Welcome to the Centre’s second quarterly Newsletter for 2007. In this Newsletter you will find information on recent developments in sustainability reporting and related areas of accountability and transparency, especially relevant to the public sector.

In my meetings with different organisations about the value of sustainability reporting, the question of how reporting actually influences an organisation’s actions and decisions is often raised. At times, some organisations appear to be making long-term decisions and investments that do not appear to reflect their sustainability commitment as outlined in their “gold-award winning� sustainability reports.

So, does a best practice sustainability report make an organisation sustainable? No! A sustainability report, of course, is only a report, and the critical difference is actually how sustainability principles are adopted and implemented, and how the process of reporting permeates an organisation and influences values and decisions.

An organisation’s sustainability values and approach will be ‘tested’ every time a major new service, product, project or program is proposed or developed. The size of some organisations and the complexity of internal divisional structures will inevitably mean that some initiatives will be “less sustainable� than others as ill-informed decisions and unclear tradeoffs are made. This highlights the need for robust sustainability assessment and decision-making criteria in all organisations that are well understood, applied and reviewed. The use of quantifiable sustainability performance measures can be a driver for an organisation to become more sustainable.

On its own, sustainability reporting cannot and does not make any organisation sustainable – but rapid progress with sustainable development needs to be made by all organisations, sectors and countries.

On June 12, 2007, the Rt Hon Helen Clark, Prime Minister of New Zealand, provided a keynote address at the Trans-Tasman Business Circle Lunch in Melbourne, Australia. The Prime Minister highlighted the importance of Australia’s and New Zealand’s economic relationship at Federal and State level, and that enhancing the growth and sustainability of the New Zealand economy was a major priority. Critically, Prime Minister Clark noted that “We want that growth to be sustainable in economic and environmental terms. Environmental sustainability is an imperative in the 21st century. There will be no prosperity without it.�

Importantly, Prime Minister Clark identified that “I do believe that those who do not take sustainability seriously are likely to face consumer resistance and even trade barriers in the future. We need to be able to confront credibly the challenge of campaigns like that around “food miles�, with its false and simplistic assumption that distance of itself implies unsustainability�.

This call to take sustainability seriously applies to all sectors – public and private. Sustainability reporting can assist any organisation to account for and demonstrate that it is advancing sustainability in a responsible manner. Sustainability reporting can communicate how an organisation is committed to and responding to sustainable development, and demonstrate how progress is or is not being made. This transparency is critical if interested stakeholders are to hold an organisation accountable, and demands for transparency are likely to keep increasing.

The UK Parliament’s Treasury Committee is currently holding an inquiry into private equity funds under the theme of ‘Transparency in Financial Markets’. In part, the Committee is interested in “whether there is sufficient transparency on the activities, objectives and structure of private equity funds for all relevant interested parties?� This would appear to be very similar to the questions raised of publicly listed companies in the 1990s and the demand for transparency that helped drive sustainability reporting as we know it. It is to be hoped that private equity funds also see the advantages of greater transparency, engagement and sustainability reporting, before they are compelled to do so.

Sustainability reporting can shed light on appropriate internal and external decisions and performance of any organisation (even private equity), and demonstrate how progress is or is not being made. No organisation, not even the best sustainability reporter is perfect. However, I would rather have an organisation undertaking sustainability reporting so that over time it can increasingly be held to account, than for an organisation to never embrace reporting at all.

Phil Hughes, Director

Additional References:
New Zealand Prime Minister’s Speech to the Trans-Tasman Business Circle

UK Parliament Private Equity Inquiry