Académique Documents
Professionnel Documents
Culture Documents
M a k i ng i t Ta n g i b l e
Dahle Suggett and Ben Goodsir
Environment Australia
Suite 2, Level 12
3 Spring Street
Website: www.partnership.zip.com.au
Website: www.ea.gov.au
Cisco Systems
20 Allara Street
80 Pacific Highway
Website: www.industry.gov.au
Website: www.cisco.com.au
Foreword
Business Partnership as the main sponsor. Its purpose was to explore current
strands of thought and action in Australian companies about triple bottom line
measurement and reporting, and to document existing and emerging practices.
An international perspective was also included with input from companies in the
United Kingdom.
The project sought to draw on the everyday experience of companies and
record their sense of priorities, benefits and challenges. We did not necessarily
want the study to mount a case for adopting triple bottom line reporting, rather to
portray companies thinking and experiences so more companies could develop a
critical understanding of the questions to be considered and the business benefits
to be gained.
The Prime Ministers Community Business Partnership, in particular, has an
objective to encourage strong and active collaboration between the community
and business sectors to achieve mutual goals, develop creative solutions to regional and local problems, and to strengthen community ties. In exploring business
practices in triple bottom line measurement and reporting we were able to take a
further step towards that goal.
The project partners were:
Ben Goodsir, Dr Steve Hadfield Dodds, Troy Hey and Dr Sasha Courville.
On behalf of the project partners, I wish to thank the many executives from
Australian and British companies and organisations who contributed their
thoughts, time and resources to assisting in this project.
Geraldine Skinner
Chief Executive Officer
Community Business Partnership
iii
Table of Contents
Foreword iii
Index of Companies vii
Executive Summary viii
Chapter One
16
Chapter Two
18
19
Evolution of reporting
Wait and see
18
21
22
30
37
26
45
48
Chapter Three
52
Performance indicators
Environmental indicators
Social indicators
52
54
63
Economic indicators
79
82
84
Chapter Four
86
86
91
Challenges to implementation
93
93
96
97
100
101
Chapter Five
104
Role of government
104
105
106
107
Appendix A
vi
Index of Companies
Chapter Two
AMP Ltd
Co-operative Bank UK
Unilever plc
Visy Industries
Wesfarmers Ltd
WestpacBanking Corporation
Orica Ltd
Woolworths Ltd
Chapter Three
Alcoa World Alumina Australia
BP Australia Ltd
Co-operative Bank UK
Unilever plc
Diageo
Visy Industries
Wesfarmers Ltd
WestpacBanking Corporation
Orica Ltd
Chapter Four
AMP Ltd
Unilever plc
Visy Industries
Co-operative Bank UK
Wesfarmers Ltd
WestpacBanking Corporation
Incitec Ltd
vii
Executive Summary
Groundswell of interest
but few public reports
to date
ransparency and accountability for economic, environmental and social corporate performance are the core notions embedded in the triple bottom line.
While relatively few companies formally issue triple bottom line reports in
Australia, a groundswell of interest is now evident across Australian business. The
next few years will see a increase in business planning and reporting to take
account of this new sense of accountability although practices will vary widely
according to the sector and context of the company.
Triple bottom line has clearly caught the imagination of many companies
and others in the community. Triple bottom line, a phrase coined in the 1980s,
encapsulates the three major dimensions of sustainability economic, social and
environmental and proposes that a companys performance and impact can and
should be measured and communicated to stakeholders. Many companies are
searching for ways to understand the boundaries of their non-market accountabilities and responsibilities and to engage with those stakeholders that matter to their
business. Triple bottom line presents one approach for companies to consider.
Core characteristics
Characteristics:
accountability,
transparency, integrated
planning and operations,
stakeholder engagement,
multi-dimensional
measurement
and reporting
powerful ideas embodied in the triple bottom line and fundemental to good governance; integrated planning and operations where a companys contributions
to economic prosperity, environmental quality and social well-being are reflected
in strategic planning and management systems; a commitment to stakeholder
engagement; and multi-dimensional measurement and reporting.
viii
Unprecedented challenges
in a globally competitive
environment
The motivation for greater company transparency and accountability is considerable. Companies throughout the world are experiencing unprecedented
challenges. Forces are reshaping the context for business success as companies
face increased global competition and the imperative of adapting to technological
change. The pursuit of sustainable development meeting the needs of the present without compromising the ability of future generations to meet their own
needs is endorsed by the Business Council of Australia as an important, legitimate and fundamental aspect of business responsibilities. As business structures
and activities in the post-industrial era will barely resemble those of earlier periods, so too will business responsibilities and accountabilities be transformed.
Choices for
Australian companies:
resist community
pressure or benefit
from transparency
Against this background, there are more immediate pressures that focus attention on the nature and quality of the relationship between business and society at
large. Simply put, companies are now asked by many more stakeholders for information about their impacts on the environment, the economy and the society, and
to attest to the ethical conduct and sound governance of their business.
Companies are faced with deciding whether to resist these questions, or respond
with available data, or whether to seize the opportunity to gain deeper insight into
the impact of their own practices, as well as to become truly transparent and
accountable.
ive broad categories capture the current diverse state of play in performance
measurement and reporting in Australia. (Some British companies were also
ix
3. A few companies have started from scratch and systematically seek alignment
between stakeholders expectations and corporate strategy. This approach
requires establishing new management systems and is a long and often
resource-intensive approach. WMC is an example of a company that seeks to
continue to develop in this direction and a number of other companies have
embarked on the first steps, such as Westpac, and others are poised to go down
this track, such as ANZ.
4. A few companies, mostly international, such as Rio Tinto and Shell, shape their
response to stakeholder expectations into principles that guide their business
activity: sustainability principles or partnership principles for example. This
approach is directed at embedding these principles into management practices
again an intense and, for some, a problematic journey. AMP has recently initiated processes to proceed in this direction.
5. Finally, some companies, mostly in private ownership, define their business
purpose and their commitment to sustainability values and accountability as
fully integrated their business success depends on this cultural perspective.
The Body Shop is the often-quoted example and the Cooperative Bank in the
United Kingdom, but also Visy Industries in Australia embraces this holistic
approach.
are successfully adopting the Global Reporting Initiative and other frameworks,
others take a more eclectic approach where they review indicators used by other
companies and adopt the most appropriate from various sources.
In general, companies develop indicators that are most relevant to the issues
they face and the concerns of key stakeholders, but, perhaps more importantly,
they are choosing indicators that are useful for informing strategic decisions within the business the extent to which environmental and social factors are
integrated into management decisions does however vary. Within this context, several indicators are comparable within and across industry sectors: the common
environmental ones tend to be the amount of energy consumed and its origin,
resource and material usage, emissions, and effluents and waste management; the
common social indicators relate to health and safety and community involvement;
and economic indicators beyond financial results are, for example, taxation paid
and estimates of wealth created by the company.
While companies have adopted a variety of qualitative and quantitative
approaches to measure their performance, there are several common main features
such as: the mix of input, output and outcome measures; the use of performance
targets; and benchmarking practices and verification processes (see Box E.1).
BOX E.1
input measures are the least difficult to develop and hence are the most common, whereas outcomes measures are rare;
performance targets are used to varying degrees. Most do not set targets but compare incremental performance improvements
over time, and set short to medium-term targets (objectives) and assess performance against these. A few companies set
aspirational targets and measure performance against these over the long term;
few companies explicitly link performance measures with the social, environmental or economic impact of the measured processes
or events;
while there are few opportunities for companies to benchmark performance against key competitors (except in the resource sector)
some companies are benchmarking against legal licence limits (that is, emissions and so on);
indicators are verified in a variety of ways, the most common are external verification and systems incorporating external input.
There are several leading companies verifying indicators based on feedback from readers and program recipients. While
environmental indicators are increasingly externally verified, this is more difficult for social indicators; and
leading companies enable data to be disaggregated to the local level and customised through web-based reporting. A few
companies are going live with their data, which challenges the status of the more static traditional paper based reporting.
Creating value
Soft benefits through
useful data, licence to
operate and reputation.
Extent of financial benefits
not agreed
ncovering the value creation of triple bottom line or making the business
case operates at two levels. There is a soft but nevertheless compelling busi-
ness case that concerns management and performance improvement through the
use of data, reputation enhancement, market differentiation and greater social
legitimacy or the securing of the licence to operate. Companies are adamant
about the value of these benefits, especially when triple bottom line is part of
a more holistic view of corporate citizenship and sustainability. Identifying more
tangible financial benefits shareholder value, revenue, access to capital and
market growth is not yet settled. Positive links between sustainable development
and financial results are being identified in research so, again, if triple bottom line
reporting is truly reflective of a companys adherence to sustainable development
practices, more tangible financial benefits should become apparent.
Not a precise
measurement technology
Companies need to
own the process to
reap the benefits
Adopting more transparent and accountable practices must be built on a business case that is widely discussed and understood in the company. To achieve
enduring benefits companies need to own their own approach, one that is built
on well-conducted research and rigorous execution. Changes of this sort need to
be well integrated into core management systems including planning, operations,
employee relations, and management appraisal and reward systems.
Government and
industry bodies have
a role in facilitation
In looking forward, many companies believe there is a role for government that
includes facilitating discussion, especially around the characteristics of an environmental, social and economic vision for Australia what are the communitys
environmental, social and economic goals that should inform business objectives?
There are many current regulatory and administrative instruments that already
include public consultation and reporting (such as the National Pollutant
Inventory). As a first step, the impact of these should be considered in the light of
triple bottom line expectations.
xi
Chapter 4 discusses the business case and the implementation challenges that
companies face in determining their triple bottom line activity and the benefits
that they anticipate.
Chapter 5 raises some strategies that may be employed in further clarifying the
way that companies could best meet the new community expectations.
xii
CHAPTER 1
Definitions, Context
and Drivers
S N A P S H O T
Characteristics
business priorities
business responsibilities.
to stakeholders;
few years.
Reputation-ranking industry: there is considerable public interest in more generalised
regulation (certification).
Introduction
The focus on how
and why
riple bottom line is a clever term for highlighting the importance of nonmarket and non-financial areas of corporate performance and responsibility.
This chapter explains the characteristics, drivers and benefits of triple bottom line
measurement and reporting, and its relationship to other key concepts in the
expanding lexicon for describing wider corporate responsibilities.
ll companies consulted for this study are searching for ways to understand the
boundaries of their non-market role and the non-financial outcomes for
A caution is that the financial accounting image of the bottom line should not
be taken literally. A triple bottom line is not a quest for a new bottom-line metric
but rather an approach to management and performance assessment that stresses
the importance and interdependence of economic, environmental and social performance. However, the relevant dimensions of corporate performance are not
always neatly divided into these three categories, with some companies already
talking about a fourth pillar in corporate governance and ethics. Triple bottom line
is therefore best seen as a metaphor that encapsulates the task of managing, measuring and publicly reporting multi-dimensional corporate performance.
Triple bottom line also needs to be understood in relation to other related concepts about the role and responsibilities of the corporation and its performance.
While there are many conceptual frameworks that seek to redefine the role and
responsibilities of business, three related concepts that regularly arise in discussion with companies are: sustainable development, corporate social responsibility
and good corporate citizenship, and stakeholder engagement.
Sustainable development
Sustainable development;
corporate social
responsibility and
corporate citizenship; and
stakeholder engagement
are complementary not
competing concepts
(those who exert a direct economic influence on the company and, in turn, are
directly influenced by the companys performance) and secondary stakeholders
(those who have a less direct relationship with the economic base of the company,
but have significant expectations).2 Primary stakeholders would be customers,
suppliers, employees, creditors, investors and shareholders. Secondary stakeholders would include media, government, local communities, interest groups,
not-for-profit organisations and the general public. In some companies, input
from their primary and secondary stakeholders is the basis for: planning to deliver
on the triple bottom line; understanding stakeholders expectations and how to
meet them; and how to measure and report on performance outcomes.
The idea of stakeholder engagement is not about exposure to narrow interest
groups as some businesses fear. Rather, stakeholder engagement can become a
core management strategy for enhancing and sustaining the shareholder and societal wealth-creating capacity of the enterprise.3
Not an either or
The core role of business is generating and distributing wealth. The expanding size
and impact of corporations in the globalised economy has, however, reconfigured
their role and responsibilities to embrace additional environmental and social
visions. The new paradigm for delivering on these wider responsibilities that are
embedded in concepts such as sustainable development or good corporate citizenship is not an either or of financial performance or environmental excellence
or social responsibility. Rather, the new paradigm is about and also.
1
2
3
Watts, P. and Lord Holme (1998). Meeting Changing Expectations: Corporate Social Responsibility,
World Business Council for Sustainable Development, Geneva, Switzerland.
Post, J. (2000). Meeting the Challenge of Global Corporate Citizenship, Boston College for Corporate
Community Relations, Boston College, MA.
Post J., Preston, L., and Sachs S. (Forthcoming). Redefining the Corporation: Stakeholder Management
and Organisational Wealth, Stanford University Press.
As BP Australia said:
In the oil industry, concern for the environment and societal development
does not mean that people have become tired of demanding cheap, reliable
and safe energy. No, it means they want all that and energy, which is clean,
has a creditable provenance and delivers a positive legacy.
Fliedner, I. (2000) 4
Commercially competitive
as well as socially and
environmentally
responsible
The considerable challenge that this presents for business is to deliver equally well
on all dimensions: to remain globally competitive and to be environmentally and
socially responsible and accountable.
Triple bottom line: Core characteristics
What are the observable characteristics of triple bottom line? In its widest sense,
triple bottom line is a philosophy that guides overall corporate performance. In a
narrower sense and the one that applies in this study it refers to the approaches
adopted for measuring and reporting on business performance beyond the financial dimension and towards an integrated view of business processes and impacts
in environmental, social and economic (including financial) domains. While strategy and management practices feature to some extent in this study, the focus
concerns why companies might consider publicly reporting on non-financial
matters and how that is being achieved.
The following points represent the essential behaviours and attitudes that are
manifest in those companies that seek to manage and report according to the idea
of the triple bottom line.
Core characteristics:
accountability;
companies are accountable not only to shareholders for generating returns but
being transparent;
integrated planning
and operations;
stakeholder
engagement; and
multi-dimensional
measurement and
reporting.
Fliedner, I., Stakeholder Reporting in BP: In Search of the Triple Bottom Line, Presentation, Centre for
Corporate Public Affairs, Melbourne 16th August 2001.
As well as the rich variety of new and traditional communication methods that
companies already have at their disposal (for example, community advisory
panels, stakeholder dialogue, performance disclosure on a website and pamphlets),
the role of a triple bottom line report is to focus on greater transparency and
accountability across all major aspects of company performance and impact.
The content of those reports typically comprises:
here are many entry points to a triple bottom line approach to measurement
and reporting company performance. Figure 1.1 provides a visual framework
of triple bottom line to illustrate how business decisions are sequenced, where
tools for assisting business processes might be applicable and where information
flows could occur.
Great variation among
companies, but also a
typical planning sequence
Subsequent chapters describe the drivers for change in a number of companies, their business case for embracing triple bottom line, and the strategies and
techniques employed for measurement and reporting. While there is great variation among companies, it is possible to show a theoretical sequence of planning
and implementing triple bottom line. The framework below offers a way to understand where a company may currently be focusing attention and where it wishes to
be in the future.
The stem and centre circles of the framework illustrates a simple linear
sequence in decision-making. The outer circles provide examples of the tools or
content that may be applied to those decision-making stages. The outer downward-pointing arrows are illustrative of the many possible feedback loops for
communication and engagement.
It is also possible with Figure 1.1 to consider points of interaction or intervention by specific stakeholders such as investors, business groups, government,
interest groups and the not-for-profit sector. Their influence could be seen
laterally: industry bodies for example, frequently take a role in developing codes
of conduct and defining issues companies face, whereas they do not advise on
management systems.
FIGURE 1.1
A visual framework
In order to improve economic, environmental and social performance, and to
communicate this to internal and external stakeholders, there are a number of
steps that a company would go through, represented in the centre column of inner
circles. This is shown in a linear format to ensure simplicity but, in reality, moving
between the different stages is an iterative process.
Strategy and values in an
environmental, economic
and social context
Indicators simply
communicate complex
information on outcomes
Sectoral issues,
often translated into
codes, are a further
performance parameter
Assessment technologies
are in-house or
externally set
Reporting is aligned
between stakeholders and
business decision-makers
this integrates the results into the companys management system with the goal of
improving performance against economic, environmental and social benchmarks.
This is also important as a lever for cultural change within the company.
The traditional relationship between business and society is being reshaped and
this is altering our common understanding of business responsibilities. This is particularly the case in Australia where changes in government functions have altered
the position of Australian industry from being highly protected and regulated to
one that is called on to be a partner with government and the community in serving a wider range of areas for the public good. Many areas of service provision and
economic activity are now privatised, and public companies and the not-for-profit
sector are active in areas of the economy previously reserved for government.
Business in Australia, unlike the United States, is not use to this level of visibility
and accountability.5
Also, intense global competition has refocused business strategy and relations
with employees. Most companies report that improving relationships with
employees and meeting their expectations is a strong for some the most powerful
driver for changing corporate activity to better serve a social role. A study of the
benefits of greater corporate community involvement revealed that meeting
employee expectations was one of the most important and new drivers of change.6
5
6
See a discussion with business and community leaders in Dilemmas in Competitiveness, Citizenship
and Community (2000).The Cranlana Programme, the Myer Foundation, Melbourne.
Centre for Corporate Public Affairs in conjunction with the Business Council of Australia (2000)
Corporate Community Involvement: Establishing the Business Case.
a recent survey found that the majority of Australians (90 per cent) want large
companies to go beyond a one-dimensional role of making profits, and contribute more broadly to social and environmental goals. A worldwide survey of
over 25,000 average citizens in 23 countries showed that Australians had the
highest expectations of companies.8 Environmental concerns for 71 per cent of
Australians related to both global as well as domestic environmental problems;
citizens are expressing their views about corporate behaviour in many different
forms, including as investors, consumers, employees and community advocates. A recent British study demonstrated the impact of company reputation
on consumer purchasing, with good companies being rewarded and poor companies being penalised 17 per cent of the population boycotted a companys
product on ethical grounds, 19 per cent had chosen a product/service because
of a companys ethical reputation and 28 per cent had done both;9
similarly, a study in 2000 for the inaugural conference of the Ethical Investment
Association found that 7585 per cent of people had purchased products on the
basis of social and environmental attributes in the previous year;10 and
other Australian studies have found that around 60 per cent of all consumer
decisions are made with an awareness of environmental impacts, and 73 per
cent of consumers state that they would change brands, given equivalent quality, to support a product associated with a good cause.11
Business is at times sceptical of the strength of these sorts of findings regarding
The taken-for-granted
link between financial
success and reputation
has been broken
Post, James, (2000). Meeting the Challenge of Global Corporate Citizenship, Boston College, Centre
for Corporate Community Relations, Boston, MA.
8 Environics International Ltd, The Millennium Poll on Corporate Social Responsibility, Executive
Briefing, 1999. Website: www.environics.net/eil/millennium/MPExecBrief.pdf
9 MORI, www.mori.com/consumer/index.shtml
10 Presentation by KPMG, Ethical Investment Association Conference, Sydney Stock Exchange, May 2000.
11 State Chamber of Commerce NSW (2001) Taking the First Steps: An Overview of Corporate Social
Responsibility in Australia, The Common Good Program.
10
benefit has been broken for many in the community. Being a financially successful
company is no longer a guarantee of community (or government) support.
The search for legitimacy and a good reputation is occupying the minds of
many company leaders. Business is uncertain about what negative community
pressure might lead to greater regulation is a concern for some sectors such as
banking or gaming, consumer backlash for the service sector, or constraints on
development for the resource sector or the telecommunications sector.
Scrutiny related to socially responsible investment
While socially responsible investment (SRI) is still a very small part of the market in
Australia, there has been considerable growth in the United Kingdom and Canada
over the past 18 months. This growth will most likely be replicated in Australia.
Major firms such as Challenger, Westpac, Rothschild and AMP have been releasing
new investment products and developing instruments for analysis of company
performance. On the demand side, some superannuation trusts, in particular,
have entered the SRI market and others are exploring their options.
A recent baseline study issued by the federal government concluded that there
are $10.5 billion in socially responsible assets in Australia.12 SRI managed funds
grew by 86 per cent between 2000 and 2001, 12 times that of managed funds as a
whole. Since 1996, SRI managed funds assets in this country have achieved a
growth rate of over 500 per cent.
The mature US market
is mainly due to the
exclusion of sin stocks
UK growth is indicative
of the future of socially
responsible investment
in Australia
11
increased number of surveys and the like wanting to access data on companys
environmental and social performance. Indeed, the impact of the screening
devices seems of greater importance in companies minds than the potential flow
of capital:
I used to spend 5 per cent of my time answering questions, now it is
50 per cent.
Resource company, United Kingdom.
The Allen Consulting Group Consultation
I can show you 20 surveys that I have received in the past few months all
from organisations serving socially responsible investment. Its an explosion.
Consumer goods company, United Kingdom.
The Allen Consulting Group Consultation
In Australia, recent amendments to the Australian Financial Services Reform
Additional scrutiny of
companies performance
and reputation is the
current major impact
of socially responsible
investment
Act will increase the disclosure of the extent to which superannuation funds and
investment managers incorporate environmental and social issues in their investment decisions, and this will inevitably increase discussion of the parameters of
socially responsible performance. Under the Socially Responsible Investment
disclosure requirements of the Financial Services Reform Act 2001, the Product
Disclosure Statement for financial products that have an investment component
will be required to state the extent to which labour standards, environmental,
social or ethical considerations are taken into account in the selection, retention
or realisation of the investment. As occurred in the United Kingdom under a similar requirement, this will produce a ripple effect not only in the investment
community but also throughout listed companies as organisations classify and
record their socially responsible activities.
Shareholder democracy is also becoming more prominent in Australia. As more
Pressure from
shareholder democracy
and more Australians become shareowners (Australians are reputedly the highest
direct and indirect owner of shares), they are beginning to look more closely at the
actions of the companies they invest in.15 Interest groups are also recognising that
introducing shareholder resolutions at company annual general meetings is a
mechanism to call management attention to issue. The Corporations Law 249D
was amended in 1998 to allow at least 100 registered shareholders to call a general
meeting of the company. The union campaign against Rio Tintos labour relations
practices was reputedly the first to be conducted through shareholders at their
Annual General Meeting.
Environmental and social risk assessment
Also, more generally, there are reports of increasing pressure from lenders, insurers
and investors on companies to improve their performance, although the current
influence appears to be low. Banks and insurance companies increasingly recognise the importance of good environmental management to reduce their future
risks and some banks overseas have begun to look more closely at environmental
management when considering business loans. Most have implemented
environmental risk criteria as part of their corporate and project lending activities.
15 Address Richard Humphry, CEO and MD, Australian Stock Exchange, Annual Oration, Australian
Centre for Corporate Public Affairs, Melbourne July, 2001.
12
Currently though, environmental assessments tend to be once only and are not
monitored for the duration of the loan period, although this is expected to change
over time.16
Overall, the extent of detailed investment analyst scrutiny of companies environmental and social performance (other than for socially responsible investment
purposes) is thought to be very low in Australia especially in a climate of economic and corporate instability. For example, a recent survey of 25 Australian
stockbrokers found that their key concern when analysing and recommending
a company to clients was its financial performance. Some did indicate that they
provide an ethical analysis if a client requests or if the company actively markets
itself as an ethical company.17 Even in the United Kingdom, where the profile of
the issues is much higher, the trend is similar. One survey found 9 per cent of
analysts saw environmental and social issues as important non-financial indicators, compared with 20 per cent of investors and 23 per cent of journalists.18
Those companies advocating a higher standard of environmental and social
performance hope that the investment market learns to differentiate between
companies on these criteria.
Reputation-ranking industry
There is considerable public interest in more generalised reputation ranking and
Data are needed for
surveys that rank
corporate reputations
this is also driving many companies to collect the data for the reports they are
being asked to produce. Many large Australian companies endorse the notion of
stakeholder scrutiny and the obligation of the company to make information freely
available in a transparent and accessible form, endorsing the notion of community right to know. Rio Tinto, WMC, Telstra, Shell and National Australia Bank are
examples of companies with external stakeholder forums. Many large companies
also see that surveys by external parties are a new and legitimate technique for
assessing companies.
The more recent surveys such as the Good Reputation Index appearing for the
second time in 2001 in The Age and Sydney Morning Herald raises a number of
important issues for companies. While more traditional conventions for ranking
each companies reputation, such as by the global business press Fortune 500 in
the United States, the Most Admired Companies for Asian Business or Business
Review Weeklys polls draw on business to business reviews, the second wave of
reputation assessment draws on community or stakeholder attitudes across a new
set of criteria. Often, the sources for advice are stakeholder groups that are not
supportive of industry and the relationship can be oppositional and combative.
Whereas earlier reputation reviews were structured around conventional busi-
13
Financial soundness
Attraction of talent
Business acumen
Community responsibility
Corporate citizenship
Environmental performance
Ethics
Sustainability
Employee relations
Stakeholder involvement
19 Purcell, N. Managing New Accountabilities, Corporate Public Affairs, vol. 11, no. 2, 2001, Centre For
Corporate Public Affairs, p. 26.
20 Lyons, M. (2001). The Third Sector: The Contribution of Non-profit and Cooperative Enterprises in
Australia , Allen and Unwin, Sydney.
14
Many interest groups and organisations are interested in having deep dialogue
with companies to assist them in identifying public concerns:
We are interested in having conversations with business to, amongst other
things, build trust between the two parties so that we can work productively together and address shared problems.
The St James Ethics Centre, The Allen Consulting Group Consultations
When asked what they would expect from companies who seek to measure and
report on the social dimensions of their performance, the Australian Council of
Social Services (ACOSS) similarly sees an opportunity for building trust and twoway relationships:
Triple bottom line reporting and stakeholder relationship building should
be genuinely reflective. Reporting needs to be based on evidence and there
needs to be assurance that the results will be acted on; reporting needs to be
part of an ongoing two-way relationship.
ACOSS, The Allen Consulting Group Consultations
15
Conclusion
A way of thinking about
integrated planning
and performance
mance across environmental, social and economic dimensions. The focus in this
study is on the measurement and reporting practices of triple bottom line rather
than the underpinning business philosophy. The intention is to provide insight
into current practices, particularly in Australian companies, and practical advice
for those wishing to go forward. The current environment for Australian business
is complex, with strong commercial pressures as well as social drivers for change.
While each company perceives these pressures in their own way according to sector,
location or size, there are increasingly common understandings emerging, propelled by the interest from government, community and the not-for profit sectors.
The drivers of change for corporate communication and reporting discussed
here were drawn from consultations and there would, of course, be others that
could be mentioned. The intention has been to illustrate those pressures that are
currently top of mind for Australian business in setting a context for understanding triple bottom line measurement and reporting.
16
CHAPTER 2
of business.
interest to them.
line report.
expectations.
shape
their
response
to
stakeholder
cultural perspective.
bottom line management, reporting and information distribution. While these distinctions are
Conclusion
and emphases.
monitor reports.
17
Introduction
his chapter seeks to portray the current thinking and experiences of a range of
Australian and British companies that are grappling with the idea or practice
of triple bottom line measurement and reporting. There is wide variation and each
case study tells a different story due to sector, size, location or simply management
culture. The common thread is that they recognise the changing status of business
and the new challenges that this presents.
Many companies are quick to point out that the range of communication channels they have available for discussing company performance is already wide and
they prefer to exercise their choice of medium to fit the purpose and audience. On
the other hand, many companies are looking for something additional that facilitates a deeper engagement with stakeholders and the issues that matter to them.
A rich set of
communication media
used by companies
Beyond the annual report, other popular mechanisms for communicating with
stakeholders include: occasional publications on social, employee or environmental activities; community or stakeholder consultation panels; local letterbox drops
of flyers on environmental initiatives; regular newsletters to employees and their
families; regular communication with politicians and non-government organisations on matters of interest to them; and so on. Some of these approaches are
specifically geared to achieving transparency and accountability goals, while others lean towards one-way communication and managing stakeholders
expectations rather than dialogue and engagement.
Evidence of a lack of
confidence in reporting or
promoting environmental
initiatives
21 Australian Conservation Foundation (2000). A Different Look at the Performance of Australias Top
100 Companies (www.acfonline.org.au/campaigns/corporate/briefings/perfresults.htm).
18
Community involvement
reported on websites
Many companies do, however, report internally and externally on major single
issues or programs that are important to them. As an example, a high proportion of
Australian companies choose to describe and display their commitment to social
responsibility or community involvement programs on their websites. This often
comprises a list of sponsorship initiatives, charities receiving donations and other
community involvement activities. The information is normally descriptive and
does not intend to provide measures that could be compared over time, except
perhaps for resource allocation.
For more than a decade many companies have issued one-off environmental
policy commitments, often distributed as a pamphlet or brochure. Many are signatories to codes of practice and voluntary agreements, such as for Greenhouse
Challenge or National Packaging Covenant, and report against results. Periodic
voluntary targets for environmental improvement and descriptions of achievements might supplement this.
Most companies readily point out that this rich set of communication techniques is their real world for reporting to stakeholders. They mix interpersonal
dialogue with web-based and paper-based information. The question is in establishing what would be gained by extending these options to include more
structured, targeted and reflective information in line with the triple bottom line
reporting concept.
The following section draws on the experience of companies in Australia and
the United Kingdom to portray the state of play in triple bottom line reporting. The
discussion explores the motivation, approaches and challenges identified by a
range of companies at varying stages of development. The subsequent chapter
examines the measurement and reporting techniques.
19
FIGURE 2.1
ENERGY/METALS/PHARMACY
INDUSTRY SECTOR
FINANCIAL
20
40
60
80
100
PER CENT
A recent international benchmarking study used the following criteria to assess and rank triple bottom line reports:
Source: The Global Reporters: International Benchmark Survey of Corporate Sustainability Reporting (2000), SustainAbility and the United Nations
Environment Programme, London
22 SustainAbility and the United Nations Environment Programme (2001). The Global Reporters:
International Benchmark Survey of Corporate Sustainability Reporting, London.
20
Evolution of reporting
Capturing the evolution
in thinking. Companies
seem to fall in to the
following categories:
gories. These distinctions are not mutually exclusive and the development is not
packaging information
linear, but they do provide a useful way to illustrate the different rationales and
stakeholder alignment
emphases of companies. It should be said at the outset that these categories are
principle driven
not judgemental; companies have their own internal logic for their decisions and
philosophically driven
ive broad categories capture the evolution of triple bottom line management,
reporting and information distribution. The discussion that follows describes
the practices of Australian and some British companies according to these cate-
It is very unlikely that this area (triple bottom line) will look the same in five
years; who knows the best way to proceed at this early stage and in this economic climate. I dont want to get ahead of the pack but I dont want us to be
left behind.
Company Executive retail sector, The Allen Consulting Group Consultations
Wait and see: benefits do
not appear to outweigh
the costs
Wait and see is where companies are mostly satisfied with their present
approaches to communication and accountability. Either a change is not a business priority and not on the radar, or there is a sense of potential benefits, but it is
far too early to proceed without understanding more about the context and the
directions for the rest of business.
Other companies make a commitment to their community to be open and
transparent observing the community right to know principle and endorsing
the notion of greater accountability to the community for their performance. To
meet this commitment they assemble and package internal information for an
external audience. This information reveals the standards they seek to meet, how
well they perform against those standards and a description of their activities.
A few companies start from scratch and systematically ask stakeholders what
they want to know about the company. The information they generate is driven by
the goal of aligning with stakeholders expectations. This often requires establishing new management tools for capturing the information and is a long and often
resource-intensive approach.
A few companies, shape their response to stakeholder expectations into principles that guide their business activity sustainability principles or partnership
principles, for example. This approach is directed at embedding these principles
into management practices again an intense and, for some, a problematic journey.
21
Finally, some companies, often in private ownership, define their business purpose and their commitment to sustainability values and accountability as fully
integrated their business success depends on this cultural perspective.
y far the majority of companies are not as yet producing triple bottom line
reports. These companies fall into a number of camps. Six companies views
are discussed below. There are those who understand the concepts, but they are
not on the radar of business priorities. There are also those that understand the
concepts, are committed to open communication with stakeholders and may be
conducting community programs and environmental improvement activities, but
they do not believe that the benefits of formal reporting would outweigh the costs.
Many in this group are interested in learning more about the concept and
are waiting to see where the whole agenda goes, before they commit to enhanced
social and environmental reporting. Others are very interested but are progressing
slowly, conducting the research to better understand their capabilities and what
is required.
Fosters: No demonstrable business case
22
BOX 2.2
FOSTERS
no demonstrable business case or benefit that would warrant the additional expenditure;
environmental and social concerns already built into the business strategy; and
In conclusion, Fosters is unconvinced of the benefits, but will wait and see
how this develops among their key stakeholders, in other companies and in the
wider community.
There is considerable confusion and poor understanding of the costs and
benefits of the triple bottom line; the jury is still out and will be for a while.
Company Executive, The Allen Consulting Group Consultations
Woolworths is one of the largest employers in Australia and has a presence in most
Australian communities. It seeks to be an active member of those communities
and to build local relationships. Its approach to community involvement and communication is derived more from understanding the particular context of the retail
sector than from emulating the activity of other sectors such as minerals.
Woolworths, as with other retail companies, operates with relatively tight margins,
a large number of shareholders, and rarely encounters community opposition to
its business. The scope for changing its relationship with the wider community is
therefore relatively minor. Nevertheless, a major corporate entity such as
Woolworths is well aware of changes that are under way in other companies and
will gradually make similar adjustments to its reporting to shareholders and the
wider community.
Woolworths annual report and website are in the traditional format, where
financial results are provided in detail and social and environmental initiatives are
described mainly in terms of policies or program initiatives. Its social or community involvement program is extensive and the website enables a reader to look in
some detail at the nature of the activities and resources allocated.
BOX 2.3
WOOLWORTHS
The company is currently considering ways that it might extend the environmental and social content in subsequent reports. It does not envisage moving to a
triple bottom line approach, but recognises that there may be additional information and data that could be included.
23
AXA: Inclusive values but triple bottom line is not a business priority
Every week we deal with issues or respond to stakeholders concerns that
could be labelled as triple bottom line accountability. However, at this stage,
the management and the board do not see developing measurement and
reporting as a priority.
Company Executive, The Allen Consulting Group Consultations
For AXA, community activities and the approach of the company to external stakeholders are based on the philosophies of its French parent, which tends to adopt
an inclusive approach to business and the community. The reporting side of this
has not been seen as a key component to date. It produces a traditional style of
annual report and is interested in learning more about a triple bottom line
approach to assess what it should or could be doing.
BOX 2.4
AXA
in marketing and community relations it sees relevance in building its reputation by adopting an inclusive approach to business
and the community.
Parts of the organisation are increasingly interested in triple bottom line issues
for different reasons. For example, the marketing area is considering the implications
for branding and product development issues, and the community relations area is
interested in developing a comprehensive framework for consultation. As with
other companies in the financial sector, the key driver for considering this area
would be to improve reputation and image. At this stage, however, the company
does not see any significant pressure being exerted from its external stakeholders.
Qantas: Existing communication channels meet current needs
Qantas is advancing slowly on this front and considering what the next development might be. As with many companies, Qantas believes it is conveying its values
to employees, relating well to the airlines sponsorship partners and it feels the
message is effectively conveyed to external audiences through existing channels.
Qantas was publicly listed in July 1995 and has extensively developed its website to
show current press releases and detailed information for investor relations purposes, for example.
BOX 2.5
QANTAS
advancing slowly;
24
MEDIBANK PRIVATE
broad-ranging consultations with staff and community stakeholders has been conducted; and
Medibank may consider a triple bottom line management and reporting framework but it is still at an early stage in the process:
Some just see the triple bottom line process as demonstration of being a
good corporate citizen but others see that it could be much more.
Company Executive, The Allen Consulting Group Consultations
Developing better ways to demonstrate the extent of the organisations
activity and capability in interacting with the community is backed by a strong
business objective.
Leighton Holdings: Prefer natural evolution
Reputation and good
environmental records are
a competitive advantage
Leighton Holdings is actively considering its options but waiting to better understand what is possible. Leighton Holdings is planning to produce a consolidated
external report on environmental and community issues within the next 12
months, and has embraced the concept of triple bottom line in this years annual
report. It has no doubt that reputation and good environmental records are a competitive advantage to the Groups operations in both Australia and Asia.
The core issue for Leighton is to determine what the triple bottom line
accountabilities are for a holding company. Thiess is an integrated engineering
and service provider heavily involved in triple bottom line reporting and there is a
strong business logic as they are a BHP-Billiton customer. On the other hand, John
Holland is a low-cost contractor with minimal overheads. They have a good safety
record but do not feel the pressure to produce additional reports on those matters.
25
BOX 2.7
LEIGHTON HOLDINGS
the first step is to review current indicators produced across the company; and
along the social and economic dimensions but are unconvinced of what they
would gain. The practices of three companies are discussed. Essentially, they are
committed to being open with the community, are pragmatically using information that they collect for management purposes on environmental, health and
safety issues and community involvement and are packaging it into a triple bottom
line framework.
While these companies have developed some additional information and management systems, the majority of this is packaged for communication purposes.
These companies have well-developed reports some have led the way in the past.
Some are unsure about the types of measures to report and are sceptical about
whether the benefits would outweigh the costs.
26
WESFARMERS
pursuing a consistent approach across a rapidly growing company although this is a challenge as employees are most interested
in their own business units;
Challenges
Committed to
transparency but
unsure about use
by stakeholders
27
Orica, like Wesfarmers, operates complex process and engineering-based operations and, where possible, has established comprehensive internal data-gathering
mechanisms as part of quality management. It is also committed to openness with
the community, conducting community consultation panels and the like, and
welcoming engagement with stakeholders.
The reports have combined both qualitative and quantitative information.
Oricas reporting has evolved from more descriptive accounts of performance and
the issues it considers important, to focusing on the facts and figures, reports on
achievements against targets and identifying targets for the future. Consistent with
the origins of its reporting to the community, over 50 per cent of its sites produce
additional reports for their local communities and this proportion will increase.
Letters of assurance, drawn from internal and independent audits, are part of the
due diligence approach in confirming the standards of management and operating
procedures for health, safety and the environment.
Oricas main emphasis has been on providing results on health, safety and
environmental performance drawn from the information generated by its comprehensive management systems and information, which is reported to government
bodies as part of the regulation of this industry sector. A change in the type and
depth of information is largely due to the fact that it now has more robust data for
those areas of performance.
It is a mature operator when reporting in areas beyond financial performance
and has received awards for the quality of its reporting. However, it does not
see additional benefits in acting differently, other than continuing to improve its
current processes.
BOX 2.9
ORICA
28
Its recent report has retained the traditional measures but has also introduced
some different aspects that go a little further into social and economic dimensions.
The new aspects:
relate to the future of our company and its role in society: material efficiency, reduction in greenhouse emissions, product life-cycle assessment,
and social responsibility.
Company Executive, The Allen Consulting Group Consultations
Oricas website also provides information on health, safety and environmental
performance nearer to real time than is possible in a paper-based report.
Challenges
Orica is comfortable with gradually improving on these established processes.
There is no apparent business case to radically change or extend these measures
further into the economic or social domains. Nevertheless, it continues to be
watchful of developments. As Orica increases its involvement in new international
markets the company is keen to ensure it is able to adapt its Australian practices
and standards to operations in countries that are less developed than those in
which they have traditionally been established.
Commonwealth Bank of Australia: Identifying suitable data
For a successful
business what more
would be gained?
BOX 2.10
COMMONWEALTH BANK
29
Challenges
The main challenge is identifying what is feasible and appropriate to measure and
report to a wider audience. Identifying the dimensions for future reporting has
required a gap analysis of the data required by the GRI against the information that
is already available. This has highlighted additional information that should be
collected to enable more comprehensive reporting according to the general framework of the GRI.
It is anticipated a more comprehensive report in the future will include the
following dimensions:
environment (for example, water and paper use, legal liability); and
small number of companies start from scratch, aiming to better align their
practices with stakeholders expectations. The strategies of five companies
are described in this general category. They actively engage with a wide range of
stakeholders not only to identify key issues and concerns, but also to partner with
them in managing environmental and social problems. Stakeholders expectations
are a major driving force for corporate direction, and performance measures are
well designed and often developed for specific stakeholder groups.
A range of starting points and practices is illustrated below. One common feature is the clear business benefits that are identified. Engaging more closely with
stakeholders is an imperative for a successful business. Another common feature is
the need to embed the processes into the company if the full benefits are to be
realised. Management improvements are a distinctive advantage that the more
experienced companies identify.
Westpac Banking Corporation: Accountable to more than shareholders
The Managing Director has said:
The future prospect for banks in Australia is not simply about how we
anticipate technological change, competition and globalisation, but
increasingly more about how well we operate in the social and environmental constructs applying across our industry Conventional business
models tend to be short on guidance in this area It would be the interplay
between the financial, social and environmental factors driving our industry that will ultimately determine the future of our industry A company
cannot succeed unless it is accountable to more than just shareholders.
Company Executive, The Allen Consulting Group Consultations
Within this context, Westpac sees the drivers of a more integrated approach
to responding to community demands as twofold: those expectations concerned
with service and product quality (reliability and value); and those derived from
the community norms (ethical practices, accountability, transparency and
acting responsibly).
30
BOX 2.11
WESTPAC
Guided by: what stakeholders want and the best ways to communicate communication will reflect what we stand for and
what we do.
Focus will be: governance and ethical conduct, market place practices, human rights employee practices, occupational health and
care for the environment, community involvement, and financial controls and risk management.
31
Challenges
The overriding goal is to develop a process to communicate what we stand for and
what we do. A difficulty is that expectations change so the development process
needs to be dynamic and relevant.
Westpac will attempt to report the information that stakeholders see as of
primary concern but recognise the complexity in selecting relevant indicators.
Credible and recognisable
performance indicators
for all stakeholders
For example, Westpac believes that around 90 per cent of ISO 14001 is not
relevant to the purposes it would wish its reporting to serve. Westpac has therefore
embarked on developing its own performance indicators that are credible and
recognisable to all stakeholders:
There is no central external group that can determine that [relevant indicators] for us we have to look to our own needs and the needs of our
stakeholders Banking is in fact a very difficult industry and essentially no
one has broken the mould on their business models for reporting.
Company Executive, The Allen Consulting Group Consultations
Another caveat on reporting, is you cant get ahead of yourself. Reporting must
be a reflection of real performance and aspirations, and each organisation needs to
establish the needs of opinion leaders and those who can give guidance and confer
credibility. For example, in the disabilities area it might be the Human Rights and
Equal Opportunity Commission.
WMC: Well-developed sustainability reporting
WMC is seen as a world leader in triple bottom line reporting.23 The company has
been publishing an environmental report since 1995 and it issued its first community report in 2000. The rationale can be summed up as:
We recognise that people affected by our operations have a right to be
considered in our activities and can have an impact on our ability to
prosper traditional practices and current technology will not always
provide acceptable solutions in the future. We accept the challenge of
adapting to meet changing standards.
Company Executive, The Allen Consulting Group Consultations
Mutual expectations
for openness and
accountability
The Managing Director has stated his commitment to openness and accountability. He expects this of the community agencies, government and others that the
company deals with, and can hardly exempt the company from meeting the same
standards.
WMC has refined the measurement and reporting processes to serve as
motivation for improved performance, as well as a mechanism to reflect performance. This has, in turn, led to establishing information management systems,
data-collection processes and verification techniques to ensure the content is
accurate. The process has become embedded in the companys operations and is
now a routine part of the work it does.
23 SustainAbility and the United Nations Environment Programme (2001). The Global Reporters:
International Benchmark Survey of Corporate Sustainability Reporting, London.
32
BOX 2.12
WMC
Main functions: it signals where a company is, where it wants to be and where it commits itself. (Reporting drives company
performance, as well as reflects it.)
Challenges: establishing valid measurement and data management, valuing intangibles in a statistically driven environment and
new skills are needed for line areas.
33
The auditors have the freedom to pursue any angle they wish and to visit
any site. This is expensive but it provides management with a sense of
assurance that is appropriate in an engineering-based and publicly
listed company.
Company Executive, The Allen Consulting Group Consultations
WMC does have a community panel and it also reports on its views of
the company.
Challenges
Sustainability reporting is, however, a demanding process. The benefits are frequently intangibles, are in a longer time frame and in that grey area that is difficult
to account for. This is especially the case in a business context where managers
prefer to deal with statistical probabilities. Managers also need to be able to communicate well to disseminate the social and environmental reports.
It really requires a new set of skills for mine managers and for them to not
only look at their production results in the next month, but also to consider
the outlook in the forthcoming years.
Company Executive, The Allen Consulting Group Consultations
Budget, accountability
mechanisms and
ownership by the business
managers is crucial
34
BOX 2.13
TELSTRA
Challenges
The identification, measurement and reporting on environmental issues is well
developed, in contrast to economic and social elements. Accordingly, environmental performance serves as the centrepiece of Telstras public report, but
includes discussion of implementation aspects, such as employee training
and stakeholder communication. There is also discussion of how Telstra views
stakeholder interaction and relationship-building and how it manages to meet
external expectations.
While there is room for improvement, we have largely covered economic
and environmental reporting the social aspect is another matter.
Company Executive, The Allen Consulting Group Consultations
Telstra is unsure whether to combine the non-financial and financial reporting
into a single document.
Unilever: Local and global accountability
The Unilever Group chairmen have stated that, to succeed requires the highest
standards of corporate behaviour towards our employees, consumers and the
societies and the world in which we live. A core objective is therefore to turn
commitment into practice and demonstrate performance. Combined with its
commitment to be open and transparent, Unilever has responded by developing
a global and comprehensive environmental and social reporting program that
balances the need for local accountability with global accountability.
However, the parameters for developing an approach to stakeholder engagement and reporting is vastly different in a company such as Unilever, compared to
a resource-based company. Unilever has a decentralised structure, it sells consumer goods under multiple brands in 150 countries, and there are multiple
suppliers and multiple sites. The company had to design an approach that fitted its
values and was suitable to the realities of a consumer goods business.
As in many other companies, a further incentive is having the capacity to
respond to the raft of requests for information the company receives from third
parties. This is a recent phenomenon but it has snowballed and is causing a
rethink on data management.
BOX 2.14
UNILEVER
Parameters: different to a resource-based company: with a decentralised structure, consumer goods brands in 150 countries,
and multiple suppliers and multiple sites.
Challenges: what to report locally versus internationally, how to achieve comparability and maintain relevance, how to identify
meaningful trend data and benchmarks, and how to deal with gaps between principles and achievement.
35
36
ANZ
developing a Customer Service Charter with the aim of evaluating performance against this in the future;
consultation with stakeholders. The principles provide a focus and the companies
encourage their performance to be judged against these. Triple bottom line is
embedded in their operations and they often seek to create products and services
with characteristics that reflect their principles. Four major companies operating
in this way are discussed.
37
A number of these companies are global and operating in the United Kingdom
where the public policy context is encouraging companies to move in the direction
of the triple bottom line. The case studies illustrate the depth of planning that
underpins their activities. Each strives to consolidate the link between measurement
and reporting, accountability to the community and performance improvement.
Rio Tinto: Stakeholders and sustainability
Rio Tinto globally and in Australia has been a leader in developing a deep
understanding of community and stakeholder expectations. It has generated wideranging strategies to engage with the communitys expectations of its business.
Rio Tinto in Australia has a robust Business in the Communities program that
places direct emphasis on forging active relationships with organisations and
communities. As the Chairman said:
Issues once thought to be remote from the conduct of our business are now
integral to it and others are becoming increasingly important to us: sustainable development, climate change, human rights, biodiversity and product
stewardship among them.
Rio Tinto, Social and Environment Review 2000
Seeking a reciprocal
arrangement with
stakeholders: listening
to each other
Widening the parameters for communicating and reporting on company performance has been an integral part of this process. The company explicitly states
that it is seeking a reciprocal arrangement with those who have a stake in its
affairs, listening to each other and learning.
While the decision to report on more than financial data has been an evolutionary process, there have been a number of matters under company law that
have focused the attention of the board (for example, The Turnbull Report in the
United Kingdom requires directors to sign that they have systems in place for all
aspects of their companys performance). Company law is under further review
and it is expected that there will be more requirements placed on directors. Also,
the Blair government has made a request to the top 350 companies that they
report environmentally and socially. Reporting more widely is not yet mandatory
but it is evident to Rio Tinto that there is a slow increase in the pressure for
accountability in this area.
There is also a shorter term and more pragmatic reason for developing wider
access to information about the company. The company headquarters in London
has observed that around two years ago external requests for information about
social, environmental and other aspects of company performance started to grow.
There is now a flood of requests connected with socially responsible investment
that call for a new level of information.
38
BOX 2.16
RIO TINTO
Development: founded on a commitment to sustainability and stakeholder engagement experience has been an
evolutionary process.
New driver: socially responsible investment surveys are an added and important impetus.
Reporting scope: reports globally with links to local reports on the website.
Key challenge: how far to take measurement any additional measurement must also be of use in management.
39
Challenges
Difficult to make external
reporting meaningful
and central to internal
management
BOX 2.17
Priorities and focus: a contract with the community publicly expressed priorities and targets is the foundation of the triple
bottom line approach. It ensures the business grows in a sustainable way.
Reporting: cutting edge; committed to openness (reports both good and bad news stories); embraces community validation; and
based on practical matters.
24 British Airports Administration was nominated as a top company in the: SustainAbility and the United
Nations Environment Programme (2001). The Global Reporters: International Benchmark Survey of
Corporate Sustainability Reporting, London.
40
On reporting, BAA regards the environment is easy it is relatively easy to measure. There are lots of rules regarding environmental improvement and
stakeholders are well aware of the general standards required. Data collection for
BAA similarly is not a problem if the requirements increase it simply measures
more aspects of performance.
Social impacts, on the other hand, are very hard to evaluate. For example:
One might measure the volume of volunteers in the community, but that
does not answer the question as to what their contribution is worth.
Similarly, one might measure the resources allocated to education, but
again the degree of impact is not measured.
Company Executive, The Allen Consulting Group Consultations
Believe triple bottom
line reporting will
eventually become
mandatory in the UK
BAA believes that triple bottom line reporting will eventually become mandatory in the United Kingdom, and this will include dimensions such as employment,
contributions to charities and safety.
In summary, the BAA experience is one that inextricably links future growth
with a commitment to sustainability and openness with the community. BAA has
consolidated the sustainability goals in a program called Contract with the community public and uncompromising promises and targets.
41
SHELL AUSTRALIA
Focus: centred on redirecting the culture by taking stakeholder engagement into account.
Reporting: macro reporting framework helps articulate what the company aspires to achieve. Operates within well-publicised
global parameters.
Two way communication: new language and reporting opportunities enable dilemmas to be discussed rather than the company
appear all-knowing.
Challenges: must do internally what is said externally and avoid a credibility gap, ensuring relevance for line management, and
sustaining this focus in the highly competitive environment in Australia.
42
Another significant benefit has been for employees. The stakeholder consultation process and the language embodied in the sustainability framework enabled
the company to openly debate the major dilemmas that it faces rather than the
company being forced into assuming the position of being all-knowing.
Challenges
Must do internally what
you commit to externally
There are a number of major lessons that Shell has learned: you must do internally what you say externally. A company can project an image of concern and
activity in the community, about improved environmental practices and employee
relations, but in reality things may not have changed. Companies that do not
vigorously engage with their own leadership teams on these matters are faced,
usually in a short period of time, with a huge credibility gap between what they say
to the wider community and what the company actually does on the ground:
Our line areas, particularly in the downstream sector, continue to ask what
does it mean for us and this reminds us that we still have a lot of work to do.
Company Executive, The Allen Consulting Group Consultations
Shell reports in the spirit of the Global Reporting Initiative but admits that it is
hard to take something off the shelf. Often the parameters are too restrictive
where the company might want to report more widely. It sees these initiatives are
helpful but only in the early stages of raising awareness.
Shell does not want a product off the shelf, it wants to build its own
understanding of reporting areas and refine the process to suit its own
stakeholders and employees.
Company Executive, The Allen Consulting Group Consultations
Verification is also a complex matter. A major accounting group verifies Shells
health and safety and environment data there are, however, limitations to the
verification process as it is conventionally conducted. Auditing does not address
the question of whether the data have a use value. Shell now seeks to go beyond
verification and publish stakeholder feedback as proof. Stakeholder engagement,
both formal and informal, leads to third-party endorsement. Accounting firms are
struggling with this style of verification.
AMP: Sustainability principles for triple bottom line
AMP recognised that in many ways:
It has a direct and indirect impact on the lives, communities and environments of millions of people they all have a legitimate interest in the way
AMP conducts its business.
Company Executive, The Allen Consulting Group Consultations
Throughout its 153-year history, AMP believes it has adopted a philosophy of
responsible corporate behaviour towards its stakeholders, shareholders, customers, employees, suppliers, governments, non-government organisations and
the broader community around the globe. It understands that:
Society is demanding that companies take greater responsibility for their
social and environmental impact.
Company Executive, The Allen Consulting Group Consultations
43
AMP has observed the growth of triple bottom line considerations and reporting practices, and has sought to determine the directions that it might take.
BOX 2.19
AMP
Bedding down internal management process for 23 years is a priority before wider reporting begins.
AMP intends to bed down the internal processes for two to three years before
reporting more widely. It will develop a consistent and credible management
process and measurement and reporting systems for sustainability.
Establishing the management systems for sustainability is being centrally led
with close connections to the AMP Board. Each business unit is identifying short
and long term sustainable development priorities to contribute to the companywide framework. A key aspect of this process is consultation with a broad range
of stakeholders:
Dialogue with the community will be fundamental to the companys
journey towards sustainable development and to being recognised and
supported by all stakeholders as socially responsible.
Company Executive, The Allen Consulting Group Consultations
44
Challenges
Fundamental grassroots
change not publicity
AMP is pursuing fundamental grassroots change not publicity. The steps for
reporting on these objectives and results will be taken very slowly. It wants its
employees to be fully engaged in developing an external version of its progress
to sustainability.
A challenge to those managing such processes in any company is to avoid the
flavour-of-the-month effect. This calls for a concerted effort to create a full awareness in the organisation of the benefits and to involve all levels of the company.
A further task is to avoid building unrealistic expectations for commercial gains
from greater community investment. Wider involvement with the community
is integral to its approach, but it is not a simple adjunct to marketing but
a way of relating to stakeholders and contributing to the public good. A
company also needs to convey to stakeholders its motivation, as well as its activities and outcomes:
As an organisation we need to develop policies and practices that are relevant to our business strategy and operations, while at the same time
balance these needs with the interests and concerns of our stakeholder
groups and the delivery of stakeholder value.
Company Executive, The Allen Consulting Group Consultations
manage for the future. They adopt a bold and solid approach to sustainable development around principles such as zero waste and sustainable product life cycles.
They see that their core business is fully consistent with their endorsement
of sustainability.
The companies described here are not publicly owned. At this stage in the
development of triple bottom line this may provide the basis for the very strong
commitment they exemplify.
Visy Industries: A values-driven business
Visys core business operations and philosophy are integrally based on what it
refers to as a sustainable development approach it sees itself as a triple bottom
line business. In one sense, much of its activity falls outside that covered in this
review but its philosophical position is illustrative of a private company at this end
of the spectrum.
Planning and reporting
Formal reporting forms one small component of its total communication strategy
that embraces extensive dialogue with stakeholders and partners. As a private
company, it produces substantial internal environmental and social impact information, but externally it reports on a as needs basis as far as the wider community
is concerned and according to commitments it has made such as the National
Packaging Covenant.
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VISY INDUSTRIES
business philosophy and operations are integrated within a sustainable development framework;
reporting is done internally for employees and shareholders, and externally on an as needs basis;
operates in a model that clearly identifies stakeholder concerns and corporate priorities;
Challenges
Visys ultimate strategy is to contribute to developing a sustainable society, which
has the following features:
road for environmental reasons, rather because it made good business sense.
Over time, however, the direction and focus has moved from a compliance focus to
beyond compliance and towards sustainable development. Visy would like to
keep developing its processes in the way that works best for it and its stakeholders:
Triple bottom line is a very good management tool and the focus and
priorities will vary from business to business so it must remain flexible
government should not prescribe indicators.
The best benefit comes when companies need to develop their own focus and
identify stakeholder concerns that they intend to address and report on.
Company Executive, The Allen Consulting Group Consultations
The Co-operative Bank: Partnerships define its core business
The Co-operative Bank in the United Kingdom is wholly owned by a co-operative
and its background is philanthropy. It is not publicly listed and it is run by a shareholder conglomerate. It is atypical in the finance sector: because it has pushed the
boundaries of social and environmental reporting, major banks are looking more
closely at its achievements.
The core-underpinning concept for its corporate citizenship is a partnership
approach that commenced in 1990. The partnership approach frames its relationship with seven partners or stakeholders: customers, staff and families, suppliers,
local communities, national and international society, past and future generations
of those in co-operative movements, and shareholders.
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it grew out of financial crisis went to customers to see what they valued;
seven partner/stakeholder groups define the parameters for their ethical business partners are regularly surveyed to identify what
matters to them;
measurement and reporting is structured around how they add value to the seven partnerships; and
Reporting is geared to indicating to the seven partners the extent to which the
bank has delivered value. The first report was issued in 1998. A core goal is that
the partnership surveys are integrated into the business and become a driver of
the business.
Challenges
One difficult issue in reporting includes how to deliver greater value to partners
when their performance is already high. For example, there is already a higher level
of customer satisfaction than would be evident in more traditional organisations.
Measuring improvement therefore may be misleading.
The bank knows that on the social side there are many complexities; for example, how to measure the inputs and outcomes of community involvement? Also,
incorporating the perspective of its partners into all aspects of the business is
another challenge.
The bank is engaged in a consortium of banks concerned with the Global
Reporting Initiative, but there are many cultural difference that place significant
limitations on the international comparability of indicators and measures. For
example, different cultural attitudes to part-time work, ethnic minorities or to people with disabilities are limitations on establishing an international template.
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Conclusion
here are many common features among companies but, as the case studies
illustrate, the pattern of motivations, priorities, strategies and perceived bene-
fits varies.
To see a pattern in current practices, companies were grouped into five general
categories. The first group represents the bulk of companies in that they are either
not taking any action at this stage to change their measurement or reporting, or
they are waiting to observe the benefits other companies identify. Companies with
well-recognised brands, such as Fosters and Woolworths, are satisfied with their
current communication channels, relations and reputation with their customers,
employees and the community. Some, such as Leighton Holdings, are thinking
about the first steps they will take towards a triple bottom line approach and are
weighing up the possible business gains.
There are others such as Wesfarmers and Orica who are far from newcomers to
openly communicating a rigorous assessment of their environmental performance
and observing a community right to know principle. These companies understand the benefits of greater transparency and accountability to the community.
However, potential additional benefits from changing their strategies to embrace
a wider form of measurement and reporting, requiring more resources and
management attention, are not yet apparent. Such companies prefer to let their
processes evolve.
Others are either poised to go more deeply into triple bottom line strategies
(not necessarily labelling their activities as triple bottom line), or are already well
engaged. Some, such as Westpac, have started from developing a better understanding of stakeholder needs to developing measurement, accountability and
communication systems. Others, such as WMC, are already embedding their
approach into the management systems of the company and identifying significant benefits in enhanced management.
Another group of companies have a set of principles as their guiding framework. While the well-established global companies Rio Tinto and Shell, for
example, are mature in their processes, while still acknowledging there is a long
way to go, others, such as AMP, are just starting on their journey. A common theme
is to avoid aspirations getting ahead of reality. These companies have embarked
on significant cultural change. Transparency and accountability for economic,
environmental and social performance outcomes applies not only to the needs of
those external to the company but to employees.
Finally, a small group of companies have adopted a holistic philosophy for the
triple bottom line. Their cultural perspective is integrated with their business
philosophy. Examples identified so far in this category are privately owned and
have a strong background in philanthropy and community service.
Some of the common features apparent in the transition in reporting of the
more active companies are summarised below (see Box 2.22).
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BOX 2.22
Shareholder focus
Stakeholder focus
Paper-based
Standardised information
Financial information
Company-controlled information
Periodic reporting
Continuous reporting
Distribution of information
Stakeholder dialogue
Historical cost
Value-based assessments
Audit of accounts
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