What is Sustainability Assurance?

Posted on 23. May, 2011 by Ross in Corporate Policy, Industry News, United Kingdom

Corporate Social Responsibility (CSR) reports are a great thing, right? They detail how companies are considering the communities and environments which their operations impact upon, and the sustainable efforts that they are going to in order to make these impacts positive ones rather than damaging. Since CSR reporting is now legally mandatory in many countries such as the UK then the exposure of a company’s environmental efforts to the world can surely only do good.

Enter greenwash. Excessive claims of sustainable awesomeness can have detrimental effects on a company’s PR should they be exposed to be false, yet a company’s desire for every aspect of their CSR report to look ship-shape often leads to inflated claims with little foundation. What mechanism is then best for boardrooms to reign in the damaging hype being pedalled by their marketing departments?

What is Sustainability Assurance? It is the service designed specifically to fill this need. Sustainability assurance is a third party examining the claims made by CSR reports, independently auditing and verifying their veracity prior to their release into the public arena. By doing so, boards can protect their share price from unnecessary damage as well as encourage middle management to engage in sustainability projects which deliver genuine and measurable results to areas such as energy efficiency, waste reduction and water efficiency. On that basis, what self-respecting listed company could refuse the business case for sustainability assurance?

The answer to that question appears to be a big majority: indeed, perhaps this article should be re-titled ‘What Is Sustainability Assurance, and Why On Earth Should We Spend Money On It?’ according to this report by CarbonSmart.

Examining the CSR reports of the FTSE 100 and FTSE 250 in 2009 and 2010, the report found that less than 25% of the companies had any form of sustainability assurance. The level of sustainability assurance in the FTSE 100 actually dropped slightly last year, and although the concept had started to gain a little more traction in the FTSE 250 only 8% of those companies had their carbon emissions independently verified.

When asked about the lack of sustainability assurance in their CSR reporting, common responses included not wishing to have to jump through yet another hoop, unnecessary cost avoidance, confidence in their own data and - most tellingly of all - that they had never heard of sustainability assurance!

The latter is hardly surprising. Sustainability assurance has only existed as a concept for the last four and a half years, and given the long hard slog that sustainability and energy efficiency have gone through to get the notice that they deserve it is entirely understandable why sustainability assurance has failed to capture much mindshare. Sustainability assurance is certainly not ‘the elephant in the room’.

For every time someone asks Google what is ’sustainability assurance’, 20 people search for the ever-unsexy ‘csr report’ and 1400 people search for ’sustainability’ or ‘csr’. As many people search for ’sustainable carpet’ as they do for sustainability assurance, and there has been no growth in the search volume for ’sustainability assurance’ at all over the last four years.

All this is bad news for the providers of sustainability assurance services. There’s definitely a business opportunity out there for them, but they’re still struggling to create enough awareness about the need for their services. Indeed, the additional costs that sustainability assurance brings to sustainability means that sanctioning assurance can impair the original business case for other projects - what waste, water and energy efficiency brings to the boardroom table is tangible and measurable cost savings, whilst further measurement can easily be framed as unnecessary extra cost by factions jostling for their own share of the company budgets.

Sustainability assurance is here to stay for the biggest players, but it is unlikely to ever crack into smaller companies in the absence of specific legislation. Companies can circumvent most of the need for sustainability assurance by prioritising effective measurement of sustainability internally and by reigning in any over-zealous marketeers.

Image of extra paperwork by moppet65535 @ Flickr