Balancing benevolence with the bottom line

Now that most large corporations are signed up to the sustainability agenda, we need NGOs to point out areas for improvement.

Yet now, as they reach the peak of their influence, can we say that NGO campaigning reaches the highest standards? Can we be sure that the claims they make are accurate? The challenge I would like to put forward in this article is that, for the benefit of all stakeholders, we need to look at standards of reporting for both NGOs and private companies. In particular, there is the critical issue of peer review, which is essential for any major investigation or scientific claim to be taken seriously.

Responsible private companies believe fundamentally in the auditing process for assessing social and environmental performance. Professional auditing should be a continuous process throughout the supply chain, usually based on a phased-approach.

If you are regularly assessed by a world-class accredited auditor, there is a reassurance to your customers and other stakeholders that your products are meeting certain standards on sustainability. Auditing should also apply to the Sustainability Reports that major companies produce every year, both to verify the concerns raised and provide reassurance on how open or transparent the company has been during the reporting process.

There is an internationally-accepted “Gold Standard” on sustainability which comes from the Amsterdam-based Global Reporting Initiative (GRI), supported by a large number of major companies around the world.

There is too wide a gulf between this kind of reporting and the influential investigations which are published by some campaigning organisations in civil society. The result is widespread confusion and frustration for other stakeholders who just want to get to the facts.

Consider the following differences:

First, too many independent reports do not follow a standard “principle, audit, research” methodology. The frameworks they do use are usually reinvented on each occasion. Because some NGOs have not adopted the standards set up by professional auditors, it is almost impossible to compare their investigations with a company’s audited report. One can often say black, while the other says white.

The second major issue is the lack of peer review. NGOs are, of course, fully entitled to say that they don’t believe what a company says in its sustainability reporting. But without peer review or professional auditing, how can those allegations be taken seriously?

This is especially true when the matter under discussion is scientifically complex – which is more often the case than not.

The third major problem with independent reports is that their findings are difficult to change, even in the face of clear evidence to the contrary. NGOs rarely invite the companies they criticise to review the allegations which are made against them - before they are made public. Again, this does not meet the standards of professional auditing, where companies are given opportunity to comment and respond to findings.

As a result, one rarely sees a company publicly disowning the results of its own audit. The conclusions are accepted, one way or another, and the company takes on board the advice (‘gap analysis’) it has been given.

Compare this approach with the highly political way in which NGO reports tend to be launched into the world. Without warning, a company becomes aware that it is under attack from a certain NGO, which has already released the results to the world’s media.

Instead of a diplomatic approach, we have a series of shots being fired in rapid succession from both sides. A verbal war becomes inevitable and neither party is prepared to back down. Once allegations about a company’s sustainability track record enter the public domain, management will feel it has a duty to all of its stakeholders - employees, business partners and government authorities – to “set the record straight”.

In turn, the NGO which published the allegations will regard the company’s response as a challenge to its integrity or reputation, and will be obliged to respond again – and so on and so on. This negative cycle of claim and counter claim can continue until everyone is exhausted.

Yet it doesn’t have to be this way! We can all learn from the handful of cases where serious, science-based reports and investigations have been launched which have led to real change across the world. Perhaps the most outstanding example is the “Stern Report”, which has set the global agenda on climate change since it was published in 2006.

Admittedly, Stern was commissioned by the British government, but its impact was every environmental NGO’s dream. We don’t have enough space here to consider all of the reasons for Stern’s success; but its rigorous science and open consultation and feedback process were absolutely critical to ensuring its immediate and widespread acceptance in the global government, scientific and business communities.

Perhaps there is scope for setting a “Stern Standard” for future NGO reporting. Going into 2012, my greatest hope is that NGOs and private companies can have a constructive dialogue on these vital issues, one which is based on fact, credible science and a degree of mutual respect.