A recent Deloitte paper Sustainability in business: a cross industry view has lots of interesting things to say about sustainability in business generally and a few interesting things to say about sustainability reporting specifically.
On page 17, the authors comment on sustainability and the future:
We believe that the evolution of technology around sustainability measurement, management, and reporting will follow a path of greater integration into mainstream business applications. Our experience shows that many companies’ use of sustainability applications, at present, has moved from a collection of point solutions to a more integrated approach in which sustainability technology is “layered on top” of other enterprise applications. Going forward, we expect that sustainability as a discrete technology investment will gradually disappear, to be replaced by mainstream enterprise applications – finance, HR, supply chain, etc. – that integrate sustainability into their basic functionality as a matter of course. For example, most supply-chain modules today lack the built-in ability to record and track much of the data and metrics used to support sustainability in the supply chain; to gather that data, companies must use work-arounds that add functionality related to sustainability to the basic module. In contrast, we believe that some 10 years from now, the capability to record and track such metrics will come standard with the supply-chain module itself.
I find it hard to believe that SAP for example (see their sustainability map) will wait 10 years to add supply chain sustainability capabilities to their ERP suite given that many of the world’s largest supply chain owners – e.g. Wal-Mart and Marks & Spencer – are already engaged in broad and deep supply chain auditing.
The authors also have this to say about regulation as a driver for sustainability:
With respect to regulation, we expect regulation to be a major driver of sustainability initiatives as well as of new technologies to enable more sustainable business practices. Examples include the proposed American Clean Energy and Security Act, which would establish a cap-and-trade system for greenhouse gases as a response to the climate change debate; the anticipated Kerry-Graham-Lieberman bill, a similar measure that is expected to be proposed in the near future; and the U.S. Environmental Protection Agency’s passage of a mandatory greenhouse gas reporting rule that requires companies emitting greenhouse gases over a certain threshold to report those emissions annually from January 2010 onward. With more governmental regulation likely in the areas of carbon management and reporting, voluntary and financial reporting requirements will be inextricably linked, meaning that reports on performance must be consistent across communications channels – whether disseminated through public financial reports, voluntary reports, press releases, or Web sites.
The implementation of the Carbon Reduction Commitment in the U.K. is evidence that this kind of regulation in the USA is a foregone conclusion. Let’s hope that the S.E.C. pick up on the phrase voluntary and financial reporting requirements will be inextricably linked and go beyond their current position on disclosure of environmental risk data so that a 10-Q/10-K can be properly viewed from both financial and sustainability perspectives.
