There are many confusing buzzwords: corporate responsibility, governance, citizen, and accountability – but their common objective is sustainability. That’s what stakeholders want – a return that doesn't vanish overnight.

There has been a slow-down in the economy as entities become increasingly wary of trusting each other’s financial statements. What was once a relationship of reciprocal reliance on each other’s self-evaluations has become one of sceptical scrutiny.

Corporations can prove their commitment to a better environment by building their reputation in the community. Take MTR Corporation Limited, a publicly listed corporation in Hong Kong with 7,200 employees, whose mission is to develop and manage a world-class railway together with property and other related business. Carrying 2.2 million passengers a day over 82.2 kilometres of track, its has one of the world’s finest records for reliability, customer service and cost-efficiency.

It chose voluntarily to produce a Sustainability Report for 2001 to try to demonstrate environmentally and socially responsible sustainable returns to its shareholders – a step in the right direction which inspired stakeholder confidence and showed it to be a good citizen. The report followed the Global Reporting Initiative (GRI) Guidelines, and was verified by an independent consultancy and reviewed by an external sustainability expert. The report reflects the ten sound reporting principles: transparency; completeness; inclusivity; accuracy; consistency; clarity; neutrality; timeliness; verifiability; and sustainability context.

Similarly, The Esquel Group (TEG) – a privately owned Hong Kong-based textile and garments manufacturer that employs 44,000 employees mainly in China – used the GRI Sustainability Reporting Guidelines to develop a general checklist to identify key issues concerning its environmental, economic and social performance, as a tool for self-assessment and improvement. It will use this process to promote its management’s commitment.

Great concern
The company says in its report that it is concerned for the Earth and its inhabitants, and can demonstrate that its efforts are genuine. For example, it built a $3.6 million wastewater treatment plant at its Gaoming facility to clean its effluent, though this was neither subsidized, nor mandatory by law.

As an accountant, and a former legislator in Hong Kong, I am privileged to have worked in all sectors of the community. It is clear that sustainable development now greatly concerns individuals and companies. To realize it, a corporation must deliver economic prosperity, environmental quality and social equity to its stakeholders – that is, everyone affected by its business, including shareholders, customers, employees, neighbours and suppliers.

Sustainability reporting can add value to the process by making the company transparent, credible and accountable. There are good business reasons for it:

1. It is a management tool for improving overall corporate performance across the triple bottom line: profit, environment and social. It is also a conduit for linking such corporate functions as finance, marketing, operations, and research and development. The process of sustainability reporting provides an indicator of trouble spots and unanticipated opportunities.

2. As global capital markets and information technologies expand they create social inequities as well as opportunities for wealth. The result is pressure on companies to account for the social impact of their actions and to describe them credibly.

Pressure groups rightly point out the injustices around the world where the rich get richer and the poor poorer. They infer that one is doing so at the expense of the other. The GRI process enables companies to examine their business models so that the least harm (and, in some cases, even good) is done. If it proceeds to report the full facts objectively, stakeholders can be better assured that this is indeed happening.

3. The Internet speeds up the transfer of information so that customers, investors, suppliers, employees and other stakeholders clearly articulate their demands and needs at an ever increasing pace. The competitive advantage goes to companies that respond to that call.

4. Corporations, especially the largest ones, have more and more influence over national economies – even at a global level. So they must demand high standards of ethics, transparency, sensitivity and responsiveness from their corporate executives and managers. As the decisions of key players in organizations are now under increasing scrutiny, effective corporate governance depends on relevant, high-quality and credible information.

All this being so, it is hard to understand why most corporations are still in the changing room and not on the playing field. If there is nothing to hide, sustainability reporting can only enhance a company’s reputation. By providing better information to its stakeholders, it encourages two-way communication, building a stronger relationship with the stakeholders and a stable foundation for development.

If there is nothing to hide, sustainability reporting can only enhance a company’s reputation

Stakeholders have genuine difficulties in recognizing the honest efforts made by companies. That is where GRI comes in. The goal is not to achieve perfection, but to reveal genuine efforts. It comes down to this: we can either focus on making short-term profits now at the expense of our future, with the ensuing inevitable costs to society, or we can focus on a long-term plan that will enable us to continue to make profits.

Global guidelines
GRI is a long-term, multi-stakeholder, international undertaking whose mission is to develop and disseminate globally applicable guidelines for voluntary use by organizations reporting on the economic, environmental and social dimensions of their activities, products and services.

It represents a consensus that has developed over the last five years between many stakeholders. It provides ‘principles’ and specific content to guide a company in preparing a sustainability report, including its corporate economic, environmental and social performance. The framework also makes reports useful and comparable, so that a company can benchmark against its peers, industry codes of conduct, performance standards and other voluntary initiatives.