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Reporting Could Suffer From Too Many Indicators

Corporate sustainability reports have considerable variation in the types of performance indicators disclosed, a trend that could hinder benchmarking efforts and make it difficult to measure progress, according to a Conference Board study.

“Reporting on Corporate Sustainability Performance”, an analysis of performance indicators disclosed in the sustainability reports of 94 for-profit Canadian corporations, identified 585 different indicators disclosed in the reports.

Of the indicators disclosed, 22 percent were used by more than three corporations; 55 percent were used only once; 16 percent were used twice; and seven percent were used three times.

The Conference Board said there are risks with disclosing too many or too few indicators. If a small number of indicators are disclosed, there’s a risk that key issues will not be addressed. On the other hand, if a report has a large number of indicators, it’s possible readers will be overwhelmed and important issues could be lost, the study said.

The board focused on reports issued in 2008, drawn from 10 different sectors, including mining; oil and gas; retail and food; transportation, communication and services; insurance and other finance; banking; electricity; forestry and paper; engineering, construction and chemicals; and steel.

The incredible diversity in the indicators disclosed may have been caused by a number of factors including differing interpretations of sustainability; a relative lack of mandatory standards for reporting; the fact that different sectors have different reporting priorities; and local circumstances, the study said.

The analysis did find a balance between economic, environmental and social issues in the reports. In the reports, 42 percent of indicators were classified as economic, 33 percent were environmental and 25 percent were social.

A number of voluntary guidelines for corporate sustainability reporting have emerged. The most prominent of these are the guidelines produced by the Global Reporting Initiative.

Of the companies sampled for the study, 48 percent said they used the GRI guidelines. Only one-third of the reports had explicit summaries of their reporting on GRI indicators.

And of the companies reporting on GRI indicators, only one reported on all 79 of the performance indicators suggested by the GRI; 10 reported between 50 and 78 indicators; seven reported between 30 and 49; and 13 reported between 10 and 29 indicators.

The study found wide variation between sectors. For instance, the oil and gas, mining, transportation, electricity, banking, and engineering, construction and chemicals sectors all reported at least 100 different indicators. The steel and retail/food sectors had the lowest number of different indicators disclosed, the study said.

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3 thoughts on “Reporting Could Suffer From Too Many Indicators

  1. I don’t think the problem is too much information. Information and detail are good things and something the companies and public can learn from. Let’s not go to the other extreme of having reports with little info. or details to truly define the program. The better idea is to standardize things and define what is most important and how and through which indicators information should be transmitted. So everyone can study and report the same way.

    Marc Karell, P.E., CEM

  2. Signficant differences in scope and materiality will inevitably result in a broad range of indicators. What is historically missing is the rationale as to why an indicator is important, and how the goal will lead to an anticipated science-based outcome. Without those, there is no way of know how to compare Company A’s 10% and Company B’s 20% reductions in an impact, and more importantly, determining if either reduction program will result in any meaningful benefit.

  3. It is really true tha “one sizes not fits all” but reporting should be an average… That is the reason why GRI exist and should be promoted as globally accepted. Otherwise stakeholders will be confused dancing with patchwork of initiatives…

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