There is an increasing trend among companies across the globe to report on their sustainability. As well as information on the company’s economic performance, this includes information on how it is handling social, ethical and environmental concerns. It is a trend driven by customers, suppliers, employees and banks in recognition that these are just as important elements of any business.
Often, the level of information provided by companies is criticised for being inadequate. But my recent research into Swedish companies shows that the quality of information does appear to be increasing. It also shows what areas are in need of further improvements to make this practice worthwhile.
For years Swedish companies have been regarded as among the best in corporate communication – in general and in sustainability reporting in particular. Their excellence in disclosing information on their performance on the sustainability arena is confirmed in both academic research and comprehensive reports like major accountancy firm KPMG’s on global sustainability trends.
Until recently, whether or not a company reported on its sustainability was voluntary in most countries. But from the financial year 2017, a new EU directive requires every so-called “public interest entity” to report on the social and environmental impact of its business model.
Having recently studied sustainability reports from the 30 largest listed Swedish companies over the period 2008-2015, there’s a lot to be learned from them. It includes household names like retailer H&M, telecomms company Ericsson and car maker Volvo. It makes clear that big and profitable companies can be more accountable when it comes to sustainability reporting.
None of these companies is perfect. My research shows that they too are learning all the time when it comes to their sustainability reporting. Over the seven-year period that I looked at, the information goes from being quite brief and general to more elaborate and detailed.
This is an increasingly important part of demonstrating business ethics. In these sustainability reports companies communicate how they take responsibility for their impact on society. This is done by disclosing their efforts to integrate social, environmental and ethical concerns into their business practices.
Most importantly, my research shows that Sweden’s biggest companies have started to integrate sustainability into their business models. Volvo’s business model is built on three pillars: economic, social and environmental. This holds true for large companies that you may not have heard of too. Take Assa Abloy – it’s the world’s largest lock manufacturer and has a market cap of US$22.6 billion. In its business model, sustainability is accentuated in all processes from innovation and product development to logistics and sales.
This was originally published by The Conversation.