Best Practice & Ethics
Vodafone tops ACCA's sustainability reporting awards
Vodafone has won the
Association of Chartered Certified
Accountants’ (ACCA’s) 2006 award for best sustainability report, but the
excellent practice it represents seems to be among the exceptions rather than
the rule.
According to the ACCA judges, companies producing sustainability reports may
claim sustainable development is at the forefront of their business, but this is
often not consistent with their strategic statements in the annual report and
accounts. Vodafone’s report was praised as “engaging, readable and refreshing”
and for not shying away from the big issues.
The report focuses on the impacts of the company’s products – such as of
mobile phones on health – rather than operations, and gives an extensive account
of how Vodafone responds to material issues, using a mixture of internal
assessment and engagement with external stakeholders.
Traidcraft, which is a combination
of trading company and development charity, took this a step further by having
its stakeholders carry out their own assessment of its performance and
achievements. Traidcraft won an ACCA commendation for reporting on stakeholder
engagement, and its sustainability report contained a detailed account of the
company’s annual stakeholder event, including a script of all questions posed by
stakeholders and Traidcraft’s response.
As noted, despite the excellent performance of some companies, progress was
considered disappointing overall. Few businesses explain in detail the part
sustainable development will play in their long-term strategy and what barriers
they may face in implementing this. Indeed, the focus remains on operational
issues rather than an overview of where the business is going.
The judges argued that companies serious about placing sustainable
development at the centre of their business model need to demonstrate this in
both sustainability and financial reporting: for instance, by disclosing in
annual reports whether performance against sustainability targets affects
director remuneration. Furthermore, the judges argued that many companies are
inherently unsustainable in the way they currently do business, and this should
be openly acknowledged.
Guardian Newspapers, for instance, was
one of the few companies to explore the negative as well as positive elements of
its products, a significant factor in it winning an ACCA commendation for
reporting on product impact. The judges praised the media group for its
transparent “warts and all” perspective, including, perspectives on responsible
advertising, accurate coverage of global news items, and political influence.
Many of the reports were found to be too long and laborious to read, some
running to several hundred pages. It was therefore recommended that all reports
have a hard copy summary of no more than 12 pages, complemented by a more
detailed but user-friendly PDF or web-based document. However, despite these
concerns Roger Adams, ACCA executive technical director, hailed this year’s
findings as another step forward in highlighting the necessity of sustainability
to business.
Furthermore, the awards’ judges were optimistic about future reporting quality.
Firstly, because of the Companies Act’s narrative reporting requirement for
directors to have regard to social and environmental issues; and secondly, as a
result of the revised Global Reporting Initiative G3 guidelines, launched in
October 2006. The judges said these guidelines were generally seen as a great
improvement on those launched in 2002, with a greater focus on internal
management processes and the inclusion of guidance on how to select
sustainability report contents.
Links
Vodafone
Association of Chartered Certified
Accountants
Traidcraft
Guardian Newspapers
April, 2007 |
