Sustainability reporting

The Quality of Sustainability Reporting in the Netherlands – MAB (Journal of Accountancy and Business Administration), Vol. 82, Nr. 12, December 2008, Nancy Kamp-Roelands and Dick de Waard.

The article describes the research results on the quality of the sustainability reports of the Dutch listed companies that are included in the AEX index and of those that are ranked in the two top categories of the sustainability transparancy benchmark of the Dutch ministry of Economic Affairs (there is an overlap between these two categories). Of the 36 companies in total 27 publish a sustainability report, of which 17 from the Dutch AEX and 10 included in the Transparency benchmark only. These reports are regarded as the best available in the Netherlands.

The research results show that in relation to the quality characteristic of relevance most of the sustainability reports address stakeholderdialogue, but fail to address the impact on the content of the sustainability report or to address the actions as a result of stakeholderdialogue. In relation to the quality characteristic understandability half of the sustainability reports lack a logical structure of the sustainabiiliy report (policy, targets, management, performance) and lack focus. It is therefore difficult to identify the key message within the sustainability report.

Tables and graphics are understandable and include an explanation of developments in time as well as a link to the policy and targets but often lack an explanation of definitions and measurementmethods. This also impacts the quality characteristic of comparability. Almost half of the sustainability reports fail to properly allow for comparison because goals have not been translated into measurable targets, goals have been adapted compared to previous years, definitions and measurements are not clear and performance data have been changed compared to the previous year without proper restatement.

Less than half of the companies refer to a wider benchmark than there own targets such as an industry benchmark. Almost all companies use the GRI guidelines as the basis for their reporting. In relation to the quality characteristic reliability it appears that most do report on relevant (negative) newsfindings on their company that are already available on the internet, with the other companies stil failing to provide a balanced view on their performance. More than half of the companies have chosen for external assurance to assess the reliability of the sustainability report. The article provides in addition to the research findings, recommendations for improving sustainability reports.

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