Stuck on the starting blocks
A new report by Carbon Smart has been released that slams the state of carbon and sustainability assurance in the FTSE 350. The report, ‘Just off the starting blocks’, highlighted that only a small proportion of the FTSE 350 had sought assurance for the sustainability sections in their Corporate Social Responsibility (CSR) reports, and that the quality of this assurance did not meet the recognised standards in many cases.
As the possibility of mandatory carbon reporting looms in 2012, the level of sustainability assurance provided by FTSE 350 companies remains pitifully low. Just 79 of the 350 companies included some kind of assurance comment for their 2010 CSR reports, only 66 of which were independent assurance statements. Even where assurance is provided, many of the statements fail to meet minimum requirements that would render them accessible and useful to readers.
What does this all mean? If we are to have any hope of meeting the carbon reduction targets the UK has committed to, then sustainability must be taken seriously by big business, as the largest corporations have greater potential to achieve carbon savings with the measures they implement. Good intentions alone will not make this happen – carbon reduction measures must be implemented systematically and monitored to ensure improvements are made. Merely stating you are doing something does not necessarily mean you are. This is where carbon and sustainability assurance reports come in as they provide independent validation that a company is doing what it claims.
Too few companies recognise assurance as valuable – when contacted, 50% of the FTSE 350 companies who did not have sustainability assurance didn’t even know what it was, and maybe there is a good reason for this. The world of assurance remains confusing and difficult to navigate as the Carbon Smart Sustainability Assurance Report 2011 reveals.
The report demonstrates that many of the organisations engaged to assure the sustainability statements of the FTSE 350 did not meet the minimum disclosures required for assurance standards such as ISAE 3000, AA1000AS and ISO 14064-3. The independence of the assurance statements was also called into question in 24 cases, where the assurors had previously worked with the company they were providing reports for and failed to discuss measures for ensuring independence.
As Carbon Smart’s Senior Consultant, Karen Mecz states: “People don’t yet know how best to report on sustainability, let alone assure it.” She points to prominent companies who the public assumes take their corporate responsibility seriously, such as Morrisons Supermarkets or British Airways, who are near the top of the FTSE 350, but haven’t undertaken assurance of their sustainability reporting. Then there are those like WHSmith, Standard Life and Ladbrokes who have at least made the effort to provide assurance statements – but on closer inspection these reports fall short on quality by failing to adequately describe the scope of assurance, meet expectations of independence, or follow a recognised standard. This poor practice fails to provide stakeholders with the confidence in reporting that assurance aims to provide; in short, it fails to give good value for money.
There is however some good news, albeit small; the FTSE 350 have reported four more assurance reports between them this year than they did last year, and the average score for the assurance provided has gone up by 13%. A few well-known names who provided high-scoring assurance reports are Vodafone, BHP Billiton, and RBS. Associated British Foods climbed 47 places from last year’s position after overhauling their approach to assurance. So maybe there is hope yet and some lessons have been learnt since last year.
A great deal of work remains before the assurance market can meet the expectations of the stakeholders and provide truly transparent and independent validation of reporting. Reviewing the results of this year’s research, Carbon Smart’s Director Ben Murray says: “It is clear that sustainability assurance is stuck on the starting blocks”.