08 / PERSPECTIVE

SUSTAINABILITY
REPORTING
MIRROR, MICROSCOPE, SPRINGBOARD
Sustainability reporting by the corporate sector is today at a
potential inflection point. While on one hand, it is not as pervasive
and widely accepted as financial reporting, on the other hand, it has
evolved to occupy a distinct space of its own in the last decade. Done
right and for the right reasons, sustainability reporting can act like
a mirror of self-reflective, continuous improvement; a microscope
allowing itself to be held up to external scrutiny; and a springboard
for strategic actions and continuous improvements.
BY P.S. NARAYAN
VICE PRESIDENT, ECOEYE

Corporate social reporting traces its early roots to the 1970s,

when sporadic initiatives such as the social reports produced
in Germany, tried to examine a companys long-term valuecreating potential beyond its financial performance. However,
the current reporting movement emerged in the United States
in the late 1980s, as the SARA (Superfund Amendments and
Reauthorization Act) legislation led to availability of more
emissions data in the public domain.

Non-financial reporting grew significantly from the end of

the 1990s, concomitant with an increase in interest in CSR
and sustainability. In 2011, nearly 95 percent of Fortune 250
companies published a sustainability reportmore than double
the number a decade ago (45 percent). More than two-thirds
of the Fortune Global 500 companies now publish some form
of sustainability or corporate social responsibility report.

Sustainability as a concept received worldwide recognition

following a report by the World Commission on Environment
and Development, known as the Brundtland Commission, in
1987. The United Nations-appointed commission coined the
term sustainable development, which over the next few years
spurred corporate non-financial reports that integrated diverse
sustainability issues. In the early 1990s, companies started
voluntarily disclosing non-financial information, such as their
environmental footprint, to supplement their CSR initiatives.
The 1992 UN Conference on Environment and Development
in Rio de Janeiro, called the Earth Summit, further served to
focus the worlds attention on sustainability. Non-financial
reports started to include wider issues, such as community, and
transform themselves into sustainability reports.

Why Sustainability Reporting

This trend was accentuated when John Elkington created

the triple bottom line (TBL) framework to measure corporate
performance during the mid-1990s. The TBL framework
went beyond the traditional measures of profits, return on
investment, and shareholder value to include environmental
and social dimensions..

Sustainability and reporting on it are two sides of the same

coinwhile sustainability is about recognizing and addressing
the needs of multiple stakeholders, not just the shareholder,
reporting is a medium and channel for engaging with these
stakeholders in a transparent, objective manner. Good
sustainability disclosures require a robust foundation of
rigorous measurement and objective assessment against goals
accompanied by balanced reporting. The very process of doing
this creates value for the organization by helping establish
baselines and by clarifying the vision, strategy, and goals that
the company should adopt and pursue.
While reporting has by and large been a voluntary initiative by
companies, a distinct trend of the recent past has been that of
investors and investment analysts seeking extensive disclosures
from companies on what is commonly known as the ESG triad,
i.e., Environmental, Social and Governance parameters. By
incorporating ESG information into their investment decision
models and rating frameworks, financial institutional investors

10 / PERSPECTIVE

(FIIs) are signaling that ESG is now an important part of

deciding on a companys long-term credentials and outlook.
Two examples will suffice to illustrate this trend:
1. The Dow Jones Sustainability Index (DJSI) comprising 340
global companies who make the cut on ESG performance
invests more than $6 billion annually in linked financial vehicles.
2. The Carbon Disclosure Project (CDP) representing 655 FIIs
with an aggregate of $78 trillion of invested funds, requires
companies to make extensive disclosures on their greenhouse
gas footprint and mitigation plans. In keeping with this trend,
market data providers such as Bloomberg and Thomson
Reuters now also provide corporate sustainability information.
Unlike financial reporting, sustainability reporting is yet to
become the norm. There are at least three reasons why this is
so: first, many companies are still at the early stages of forming
their sustainability program and hence reporting is not seen
as particularly important; second, even in companies which
have an established sustainability program, reporting is viewed
as difficult, requiring processes, systems and resources of a
considerable order; third, the absence of regulatory directives
makes sustainability reporting seem secondary in importance
in companies where sustainability is not seen as central to their
vision, strategy and reputation.
It is on the last point that we are likely to see a change; many
governments and stock exchanges have already outlined the
non-financial data that companies must report. For instance,
companies listed on the Johannesburg Stock Exchange in
South Africa must comply with the King Report on Corporate
Governance for South Africa (King III), which recommends that
companies should produce an integrated report rather than a
separate annual financial report and sustainability report.
Recently, a group of five stock exchangesNasdaq,
BM&FBOVESPA, the JSE, the Istanbul Stock Exchange (ISE),
and The Egyptian Exchange (EGX) -- voluntarily committed
to promote improved environmental, social and corporate
governance disclosure and performance for the 4,600
companies listed on them.

Elements of a Good Sustainability Report

A good sustainability report must be balanced, transparent
and inspiring as elaborated below
It must provide a balanced picture of the positives and
negatives of the companys performance on its sustainability
goals.
It must provide information in a transparent, comprehensive
manner without appearing to obfuscate the critical issues
being discussed.

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It must inspire the readera sustainability report that is

dry and clinical is difficult to read. The report should
communicate a sense of promise and what is possible by
going beyond the boundaries of the organization to
highlight narratives and stories from around the world that
illustrate inspiring work

THE VERY ACT OF SUSTAINABILITY REPORTING

CAN BE A CATALYST FOR CHANGES IN MANAGERIAL

PRACTICES ON ESG DIMENSIONS THAT ARE
INTEGRAL TO BUSINESS

THE GLOBAL REPORTING INITIATIVE

MATERIALITY

STAKEHOLDER INCLUSIVENESS

The concept of materiality in sustainability reporting is

concerned with a wider range of impacts and stakeholders, and
not limited only to those topics that have a financial impact on
the organization.

A sustainability report should clearly identify the organizations

stakeholders, entities and individuals that can be affected by the
organizations activities and products, and vice versa.

COMPLETENESS

Coverage of the material topics and indicators and definition of

the report boundary should be sufficient to enable stakeholders
to assess the reporting organizations performance in the
reporting period.

SUSTAINABILITY CONTEXT

The report should present the organizations performance in

the wider context of sustainability, or how it impacts economic,
environmental, and social conditions, developments, and trends
at the local, regional, or global level.

QUALITY PRINCIPLES OUTLINED BY GRI

Reporting Vs. Ratings

It is important at this point to distinguish between sustainability
reporting and ratingsboth require a significant quantum
of disclosures from the organization but differ in their
end objectives. While reporting is largely a voluntary, selfdriven exercise, disclosures against ratings are in the nature
of responses to questions on ESG performance by rating
agencies. The origin of sustainability ratings goes back more
than a decade to the recognition by FIIs that Environmental,
Social and Governmental risks posed to companies may
impact business performance, and even business continuity.
Therefore, it was a logical step for FIIs to include a companys
outlook, strategy and performance on ESG goals into their
investment decision framework. Development of frameworks
like the Equator principles for the banking sector accelerated
this trend. Another visible illustration of this trend is the growth
in the number of specialized stock exchange indices that are
based on ESG parameters.
Apart from the DJSI and the CDP mentioned earlier, other
examples of ratings include FTSE4Good, the oekom corporate
rating, the Bloomberg Renewable Energy Index, the Nasdaq
Global Sustainability 100 and the recently launched Carbonex
from the Bombay Stock Exchange. While the information
provided by companies to these firms is extensivesometimes
more than what is in the sustainability reportit is not in the
public domain and therefore unavailable to most stakeholders.
ESG ratings have very rapidly become a proxy for good
governance and the long-term durability of the company.
Reporting, on the other hand is addressed at stakeholders
in addition to the invest enabling them to understand the
linkages between sustainability and long-term economic value.
For instance, firms that generate profits by creating negative
impact on the environment will see unfavorable attention from

BALANCE

COMPARABILITY

TIMELINESS

CLARITY

The report should reflect positive and

negative aspects of the organizations
performance to enable a reasoned
assessment of overall performance.

Reporting should occur on a

regular schedule and information is
available in time for stakeholders to
make informed decisions.

Issues and information should be selected,

compiled, and reported consistently, in
order to enable stakeholders to analyze
changes in the organizations performance
over time, and compare to that of other
organizations.

Information should be made available

in a manner that is understandable and
accessible to stakeholders using the
report.

financial analysts and activist investors and will be penalized in

the capital markets.
The very act of sustainability reporting can be a catalyst for
changes in managerial practices on ESG dimensions that are
integral to business. For example, it can uncover hitherto
hidden business risks and opportunities e.g. the opportunity
costs of not investing in resource or energy efficiency or a
potential business continuity risk on account of looming water
stress. Further, when a company reports sustainability goals
and data, its much more likely to progress toward meeting
those goals.

Wipro and Sustainability Disclosures

Wipros approach to sustainability disclosures can be
summarized in the following operating principles:

Extensive breadth and selective depth: Disclose
extensively -more than what is asked for on a wide range

ACCURACY

The reported information should be

sufficiently accurate and detailed for
stakeholders to assess the organizations
performance.

RELIABILITY

Information and processes used in the

preparation of a report should be
gathered, recorded, compiled, analyzed,
and disclosed in a way that could be
subject to examination and that
establishes the quality and materiality of
the information.

of issues; within these, select a few critical, strategic issues

for in-depth analysis and articulation e.g. energy, climate
change,water, people diversity, etc.
Beyond frameworks: A sustainability report can be dry and
boring, and unless it is designed to inspire interest, readers
tend to skim and skip over most sections. At Wipro, we have
tried to make our reports interesting by moving beyond
what frameworks like GRI ask for and by including narratives,
stories and essays that are drawn from all around the world.
(See box item above)
Not one but many: By design, we participate in several
disclosure programsthe GRI based Sustainability Report,
the DJSI Index, CDP, Oekom Corporate Rating, Greenpeace
ratings, the Ethisphere rating, etc. This calls for the
commitment of significant time and management resources.
We do all this because of the value that we see in disclosures
as a catalyst and as a mirror, microscope and springboard.

The Act-Disclose-Act feedback cycle: Many of the
disclosure frameworks have evolved through a rigorous,
multi-stakeholder process of incorporating good practices

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Since our first sustainability report for 2007-08, Wipro

has attempted to bring in a creative approach to the
design and content of each report as illustrated below.

FIRST REPORT (2007-08)

The theme of symbiosis in nature and how we can
draw from it in the context of corporate sustainability.
Vivid images and photographs of marine biodiversity
were used to illustrate this.

SECOND REPORT (2008-09)

Tapping the passion of Wipro employees, we featured
narratives of 50 outstanding examples from around
the world of sustainability in action ranging from
the case study of the rapid bus transit system in the
Brazilian city of Curitiba to the efforts of Mohammad
Dilawar in India to save the sparrow, or the long
tradition of the Bishnoi community in Rajasthan, India,
of revering all life forms and conserving trees.

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Ranked # 1 in the Greenpeace global ranking of Green

Electronics

BREADTH OF COLLABORATION
FUNCTION

Why is sustainability reporting so difficult?

The three primary challenges around sustainability disclosures
are:
I. DEPTH OF EFFORT: Major frameworks like the GRI and DJSI
call for significant efforts and time. A good, comprehensively
written GRI report will take the better part of six months;
DJSI and CDP disclosures require between 2 and 3 months of
focused attention.
II. BREADTH OF COLLABORATION: Sustainability is inherently
multi-disciplinary and multi-functional; therefore, its associated
disclosures call for the coming together and collaboration of
multiple internal functions. E.g. human resources, operations,
finance, legal, corporate sustainability. The table alongside
shows the collaborative breadth needed for any ESG disclosure
or sustainability report.

AREAS COVERED

HUMAN
RESOURCES

LABOUR AND HUMAN RIGHTS, DIVERSITY, FREEDOM OF ASSOCIATION, EMPLOYEE ENGAGEMENT

FACILITIES
OPERATIONS

ENERGY AND WATER FOOTPRINT, CLIMATE CHANGE, WASTE MANAGEMENT, BIODIVERSITY

FINANCE

INVESTOR RELATIONS, BOARD GOVERNANCE, PAYMENTS TO STAKEHOLDERS, SUSTAINABLE

INVESTMENTS

LEGAL

CODES OF BUSINESS CONDUCT, POLITICAL LOBBYING, ANTI-CORRUPTION, ANTI-FRAUD AND

BRIBERY, RISK MANAGEMENT, OMBUDSPROCESS

PRODUCT
DEVELOPMENT

LIFE-CYCLE DESIGN OF PRODUCTS, END OF LIFE WASTE MANAGEMENT, REDUCTION IN

OPERATIONAL FOOTPRINT, SUPPLIER RESPONSIBILITY

CORPORATE
SUSTAINABILITY

SUSTAINABILITY STRATEGY, COMMUNITY AND SOCIAL INITIATIVES, REPORT EDITING AND

COMPILATION

SUPPLY CHAIN

SUPPLY CHAIN RESPONSIBILITY, GREEN PROCUREMENT POLICY, SUPPLIER CODE OF CONDUCT

MARKETING
AND CORPORATE
COMMUNICATION

ETHICAL MARKETING AND ADVERTISING, REPORT DESIGN AND COMMUNICATION STRATEGY.

THIRD REPORT (2009-10)

This reports distinguishing feature was the creative
use of cartoon and graphic motifs to communicate the
contents in a compelling and interesting manner.

FOURTH REPORT (2010-11)

This report featured invited articles by experts on a
multitude of topics. E.g. Solar energy in India, urban
biodiversity, CSR value positioning, etc

from multiple sectors and geographies. These can serve as

triggers for starting new programs or recalibrating existing
ones. Thus, we view disclosures not as ends in themselves
but as the means of providing continuous feedback into our
action programs.
As is clear from these examples, we see a sustainability report
as more than the organizations mirrorwe see it as a medium
for educating and for stimulating fresh thinking and debate
among the public on the major issues that face humanity.
Below is a partial list of recognitions that are a reflection of our
passion for and attention to sustainability disclosures:
Member of DJSI for three years in succession and Sector
Leader in Computer & Internet services sector
Listed in Worlds Most Ethical Companies 2012 by Ethisphere
Part of Global Carbon Disclosure Leadership Index (CDLI)
Ranked #2 In the Newsweeks global ranking of 500 Green
companies

III. STRONG ANCHORING LEADERSHIP: A corporatelevel sustainability group is essential that will provide strong
leadership and anchor the whole disclosures program. This
involves and requires adequate advance planning, constant
engagement with the framework owners, the development of
sufficient domain knowledge in sustainability and the ability to
influence internal stakeholders to be committed participants in
the whole process.
Having said this, it is important to emphasize that starting off
the whole thing is the most difficult stage . Once a start has
been made, it is relatively easy to build upon each cycle of
effort and to create a strong institutional foundation where the
entire cycle from planning to disclosures becomes smoother.

Sustainability Reporting in India

Sustainability disclosures require, above all, a spirit of courage
and transparency on the part of companies. From this
perspective, India Inc. has a long way to go -- the number of
assured sustainability reports from Indias top 100 listed firms is
a low 21 and only 57 out of the top 200 companies responded
to the CDPs annual questionnaire in 2011. Brazil, on the other
hand, has quickly established itself as a leader in sustainability
reporting. The situation among small and medium enterprises
is even more abysmal.
Is the poor level of sustainability reporting reflective of the weak
traction with sustainability itself on the part of companies? Or

is it just that many organizations that have strong sustainability

programs have not bothered to invest time and attention in
reporting? I would bet on the former, for in companies that
have a strong sustainability culture, transparency and reporting
are a natural part of the DNA of the organization.
An interesting recent development is that of the Securities and
Exchange Board of India mandating that the top 100 listed
companies by market capitalization must submit business
responsibility reports as a part of their annual reports. The
proposed amendments to the Companies Billlikely to be
passed in the current winter session of the Indian Parliament
lists a similar requirement but with a wider catchment of
all listed companies with revenues greater than Rs 500 crore.
These amendments and the controversial proposal to mandate
a minimum spend of 2 percent of average net profit on CSR
raise a crucial question: Can sustainability be enforced
through legislative mandates? My personal view is that the
essence and gestalt of sustainability is something that one
has to feel deeply and be convinced about, without which
a company would quickly fall into the compliance trap, i.e.,
ticking checkboxes and gaming the system instead of doing
real, impactful work.

Finally
If nothing else, the 21st century will be viewed in history as one
where, aided by the Internet and its various manifestations,
transparency became the norm and an essential expectation
of those who wielded power over othersgovernment and
business in particular. It is also likely to be seen as an era where
sustainability concerns became mainstream and a matter of
survival for humanity. Organizations and institutions that do
not recognize this are likely to run into the eye of the storm
sooner rather than later.
We therefore see multiple forces in play that will result in a
rising groundswell of thinking and actions around sustainability
and its associated disclosuresreputational and competitive
pressures, legislative compulsions, and critical issues around
business continuity. But what will mark out a few companies
from the rest is the ability to see beyond the short term and
the narrow, and to inform their actions on sustainability with a
vision that is rooted in the conviction that this is the right thing
to do and that there are really no choices.