KPMG and SAM (Sustainable Asset Management) recently launched the 2012 Sustainability Yearbook which presents the companies around the globe that are sustainability leaders across 58 sectors.

These ‘SAM Sector Leaders’ are businesses that set the industry standard for environmental, social and governance practices.

Five UK companies have earned this accolade according to the Yearbook, which represents a collaboration between the global professional services firm and the sustainable investment boutique:

AMEC (Oil Equipment & Services), British American Tobacco (Tobacco), Pearson (Media), Sainsbury (Food & Drug Retailers) and United Utilities (Water) are named as ‘SAM Sector Leaders’ after being examined using SAM’s Corporate Sustainability Assessment.

In total 54 UK companies made it into the Yearbook and 10 received SAM Gold Classmedals for excellence in sustainability.

So, why benchmark organisations on their sustainability performance? Well, it helps the boards of organisations to capitalise on the commercial possibilities of sustainable business practices, through developing effective strategies and measuring outcomes appropriately.

In fact KPMG is so convinced of this that we have joined forces with SAM, the body behind the Dow Jones Sustainability Indexes. Our combined knowledge and expertise in sustainability trends, strategies and investor concerns offers organisations insights into both their current and potential sustainability performance.

Strategy

Benchmarking can aid an organisation to design sustainability strategies make good business sense and contribute to commercial outputs which drive performance, potentially improving:

  • the bottom line
  • corporate profile
  • future competitiveness
  • the opening of new revenue streams.
  • efficiency
  • employee and stakeholder engagement
  • corporate governance
  • response to the risks of climate change and other global trends
  • innovation management
  • talent attraction and the development of human capital

 

With such a list, it’s no surprise that successfully implemented sustainability strategies are acknowledged as a key indicator of a company’s foresight and management objectives. They are not only a sign of good governance but are increasingly seen as an investment deal-maker and breaker as sophisticated investors know that responsible, forward thinking companies create greater value.

Companies often introduce a multitude of projects and policies to reach their sustainability targets. Not all of them are effective. In contrast the Yearbook’s ‘Leaders’ integrate their sustainability strategy into their corporate strategy.

Successful sustainability practices are those which are based on a long-term vision as well as short-term goals. They must encompass every level of an organisation, while careful and gradual integration is key.

Now more than ever, failing to adopt impactful sustainability practices throughout an organisation means missing opportunities for improving commercial performance.

Measurement

External stakeholders recognise that tangible, results-focused and accountable sustainability strategies are evidence of sound management and an organisation with increased readiness to adapt to changing markets and respond to customer needs. A clear, measurable and measured sustainability strategy helps to provide confidence and reassurance that a company has a solid foundation for future success.

A good sustainability strategy should be tangible and easy to communicate. The link to social and environmental issues and global sustainability trends should be clearly defined, while the connection between a company’s sustainability commitment and its actions should be coherent and credible.

Developing criteria to evaluate a corporate sustainability strategy is a relatively new discipline. Analysts and investors seek credible data and are increasingly demanding independent and objective information from an authority they can trust. Greenwash no longer does the job when recognised frameworks, clear criteria and third party verification are being deployed by competitors.

Having achieved so much in the development of a strategic and professional sustainability strategy, it would be hugely remiss not to report on it in a meaningful and accurate way, and to fail to secure the credibility of external assurance.

After all, investors and other stakeholders need to know that they can rely on what they read in a sustainability report.

I’m convinced sustainability reports should be, and some day will be, considered as seriously as financial accounts. The finance director of any major company will be highly confident in the accuracy of their financial statements – and will pay a significant audit fee to ensure it receives the stamp of approval from a rigorous and respected auditor. This is the direction of travel for sustainability reporting.