Keneth P. Pucker, former COO of Timberland, outlines the problems with sustainability reporting and sustainable investment. The author mentions non-standardised measurements, insufficient audits, unreliable ESG ratings, etc. But real progress, he says, requires not only better measurement and reporting practices, but also changes in regulations, investment incentives and mindsets.
"The pursuit of measurement efficiency and the endless fine-tuning of non-financial reports are in fact distractions from the necessary work of changing systems. »
The Corporate Sustainability Report starts from a laudable objective: measuring and communicating the social and environmental footprint of a company would trigger the following positive chain reaction:
- The social and environmental performance of individual companies would improve (because what is measured is managed).
- A link between companies with better sustainability performance and better stock market returns would appear.
- Investors and consumers would reward companies with strong sustainability performance and put pressure on laggards.
- The means of measuring social and environmental impact would become more rigorous, more accurate and more widely accepted.
- Over time, this virtuous cycle would lead to a more sustainable form of capitalism.
Unfortunately, this has not happened and he does not believe it can happen without deeper systemic changes.
This is the argument he makes in an article just published in the Harvard Business Review.
