Keneth P. Pucker, former COO of Timberland, outlines the challenges of sustainability reporting and sustainable investment. The author mentions non-standardized measurements, inadequate 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 reporting are actually distractions from the much-needed work of systems change.”
The Corporate Sustainability Report starts from a laudable objective: measuring and communicating a company’s social and environmental footprint would trigger the following positive chain reaction:
- The social and environmental performance of individual companies would improve (because what gets measured gets managed).
- A link would appear between companies with better sustainability results and better stock market returns.
- 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 precise and more widely accepted.
- Over time, this virtuous cycle would give rise to a more sustainable form of capitalism.
Unfortunately, that hasn’t happened, and he doesn’t believe it can without deeper systemic changes.
This is the argument he puts forward in an article just published in the Harvard Business Review.
