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Rising to Meet Stakeholder Expectations

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In a 24/7 world of communications, social media and transparency, we live in a stakeholder society. These stakeholders have high expectations for business and government, yet in Edelman’s 2012 Trust Barometer we found a real deficit in the trust people have in these same institutions.

Similar to our 2012 Trust Barometer results, the Ceres’ report, The Road to 2020: Corporate Progress on the Ceres Roadmap for Sustainability, indicates companies are under-performing in achieving their sustainability goals. Of the 600 U.S. companies surveyed, only 26 percent of them are integrating sustainability into their governance and management systems.

To meet stakeholder expectations and address this corporate leadership gap, people increasingly are looking to government for consumer protection and regulation to ensure responsible corporate behavior. Here are some examples: In its 12th Five Year Plan (FYP), China is requiring reduction of carbon emissions per unit of GDP of 17 percent by 2015; the State of California has implemented a Mandatory Commercial Recycling Program; and stock exchanges including NASDAQ, Bombay, London, Brazil and South Africa now require sustainability reporting for companies wanting to list.

To make progress on building a sustainable world for future generations, all companies need to embrace sustainable business strategies and set meaningful goals to guide their performance. However, we must understand that there is no “one-size-fits-all” approach to sustainable business strategy. Strategies and performance indicators need to be tailored to specific industries to truly make an impact.

I recently joined the Advisory Council of the Sustainability Accounting Standards Board (SASB). This non-profit organization’s mission is to develop sustainability accounting standards across 10 industry sectors and 89 industries by prioritizing environmental, social and governance issues within each industry. SASB is producing an evidence-based Materiality Map and will develop the standards with input from industry working groups (IWGs) populated by industry experts. As an example, the first sector, Health Care, was launched on November 1, 2012, and has 89 registered participants in the IWGs reviewing the Health Care standards. In 2013, SASB will continue to complete one sector per quarter: Financials, Tech & Communications, Non-renewables and Transportation, respectively.

In the two years I have led Edelman’s global sustainability and corporate responsibility function, the ongoing challenge has been to identify key performance indicators (KPIs) specific to us as a professional services firm but broad enough to be responsive to stakeholder expectations in reporting our environmental, social and governance information. SASB’s approach to prioritize KPI development across industry sectors makes a lot of sense and, once completed, will fill an important gap for stakeholders and investors to value the stability and long-term growth prospects of a company.

I am enthusiastic about our participation with SASB’s efforts and encourage you to participate in a SASB industry working group to evolve KPIs for your industry before the regulators develop them for you.

John Edelman is managing director of global engagement and corporate responsibility.

The photo featured in this post was taken by epSos.de

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