Why measuring ethics in a company and how to do it

“When people know that their behaviour is being observed, measured, recorded, and published, they change that behaviour to meet the expectations, whether those expectations are expressed or implied.” (1)

In The triple bottom line Savitz gives one of the most effective and synthetic description on the reasons for measuring and reporting progresses on TBL (Triple Bottom Line) related matters.

(For more information on the Triple Bottom Line you can read this article)

Because reporting is the only way to measure the current situation, the progresses, improvements and possibilities of development of companies, it compels them to engage in sustainable practices.

However, in some cases the pressure to report has pushed managers to create sustainability programs with the only purpose of presenting a nice image of the company, with the risk of incurring in greenwashing.

As remarked in my previous articles, during the development of a non-financial report it is left to each company to decide which category of environmental or social impact has to be included and how to describe it: even if a certain degree of flexibility is allowed, it is necessary to define the concerned activities in a clear and consistent way, and to look for the right balance between different aspects of a performance.

Transparency is key and in case the reporting is well done, there are many benefits that the activity can profit from, like for example:

  • leading to an improvement in management,
  • enhance value creation,
  • recognise trends, problems and opportunities,
  • set the premises for the development of long-term projects.

Moreover, reporting represents a chance to better organise information and, therefore, better spot out risks and opportunities linked to the activity.

Last but not least, engaging in a transparent non-financial reporting brings a Return of Investment in terms of image and credibility, which also helps to face any possible legal and economic issue, and any situation of uncertainty leading to an external assessment or judgement.

It is extremely important to report also mistakes and failures, indicating the corrective actions necessary to improve the process: this protects the company from external attacks by becoming the first to provide the information and therefore leading the conversation on the subject.

It is important to reach an agreement inside the company management about the situation and the information to be provided to the public; all employees should be updated and they should be given the possibility to discuss the issue and make propositions for improvement, not only because teamwork in these cases is of vital importance but also because employees, as stakeholders, have an active role in the communication of the company’s identity and, consequently, of its image in front of the public.

Any expressed commitment to change and/or improvement must be followed through.

Failing to keep a promise means deceiving the trust of the stakeholders and letting them down.

If a company engages in a TBL-related plan, it should be prepared and ready to make all necessary efforts to reach the target.

In terms of non-financial reporting methods, among the variety of guidelines and certifications available we can mention the following ones (2):

The GRI (Global Reporting Initiative) standard for non-financial reporting ;

The Social Accountability International SA8000 social certification standard ;

The International Organisation for Standardisation ISO14000 family of standards for environmental management ;

The EU Eco-Management Audit Scheme (EMAS) ;

The International Organisation for Standardisation ISO50001 energy management standard ;

– The International Organisation for Standardisation ISO45001 standard for occupational health and safety (that replaced the British Standard Institution BS OHSAS 18001 – Occupational Health and Safety Management);

The International Organisation for Standardisation ISO26000 guidelines on social responsibility.

For the purposes of this article it is not necessary to explore the details of these standards; it is enough to know that they provide a set of tools to guide the company through the writing of non-financial reports, the achievement of certifications and continuous improvement of TBL related business areas.

The GRI standard may stand out among the others, as it currently represents the most exhaustive instrument for non-financial reporting and it provides an online archive of the reports published by companies using the GRI worldwide.

Although at first sight it might result complicated to use, it gives a good degree of flexibility and allows companies to gradually increase the amount of information provided.

Therefore, the GRI has good chances to become a centralised platform for the monitoring of non-financial metrics, a useful tool for the study of the effectiveness of measures employed in different businesses and a basis for the improvement of companies TBL policies worldwide.

For more information on this topic you can contact me at the email address : info@theslowcorner.com

(1) SAVITZ Andrew W., WEBER Karl, The Triple Bottom Line, Jossey-Bass, John Wiley & Sons Inc., 2014

(2) “Progetto di Informazione e sensibilizzazione degli stakeholders sulle linee guide OCSE e sulla responsabilità sociale d’impresa”, Italian Ministry of Economical Development, Italian Center of National Contact on CSR, Unioncamere, Guglielmo Tagliacarne Institute, in collaboration with Indica (Italy).

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