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Sustainability: it is time to be transparent

The United Nations 17 Sustainable Development Goals (SDG) Agenda has generated new ethical mandates to intensify companies’ contributions to the struggle against the triad of poverty/inequality, climate change and environmental deterioration of the planet. Lucas Ignacio Utrera, sustainability director at SMS Latinoamérica, writes.

The SDG 16 explicitly mentions in its sixth target: “Develop effective, accountable and transparent institutions at all levels,” while the sixth goal of SDG 12 aims to “encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle”.

Those are ambitious expectations, and they reflect growing interest from companies – either medium-sized or large – to define their sustainability strategies, having as a reference the 2030 SDGs Agenda.

It means leaving specific and low-impact actions to move forward to a professional management that minimises risks and negative consequences of business, while promoting the positive effects to the benefit of communities, the planet and the company itself. It requires the tough task of moving sustainability management from the periphery towards the core of the business. It also needs a board of directors more consolidated in the decision-taking, with social and environmental criteria combining short and long term.

Information is Key

The process will only be completed if it contains the definition of value metrics for business. That is another huge challenge of sustainable management: how to measure intangible value. How do we demonstrate the true impacts of an organisation in economic, productive, social, human, environmental and innovation terms? These are the six famous capitals to which the Integrated Reports Framework refers. 

This is an incipient reporting trend in Latin America that we are enthusiastically backing with the role of ambassador of the International Integrated Reporting Committee (IIRC) in the region, in the shape of Pablo San Martín, president of SMS Latinoamérica.

It is necessary to give more information to investors for their future decision-making, but also to measure and communicate to all stakeholders the economic, social and environmental performance of the organisation. In this sense, we celebrate sustainability reports based on the Global Reporting Initiative (GRI) methodology, connected to ISO 26000 and the UN Global Compact Principles. These kinds of reports are increasingly being adopted by companies all over the region.

Latin America’s recent cases of corporate corruption and significant negative environmental impacts have raised stakeholders’ pressure and encouraged companies to work towards more accountability and transparency. Quality of information becomes an essential issue for a sustainability report’s credibility. It means a company commitment to inform about its material aspects (GRI’s materiality), even the most controversial aspects of the management.

In this scenario of tensions and complexities, companies generate value and wealth, but also questions and mistakes. The challenge is how to measure in order to reflect those impacts, in a balanced way, in the sustainability report.

Dynamism Required

A greater dynamism in terms of the communication of information beyond investors is also required. A big dilemma for sustainability managers is to understand who reads traditional sustainability reports. Companies still are less proactive in communicating to different stakeholders with a planned strategy and adequate channels in order to get valuable feedback to consolidate materiality analysis for every reporting cycle.

The SDGs Agenda contains numerous mandates agreed for the entirety of humanity that question directly the business world. The challenge is how those mandates turn into transforming actions, leaving behind ‘business as usual’ practices. To get effective, responsible and transparent companies, we must go to decisions about clean production, responsible consumption, waste management, female empowerment, decent working conditions and the care of employees and communities, to mention only a few of the novel expectations prescribed by the SDGs. 

Precise measurements and accountability to investors and stakeholders are essential aspects of this business ethic, based on care and commitment to welfare and harmony in each corner of the earth, highlighting as the main criterion the essential value of every human being and the preservation of our one and only planet. 

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