Cory Searcy
Laurence Roca
Assistant Professor, Ryerson University MASc. Candidate, Ryerson University
Associate, IISD

Background

Corporate SD Indicators in Canada

Study Overview

Results

Summary
How are corporate
sustainability
indicators used in
practice?

Many corporations have made commitments to apply the
principles of sustainable development to their operations
 The hardest part about SD is actually applying it in practice

One of the keys to understanding corporate SD is
performance measurement
 Fundamental to this task is the creation of SD indicators

Sustainable Development Indicators
 Signs, symptoms, trends, or warnings that identify relationships based
on defined parameters
 Show the presence, absence, or threats to SD
 Roles: measure progress, communicate, educate, understand
interdependencies, and inform decisions

Numerous Canadian corporations have included SD
indicators in their publicly available SD reports
 A review of the GRI website and CorporateRegister.com showed that
95 Canadian corporations published a SD report or equivalent in 2008
 Many of these reports included an indicator “scorecard” near the
beginning of the report

A content analysis of the 2008 Canadian reports highlighted:
 A total of 227 indicators were reported (157 were used once, 35 were
used twice, 13 were used three times)
 The most reported indicators were:
Total employees
30
GHG emissions
14
Fundings, donations, sponsorship and
community investments
25
Lost time injury frequency
11
All injury frequency
20
Total production
11
60
50
40
30
20
10
0

The purpose of this study was to explore the use of SD
indicators in corporate strategic management. Focus was
particularly devoted to three areas:
 Board-level decision-making
 Corporate strategic management
 Supply chain management

The study consisted of three key phases:
 A survey of relevant literature
 A content analysis of 17 corporate SD reports
 Interviews with 15 Canadian experts

The literature review focused on both peer-reviewed
publications and internet reports published since 1987

Key areas of focus in Board-Level Decision-Making:
 SD indicators, corporate governance, and performance measurement

Key areas of focus in Corporate Strategic Management:
 Corporate SD (and related) indicators, sector-specific SD indicators,
Balanced Scorecard, composite indices, and integration

Key areas of focus in Supply Chain Management (SCM):
 SD indicators, green procurement, ethical sourcing, life cycle
assessment, and sustainable SCM
There is relatively little literature that specifically focuses on the use of
SD indicators in the three areas of interest.

The review focused on the Canadian companies listed on the
Dow Jones Sustainability Index (North America)
 19 of the 118 companies listed were Canadian

Industries represented in the sample:





Financials: 8 companies
Oil and Gas: 5 companies
Telecommunications: 2 companies
Basic Materials, Industrials, Utilities, and Technology: 1 company each
All but two of the companies provided a SD (or related)
report on their website
 The most recent SD report was reviewed

The review in this area focused on four key questions:
1.
Chairperson of the Board Statement: Did the report contain a formal,
signed statement from the Chairperson of the Board of Directors?
2.
Governance Structure: Did the report provide a description of the
role of the Board in the governance of the corporation or reference
to such a description available on the corporate website?
3.
Board Committees: Did the report identify specific Board
Committees responsible for environmental and social issues?
4.
Use of Sustainable Development Indicators: Did the report specifically
describe how indicators are used at the Board level?

Chairperson of the Board Statement:
 Only one report contained a formal statement from the Board chair
 Two other reports contained a brief message or quote from the Board

Governance Structure:
 All but one report contained details on the governance structure

Board Committees:
 59% of the reports contained some detail on how SD issues were
addressed at the Board committee level
 Several corporations created a distinct committee to address SD (or
related) issues, while others incorporated SD in existing committees

Use of SD Indicators:
 None of the reports specifically described how indicators were used,
but there were limited examples on how SD information was shared
with the Board

The review in this area focused on five key questions:
1.
Top Management Statement: Did the report contain a formal, signed
statement from the Chief Executive Officer (or equivalent)?
2.
Measurements of Sustainable Development Performance: Did the
report contain sustainable development indicators? Were economic,
environmental, and social issues addressed by the indicators?
3.
Clear Targets: Did the report contain explicit targets for the SD
indicators that were highlighted in tables or figures?
4.
Forms of Measurement: Did the report contain any reference to (1)
the Global Reporting Initiative, (2) the Global Compact, (3) the
Balanced Scorecard, and/or (4) composite measures?
5.
Use of Sustainable Development Indicators: Did the report specifically
describe how sustainable development indicators are used in
corporate strategic management?

Top Management Statement:
 All of the reports contained a statement from top management

Measurement of SD Performance:
 All of the reports contained some measures relevant to SD performance
 Most reports addressed all three pillars of SD, but the number and types
of measures varied widely

Clear Targets:
 Many of the reports acknowledged the importance of targets in the text
 35% of the reports clearly reported on progress towards targets for
clearly identified performance indicators

Forms of Measurement:
 82% of corporations reported on at least some of the GRI indicators
 29% reported a commitment to the Global Compact
 18% referenced the Balanced Scorecard
 35% reported on some form of aggregated measure, though in no
cases was a comprehensive composite indicator reported on

Use of SD Indicators:
 Limited details on the use of indicators were provided in 4 reports
 There were also numerous statements focused on integrating SD
considerations into the decision-making process

The review in this area focused on three key questions:
1.
Supply Chain Management Strategy: Did the report contain a
description of, or reference to, the corporation’s supply chain
management strategy?
2.
Supply Chain Management Performance Measurement: Did the report
contain indicators on the corporation’s management of its supply
chain?
3.
Use of Sustainable Development Indicators: Did the report specifically
describe how sustainable development indicators are used in supply
chain management?

Supply Chain Management Strategy:
 82% of reports provided some details
 The reports generally focused on the incorporation of SD criteria into
the supplier selection process, supplier compliance with corporate
codes of conduct, and descriptions of corporate procurement policies

Supply Chain Management Performance Measurement:
 88% had some form of measurement relevant to the supply chain

Use of SD Indicators:
 Only one corporation provided explicit insight into how SD indicators
are used in its supply chain

The interviews focused on Canadian experts in corporate SD

15 experts were been consulted:
 6 corporate experts (current or recently retired directors & managers)
 2 professors
 2 auditors of corporate SD reports
 5 other consultants

The interviews were conducted over the telephone, with
calls ranging from 30 – 90 minutes
 To provide some structure, several standard questions were
developed
1.
In your experience, what is the primary motivation for companies
undertaking SD initiatives?
2.
To what extent do you see PM and reporting as a key lever in both
improving corporate performance and meeting societal outcomes?
3.
In your experience, how are SD indicators being used in corporate
strategic management? Can you provide any examples?
4.
In your experience, how are SD indicators being used in supply chain
management? Can you provide any examples?
5.
Are you aware of any corporate Boards that use SD indicators to inform
their decisions? Can you provide examples?
6.
How could the use of indicators in Board-level decision-making,
corporate strategic management, and SCM be improved?
7.
What areas do you see for future work in SD measurement and
assessment? What key challenges do you anticipate in these areas?

A wide variety of motivations were cited by the experts

Some of the key motivations cited included:
 Corporate reputation
 Brand value
 Risk management
 Cost savings
 Recruitment and retention of employees
 Competitive pressures

Many experts noted the motivation can change over time
The expert answers generally align with what has been reported in the
peer-reviewed literature

The majority of the experts consulted noted that
performance measurement (PM) is a key lever in improving
corporate performance and meeting societal outcomes
 PM is at the heart of getting corporations to change
 PM is a key to focusing the attention of senior management
 PM plays a key role in corporate accountability

Several experts cautioned that PM alone is not enough
 PM must be integrated into a broader information management
system that encompasses data management and reporting
 There can be misplaced emphasis on PM

The views expressed by the experts were mixed
 Most felt that Boards do consider SD information, particularly from a
risk management perspective

There were different views on how the Board considers SD
information
 Formation of Board committees
 Internal quarterly reporting processes
 Importance of indicators will vary by sector: e.g. GHG emissions

Although the Board may have a great deal of interest in SD
issues, this is not necessarily being captured by indicators
 There were few concrete examples on how Boards consider SD
indicators beyond Health and Safety indicators and GHG emissions

The experts felt that senior management in most large
corporations have access to at least some SD indicators
 This is generally reflected in top management approval of SD reports,
integration of SD issues with the Balanced Scorecard, and other
initiatives

There were few concrete examples on how SD indicators are
used in practice
 In one corporation, the CFO received SD indicators (along with more
traditional financial indicators) on a regular basis
 In another corporation, the indicators are regularly reviewed and
discussed in directors meetings

In general, the experts expressed that there is less emphasis
on quantitative performance measures in this area
 There are some exceptions, such as such as for safety indicators when
hiring contractors

The experts noted that SD issues are on the radar of SCM,
but are not generally driven by indicators
 Typical areas of corporate focus include codes of conduct, green
procurement policies, or requiring suppliers to achieve recognized
certification (such as ISO 14001)


Many suggestions for future work were provided by the
participating experts
Some suggestions focused on SD indicators:





Improve data management and control capabilities
Study the processes and contexts in which decisions are made
Focus on indicators that are useful in management decision-making
Focus on linking indicators to clear targets, including broader public
policy goals
Some suggestions focused on SD reports:


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
Develop and apply standards for independent verification of reports
Renew study on what information and indicators should go in reports
Study how the information in reports is used in practice
Enhance the GRI sector supplements
Increase the visibility of SD info (e.g. carbon facts similar to dietary
facts)

Work on corporate SD indicators is abundant and growing
rapidly

This ongoing pilot study focuses on the use of SD indicators
in three key areas:
1.
2.
3.

Board-level decision-making
Corporate strategic management
Supply chain management
Despite many commendable efforts, work remains