The number of U.S.-based companies issuing sustainability reports may have reached a record high this year, but that doesn't mean the concept is catching fire.

Some CEOs and board members are shunning the reports because they say they drain valuable resources that could be deployed elsewhere.

The Oxford English Dictionary defines sustainable as “to be capable of enduring,” a characteristic that corporations  strive for,  but a 2013 survey of 1,712 corporate members of the United Nations Global Compact from 113 countries “shows that while increasing numbers of chief executives recognize the need to change, they are not following through with concrete actions.”  The report goes on to say that, “the Gap between what companies ‘say' and ‘do' is enormous.  For example, while nearly two-thirds of respondents claim to evaluate sustainability policies and strategies at the CEO level, only around a third trains managers to integrate these into their work.”

Indeed, 90 percent of company boards say they discuss and act on sustainability issues, yet only eight percent link remuneration packages to social, environmental, and governance performance.  Put another way, “sustainability is not penetrating the core corporate culture,” John Brock, chairman and CEO of Coca-Cola Enterprises, says.  “Innovation and technology drive sustainability; there's still a lack of engagement at the board level and a failure to evaluate progress,” he says.

“A significant challenge is the lack of a compelling business case: Just 26 percent of companies say they evaluate sustainability initiatives across their business, and 44 percent say sustainability initiatives are perceived to be expensive and result in insufficient expected returns,”  Brock says. Leading sustainability companies like Unilever, Kingfisher, and Marks & Spencer “have aligned profitability and sustainability throughout their organizations and value chains,” he adds.

What have we learned from the 2013 proxy season?  The Conference Board says that during the first half of the year, there were 24 shareholder proposals on sustainability reporting, representing nine percent of shareholder proposals on social and environmental issues.  There were 18 during the same period in 2012, and in 2009 there were only nine on sustainability reporting. 

Investors seem to be calling for companies to take sustainability reporting more seriously. This year, sustainability reporting proposals received the second highest support level among environmental and social issues, just behind board diversity proposals.  Of the 24 proposals, 15 were voted on and one passed by a 57.2 percent of the votes cast that was submitted to CF Industries by the board of pensions of the Presbyterian Church.

Boards, though, haven't been listing that well. Despite the fact that more than half of S&P 500 companies publish sustainability reports, Thomas Singer, an independent consultant for the Conference Board says “board responses to this year's proposals on sustainability reporting nearly unanimously recommended voting against the proposals based on a claim that sustainability reporting is too resource intensive.” Of the 15 voted proposals, boards criticized the Global Reporting Initiative compliance requirements as “too complex, lengthy and vague.”

Accenture joined with the UN Global Compact survey and found CEOs globally said, “We'd like to do more on sustainability, but investors just don't care.”  Accenture asked the following questions to see if they could uncover why CEOs feel this way.  They were:

(1)    “Do you think your share price currently includes any value directly related to sustainability?

(2)    How many times have you gone on record to the analyst community to explain to them how your sustainability program is generating value—and what did you tell them?

(3)    How big an impediment are financial markets in terms of decisions where there is a trade-off between sustainability and profit?

(4)    What changes could be made in the financial system to encourage companies and individuals to prioritize sustainability?

(5)    What do you need from your investors to allow you to progress further with transforming your business toward a truly sustainable one?”

The Accenture survey suggests “the pace of change may be slow since only 7 percent of CEOs in the communications industry, for example, regard investors as an important voice in guiding their approach to sustainability.”

Compliance officers and investor relations officers should look at the GRI Initiatives and their own company reporting process and suggest to the GRI folks what needs to be changed and improved.

Andrew Last, a public relations executive with over 20 years of experience reported in his blog that sustainability was big talking point at the Davos World Economic Forum last January.  He says corporations are “adopting the power of PR as an accelerator of change, which can have benefits across multiple audiences including company staff.  Going very public, very fast early on sustainability can have remarkable results.”

Paul Polman, chief executive of Unilever, won praise for using the media to push his progressive agenda along more quickly than might otherwise happen.  Last says Polman's message is that “the big issues the world is facing require new approaches, new business models, and new partnerships.  Responsible businesses must take a more active leadership role.”  His top three tips for getting it right are:

(1)    “Set and communicate a clear direction on sustainability, which liberates people throughout your organization to talk passionately and freely about what you are doing.  They are your best advocates.

(2)    Be transparent about your motives.  Don't let PR wrap your business motives in cloying half stories about the social good your business is driving.

(3)    Tell the story of the journey.  Be open about what's not working as much as what is.  Vulnerability plays surprisingly well with sustainability stakeholders and a cynical public.”

Perhaps those responsible for the Global Reporting Initiative based in Europe, need to take a close look at compliance requirements of the GRI to see which requirements are making the reporting complex, lengthy, and vague—issues that are driving CEOs and boards from taking a vested interest in the process and supporting the initiatives.  Compliance officers and investor relations officers should look at the GRI Initiatives and their own company reporting process and suggest to the GRI folks what needs to be changed and improved. 

A year or so ago, there were some positive signs that institutional investors were beginning to embrace sustainability reporting and provide an investment premium for good reporting.  The surveys cited above suggest that is changing and not for the better, at least in the eyes of executive management and the board.  Greater transparency in simple language that consumers can believe and have confidence in is necessary.  The so-called “green-washing” seems to be undermining consumer confidence in sustainability claims.  Credible PR is clearly important in the entire communications process.