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First Results From New UNRISD Research on Measuring Corporate Sustainability Performance

6 May 2020


First Results From New UNRISD Research on Measuring Corporate Sustainability Performance
Rethinking corporate sustainability disclosure and reporting is the ambitious goal of the UNRISD Sustainable Development Performance Indicators project, and the first set of research findings from one of the main workstreams is well on its way to achieving that aim. With the full report on transnational corporations and other large companies due out in a couple of months, the accompanying Research and Policy Brief setting out the main highlights is already available, providing a preview of the innovative insights from this research. The Brief casts into startling relief the gaps in the system that need to be changed if sustainability reporting is to assess the issues, indicators and targets that really matter from the perspective of sustainable development.

There has been increasing recognition, and acceptance, that the private sector must do its part to make our economies and societies more sustainable. Indeed, over the past 30 years an extensive, multi-faceted industry has developed to help companies measure how sustainable their corporate performance is. The climate crisis, rising income and wealth inequality, the Sustainable Development Goals—all have raised the bar in terms of what is expected of corporations.

While this has injected momentum into efforts to improve sustainability accounting and reporting, it has also thrown up more fundamental questions about whether, as currently designed and practised, this reporting machinery is indeed fit for purpose. The socio-economic impacts of Covid-19 are likely to increase such scrutiny further.

The research has identified a number of blind spots that corporate sustainability accounting needs to see its way through:
  • measurement of actions that actually transform the root causes of unsustainable development, including inequalities, distributive injustice and unequal power relations;
  • quantitative, time series data that reveal performance trends over time; and
  • "material" and “contextualized” metrics, informed by social science research, that show how entities perform relative to sustainability thresholds.

This is the kind of information that stakeholders need, in order to gauge whether companies’ performance is consistent with the transformative vision of the SDGs, according to the research.

The Research and Policy Brief summarizes the indicators, metrics and targets UNRISD research recommends for use in sustainability reporting, and for companies to measure how they are contributing to structural and systemic change:
  1. Fair remuneration, including the CEO-worker pay ratio and paying a living wage.
  2. Gender equality, including the gender balance across the corporate structure, the gender pay gap, and support provided for care-givers
  3. Corporate taxation, including the gap between effective and statutory tax rates, the effective tax rate as a percentage of pre-tax profits and the industry norm, and the use of tax havens.
  4. Labour rights, including collective bargaining coverage and trade union density, and the use of subcontracting, temporary or part-time contracts across the supply chain.
  5. Corporate political influence, including political spending, lobbying efforts and the “revolving door”.

Interested? Read the full report

The full research report provides a thorough grounding of the recommendations in a review of the origins and evolution of corporate reporting on environmental, social and governance (ESG) issues, in order to better understand the current state of play. Drawing on that analysis, it aims to spur discussion on how to repurpose the measurement of corporate sustainability performance for transformative change, making concrete suggestions for better indicators and targets. Written by Peter Utting with Kelly O’Neill, it will be published soon; watch the UNRISD website and social media channels for more information.