The case for CSR/ Sustainability Reporting Done Responsibly


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The sustainability challenge: The aspect environmental ratings fail to consider

According to an article by Auden Schendler and Michael Toffel in MIT Sloan Management Review environmental rankings of businesses often fail to take into account advocacy activities by corporations that impact environmental regulations, despite the global scope of the climate crisis and the need for climate regulation.

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Most environmental rating organizations, agencies or systems continue to focus on businesses’ operational impacts – for example, pollution levels – or environmental management practices. Public support activities that influence environmental regulations are not taken into consideration. This happens despite the fact that corporate political activities (like, for example, campaign funding) can be more effective in fighting climate change and promoting environmental protection, given the urgent need – worldwide – for far-reaching policy solutions.

Examples of advocacy activities, include:

  • over one thousand business leaders who joined the We Can Lead group, which supports strong climate policy, and
  • twenty companies that joined Business for Innovative Climate & Energy Policy, an important corporate policy advocacy group

Taking public support activities into account

Corporate responsibility ratings that influence buying decisions by consumers, employment decisions by jobseekers or investment decisions by socially responsible investors, should seriously consider political activities by corporations. Such activities may include support for climate action, including political contributions, and engagement or collaboration with non-governmental organizations. Effectively integrating such factors into their ranking procedures, is highly important for rating agencies and organizations. They will become more competitive and more valid, when evaluating and deciding on environmental leadership.

 

References:

This article is based on published information by MIT Sloan Management Review. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://shop.sloanreview.mit.edu/store/the-sustainability-challenge?utm_source=newsletter&utm_medium=email&utm_content=Learn%20more%20%C2%BB&utm_campaign=Enews%20Sust%2011/9/17

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