The State of Sustainability Reporting & Transparency in Canada       

[Join me at TSSS on Feb 5th as we delve into the disconnect between CSR Reporting and Bay/Wall St. – why does it exist and what can we do about it. Click here for details: Bay/Wall Street and Sustainability: Does your CSR Report Resonate with Investors?]

sustainability_reportSustainability reporting in Canada today presents a dilemma. On the one hand, a 2014 study of Canadian reporters by Stakeholder Research Associates Canada (SRA) suggests that a mere 42% of Canadian companies listed on the TSX Composite disclose meaningfully ESG information. SRA’s research also found that among 100 reporting companies across various sectors and geographic regions in Canada, only 20% communicated a long-term strategy informed by targets and goals and only 38% identified their material issues.

These findings align with the 2014 Corporate Knights report that gives the world’s largest companies, including 162 Canadian mid-and-large-cap equities, a failing grade when it comes to adequate disclosure on seven core sustainability metrics. The paucity of corporate reporting, according to the report, “stands in stark contrast to investors’ growing interests in building sustainable investment strategies.” On the other hand, Bloomberg reports a 47% annual increase in use of their ESG data since 2009, and CSRHub, which rates companies based on 12 sustainability indicators, has found that more disclosure correlates with higher perceived CSR performance.

What’s behind these contradictions? Do Canadian companies see the value in issuing sustainability reports? Does the typical sustainability report resonate with the investment community? Are companies finding other ways to engage with their stakeholders on ESG issues of most material importance? How can we ensure that the investment community gets the ESG information it needs to make sustainability-informed investment decisions?

Reporting conversations in Canada now must shift towards understanding the drivers behind reporting and the means by which companies can derive value from the reporting process beyond simply showcasing their sustainability initiatives. Through our research, SRA believes that after 20+ years of reporting activity in Canada, we are at a turning point. Early-adopter companies are stepping back to re-assess the value and benefit of producing annual sustainability reports. RBC, for example, has navigated through a variety of iterations to find a format and reporting cycle that makes sense to their business model and that resonates with stakeholder needs. For 2014, RBC adopted a stakeholder-centric reporting model, aiming their communications modes and information at targeted constituents based on a robust materiality analysis. Other companies, such as Telus, are using technology in new and savvy ways to produce interesting, appealing and interactive reports. The majority of reports reviewed by SRA, however, continue to be text-heavy, kitchen-sink accounts that are neither linked to corporate strategy and goals nor focused on material issues.

And while the GRI has become the gold standard of reporting frameworks – 71% of SRA-studied reporters referenced the GRI – the new kids on the block, SASB (Sustainability Accounting Standards Board) and the IIRC (International Integrated Reporting Council), are garnering attention. With these new frameworks and a plethora of tools available to facilitate the reporting process, isn’t it time for Canadian reporters to get serious about aligning ESG activities with their company’s business strategy and drive performance through ESG goals? And in a multi-channelled communications universe, isn’t it also time for companies to come clean on the value created – or diminished – by their business activities across multiple dimensions that matter to investors in a sustainable future? Without this, sustainability reporting in Canada, or worldwide for that matter, will remain nothing more than a costly exercise in futility.

For more information on SRA’s Tracking Transparency: A Study of Sustainability Reporting in Canada please contact Kathrin Bohr at
Kathrin Bohr brings nearly 15 years of experience in the sustainability field to the Stakeholder Research Associates team. She has worked in the private, public and non-profit sectors, most recently as Director of Advisory Services at Intertek Group plc where she worked with international clients on supply chain engagement.

4 Responses

  1. Alan Knight

    Thanks for this. It reminds us, if we needed reminding, that reporting has not achieved its ambition of driving significant change. Reporting has always been the tail (tale) wagging the dog. The theory was that if there was enough pressure on companies from stakeholders, peers, and possibly shareholders and governments to be transparent, that transparency would force change. But the dog has not been that moved by its furiously wagging tail. Stakeholder pressure has not penetrated too deeply in most cases. It has been deflected by PR into a reputational issue. This has resulted in many Incremental and cosmetic changes in the margins but has rarely penetrated to strategy and business models. It has not driven the kind of significant systemic change that is needed to avoid overshoot (vis. Limits to Growth). There are many reasons for this. One is the still non-standard and non-compulsory state of reporting. This makes it easy to publish something that does not identify material issues, does not link material issues to strategy, does not provide goals and context and does not use core, comparable performance indicators. You still get a tick in the box for reporting though. And we know from reader studies that this is all that counts because few people actually read CSR reports; they simply note that one exists. But more importantly, shareholders and the guardians of our current economic systems could give a toss. That is, they will put out a press release that says they care deeply, but will do nothing that forces or results in systemic change. They are happy with and defend the current market system (economic policy and systems, national accounts, acounting standards, stock markets etc.), which neither demand nor give much scope to do anything about anything that is not monetised and then financially material. Integrated reporting – reporting on the value you have created or destroyed in relation to a range of capitals in addition to financial capital, including natural, social, human and manufactured – is a great tool for an economic system that doesn’t yet exist. So, as for so many other things these days, the absence of real change, the inability of the ‘tale’ to have any real impact on the dog, is a result of the resistance and systems manipulation by the ‘ruling’ oligarchy (the dog). Doesn’t mean you stop pushing. Just recognise and adjust your approach to the field the game is being played on.

  2. Brad Zarnett

    Hi Alan, thanks for sharing your thoughts. You make many good points – I’ve tried to summarize them below:

    1) The changes to our economic system aren’t enough to deal with the ecological reality facing us.

    2) Stakeholder pressure hasn’t been enough to make the necessary changes – it’s often incremental or cosmetic changes.

    3) We need systemic change

    4) CSR Reports lack uniformity and often act simply as a box ticking exercise

    5) Integrated reporting – reporting on the value you have created or destroyed in relation to a range of capitals in addition to financial capital, including natural, social, human and manufactured – is a great tool for an economic system that doesn’t yet exist.

    6) Despite the obstacles…”you can’t stop pushing. Just recognise and adjust your approach to the field the game is being played on.”

    Alan, thanks again for sharing your views.

  3. Lyn Brown

    While sustainability reports (SR) have not driven the degree of operational or strategic progress we may have hoped for, it is less because stakeholder pressures have become reputation issues. The greater obstacle lies in the absence of clear regulatory penalty coupled with express lanes and market reward for superior performance and companies that are voluntarily leading the way toward a cleaner economy. Nonetheless, that sustainability performance/reporting is now on the risk management/governance agenda of more corporate boards is a reason to be both optimistic and resolute in striving for operational actions that give concrete form to sustainability vision. The SR is one way we can continue to give this effort visibility.

  4. Joss Tantram

    Dear Kathrin,

    Thank you for posting this fascinating article.

    My observations from our work would definitely back up your conclusions – companies are still failing to convey the value implications of sustainability to investors – and some are starting to question the process and point of reporting as it is currently configured.

    Reporting is clearly a potentially powerful way of conveying such information, but reporting can often be seen as an artefact itself, rather than a story of the sustainability ambition, management and performance of a company.

    However I would also say that there are two sides to the story – and just as companies are failing in the value dimension of sustainability, so investors are too – mainstream investors still rarely ask about such issues. SRI investors, whilst they do look at reports, do not as yet seek to understand the value dimensions adequately – relying largely upon questionnaires.

    For a superb overview of this challenge – and much more on challenges with the state of current sustainable investing check out the work of Mike Tyrrell of SRI Connect, especially this recent piece on the issue:

    I would contend that the challenge you raise goes beyond formal sustainability reporting itself, it is also just as much about an understanding of sustainability as a strategic issue capable of affecting company value – just like any other set, range or example of strategic company issues.

    For me – the chicken and egg situation noted above requires that a responsibility for developing a strategic understanding of sustainability lies both with investors and company staff – and requires the latter to have IR staff open to such understanding, CSR/ sustainability staff versed in making the case and leadership who truly “get” strategic sustainability.

    This exact issue was the subject of a (free) publication we produced (2004) while I was at WWF, ‘To Whose Profit (ii): Evolution – Building Sustainable Corporate Strategy’ ( which focussed upon supporting both companies and analysts in understanding firstly how to make the case for sustainability and strategic value (the company) and suggesting possible mainstream investment tools capable of appreciating sustainability as a value driver (the analysts).

    The document provides step-by-step guidance for practitioners in companies to make and communicate the strategic value case in language that investors use and understand.

    I believe the document still has utility – as the situation you articulate seems to be as true today as it was 10 years ago – that sustainability is not properly understood and communicated in value terms.

    As noted above, moving forward from the current situation requires change both within and without the company. Unless sustainability is strategically integrated, and capable of being expressed and understood as drivers of strategic value or sources of strategic risk then the mainstream can quite happily continue to largely ignore them – to the detriment of us all!

    As another perspective on the state of reporting at present, we recently produced a quick overview of themes and trends based upon our work
    to review and rate all 100 entries to the CRRA 15
    Reporting Awards:

    For me – the “value gap” is and has long been the biggest challenge that sustainability faces if it is to become a natural and automatic aspect of strategic thinking and behaviour. Bridging that gap has long been theoretically possible, but rather slow in happening!

    Thank you again,