Sustainability as a branding technique? Susanne arvidsson, Associate Professor LUSEM Lund Brand Management Group, Lund 23 maj 2018

Background Brundtland report ’Our common future’ A gradually increased focus on sustainable development in general and sustainable business in specific Sustainability, business ethics, corporate social responsibility … Scepticism PR-invention… Green washing, blue washing or even SDG washing… Sustainability is globally focused upon High up on the agendas of politicians, management teams, policy makers, NGOs etc. and so fourth. Sustainability reporting is today undergoing a fierce practice development Primarily developed through voluntary initiatives Increased regulation and legislation, both at national and international level (In the areas of sustainable finance, sustainable investments, green lending, compliance, anti-corruption…) EU directive (2014/95/EU)

EU Direktiv (2014/95/EU) The Directive introduces measures that will strengthen the transparency and accountability of approximately 6000 companies in the EU. These so-called ‘public interest entities’*  with more than 500 employees will be:  • Required to report on environmental, social and employee-related, human rights, anti-corruption and bribery matters; • Required to describe their business model, outcomes and risks of the policies on the above topics, and the diversity policy applied for management and supervisory bodies;

Agenda 2030 and UN Sustainability Development Goals (SDGs) 167 indikatorer Goal conflicts to be understod and solved Negative and/or postive impact A global societal challenge in politics, business society and academia Det är 12 år till 2030

Source: Stockholm Resilience Centre

Why communicate on sustainability? Increased public awareness and commitment to sustainability Important for companies to understand norms, values and expectations in society related to the concept sustainability (=understand their stakeholders) Legitimacy reasons (social contract, licence to operate, acceptable business conduct) Sustainability report – a means for openly communicate to stakeholders about the company’s performance on the sustainability arena. An efficient technique for branding…? The sustainability report is viewed as a dialogue with stakeholders (although not a two-parts communication per se….) Stakeholders involved and participate in shaping sustainability discourses.

How do companies communicate sustainability? Status and challenges

Objective(s) with engaging in sustainability activities Vague objectives “we want to minimize the environmental impact” “our sustainability activities aim to bring economic, social and environmental benefits to our stakeholders” A gradual sophistication “Corporate sustainability is about understanding the [company’s] role in the community and acting responsible and with a long-term perspective in areas where the [company] can make a difference, through its own operations, either directly or indirectly.”

Stakeholder relations Which stakeholders are highlighted? Stakeholder-identification analysis Stakeholder engagement & dialogue Materiality assessment

Sustainability-related KPIs Lack of explaining relation to ”value”-creation process Inadequate presentation of: Goals Status Deadlines There is a structure…however, the information is in need of improvements

Concluding remarks First of all, there are positive trends related to extent, content and/or structure in more or less all sustainability themes at focus in the reports. Thus, Swedish companies appear to merit the epithet ‘good reporters of sustainability information’. However, some of these positive trends are in fact quite modest. Throughout the examined period (10 years), the sections and the sustainability information per se are quite brief, general and unstructured.

(cont.) As an outsider it is paired with substantial difficulties to assess a company’s sustainability achievements/performance from the information provided in the sustainability report. Comparing the achievements made by one company with the achievements made by an other company seems almost impossible. This lends credence to the findings in Radley Yeldar (2012:3) about capital-market stakeholders finding it difficult to assess and benchmark sustainability information the way it is presented in today’s reports.

Sustainability governance There is a need for a continued development towards working systematically with sustainability Vital aspects: Division of responsibilities Strategic management Monitoring Accountability With this comes also an integrative approach

Sustainability risk management Influenced by the EU directive(2014/95/EU)? A gradual shift towards considering working with sustainability as an extension of enterprise risk management Value creation vs ”insurance” against value destruction A need to develop a framework (firmly integrated in routines and processes) for a ’sustainability risk management’-programme where sustainability risks are identified, assessed and managed. How to handle risks

Challenges Create: Possible paths: Credibility Comparability Value relevance Possible paths: Standards Integrate in business model Communicate ’business case’

Looking forward to the winding roads ahead… Susanne.Arvidsson@fek.lu.se