Forbes.com recently published a very interesting essay that was written by Nick Main and Joseph Stanislaw. In the article, the authors correctly note that every company must be energy-conscious in order to achieve maximum profitability.

 “Energy consumes a significant portion of an enterprise’s spending, accounting for 5-20 percent of a typical company’s costs. Yet, many organizations have a poor understanding of their energy consumption and how to reduce it. Their unawareness of how they consume energy is analogous to an individual paying for a grocery cart full of food at the supermarket, but without knowing what is in the cart or how much any individual item in the cart costs…..There’s no reason for companies to wait a decade – or even a year – to move towards an energy strategy.”

Until a company acknowledges that energy consummation is a reducible expense, it will continue to unnecessarily expend resources that it could be using elsewhere.

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A follow up on Stakeholder Influence on a Company’s Public Reporting 

Participating in integrated reporting does not necessarily mean a company is sustainable. Integrated reporting- reporting that goes beyond traditional financial statements to include information about a company’s impact on the community and the environment- is only a means for a company to express their sustainability measures, although some companies who do voluntarily provide such information can misconstrue their actual practices.

Environmental Leader recently wrote an article on research conducted by a management professor at the University of Notre Dame, Sarv Devaraj, and a 2010 MBA graduate student at Notre Dame, Suvrat Dhanorkar, which compared the relationships between the statements companies made regarding “their beliefs and actions on the dimensions of sustainability” and the actual performance of these companies on these sustainability dimensions.

To measure such relationships, Devaraj and Dhanorkar correlated a company’s annual 10-K report and the statements they made regarding sustainability with the company’s greenhouse gas (GHG) emission intensity and their Newsweek rankings on sustainability. They found that “companies that actually tout their beliefs quite a bit are in fact the ones that are not performing as well on the sustainability dimensions.” There was an overall negative relationship between what a company said it believed in and their true standing on sustainability performance.

Devaraj announced that he was expanding his study to a longer timeframe, as the relationship between reporting and sustainability performance may become positive over a longer period of time for many companies He says that overall he wants his research to lead to a more “transparent (and) standard policy or procedure about reporting environmental disclosure so that the public and stakeholders can judge companies on equal footing.”

Reporting in a way that misinterprets a company’s actual sustainability measures and operations can only have a negative impact on that company’s image. When stakeholders request more information, it is best for companies to be upfront and honest.

Despite current legislation in Congress attempting to block any requirements of greenhouse gas (GHG) emission regulating or reporting from organizations, there has been an increasing trend among large companies to voluntarily report on issues relating to sustainability. Giants such as Bank of America, Avaya, and Best Buy are among some of the many US-based companies who have released company-wide data on GHG emissions as well as details regarding their reduction goals. What has motivated these companies to release such information? According to Donald Delves, founder of a compensation consulting firm in Chicago and regular contributor to Forbes Magazine, such motivation comes from a company’s stakeholders.

Delves recently published an article on Forbes’ website in which he examined the influence of shareholders versus stakeholders within a company. In his article titled Whom Do Public Companies Now Serve? Delves writes, “Increasingly, large companies are demonstrating direct responsibility not just to shareholders, but also to employees, communities and the environment.” Stakeholders include any person, group or organization that has a direct or indirect stake in an organization, such as employees, non-government organizations (NGOs),  and communities. Delves highlights how in other countries, such as Germany and France, integrated reporting, a type of reporting that combines both social goals and financial results, has been the common practice among public companies. Companies in many other nations are “obligated to satisfy social expectations by tending to the interests of employees and other stakeholders.” This type of reporting, according to Delves, is becoming more common-place in the U.S. as companies strive to satisfy shareholders and stakeholders alike and increase public accountability.

Reporting on topics stakeholders’ value “can not only result in healthier customers, but in a healthier culture in which people will likely make it a point to patronize- and buy shares in- responsible companies.” To this extent, and as stakeholders become more and more environmentally conscious, we have to speculate on how long it will be before environmental data and, more specifically, carbon reporting will be required of all US companies’ operations by their shareholders. As more companies become involved in integrated reporting in which they share both sustainability and financial data, will competitors also feel the heat to do the same?

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