The performance opportunities and cross-sectoral benefits generated by sustainability management and reporting have become even more compelling, writes Abdulkareem A. Abu Alnasr
In 2008, the responsible competitiveness initiatives of the King Khalid Foundation and SAGIA sought to catalyse awareness of sustainability issues. Three years on, I believe the time is now right for leading Saudi corporations to adopt sustainability reporting as the norm. The King Khalid Foundation and the Saudi Arabian General Investment Authority (SAGIA) instituted the first annual King Khalid Awards for Responsible Competitiveness in 2008. The awards recognise Saudi companies’ achievements in integrating social and environmental goals with business performance. Winners are shortlisted from the Saudi Responsible Competitiveness Index (a detailed annual benchmark analysed by SAGIA), the King Khalid Foundation, and global research organisation AccountAbility.
NCB was the first recipient of the King Khalid Award in 2008 and we are honoured to have won it again in 2009 and 2010. We were also one of the first Saudi companies – and the first financial institution in the region – to issue a sustainability report. We have since published a further three sustainability reports, each accredited by the Amsterdam-based Global Reporting Initiative (GRI), considered the most respected evaluation process for global sustainability reporting.
Still no standards
The King Khalid Foundation and SAGIA’s 2008 initiatives sought to encourage Saudi Arabia’s entire business community to consider the growing competitive importance of a range of economic, social, and environmental issues. They also worked to improve corporate performance in those areas.
But three years on, while many Saudi businesses have advanced their economic, environmental, and social efforts, we have yet to see a corresponding rise in public reporting. Few sustainability reports have been issued, compared to the 20 (GRI accredited) in the UAE, for example; or compared to South Africa, where all listed companies are now required to issue sustainability reports annually.
Why did NCB take the initiative on sustainability reporting? Our reasons for publicly sharing our performance on economic, environmental and social impacts were four-fold. We wanted to:
• present the case for systematically managing these impacts in creating value;
• demonstrate business gains from doing so;
• adopt higher levels of transparency and accountability to our stakeholders on the
issues that matter most to them;
• create greater awareness of sustainability issues, especially within Saudi Arabia.
Apart from NCB, only a few leading corporations have published sustainability reports. These companies should be commended for adopting the new global benchmark and showing willingness to report openly on activities, achievements, and shortcomings across a broader range of economic, social, and environmental issues.
A missed opportunity
For Saudi Arabia, the lack of take-up in sustainability reporting represents a missed opportunity. Increased adoption of sustainability reporting in Saudi Arabia would help to:
• illustrate the important foundation work and tracking of economic, environmental, and social performance already being undertaken;
• accelerate the business community’s understanding of sustainability’s strategic business case and benefits, with companies challenging each other through performance benchmarking;
• demonstrate verifiable performance on key societal issues in a way that enhances public trust, confidence, and involvement – including the loyalty and engagement of customers and employees.
Now that many leading Saudi companies are systematically tackling these issues, it is time to take the next step and publicly communicate performance to the stakeholders we all serve. Are we capturing the competitive benefits of sustainability for our shareholders? For our customers? For our employees? For the community? For Saudi Arabia and its national competitiveness?
How are we responding to some of our toughest short-term and long-term challenges, be it job creation or ensuring the wisest possible use and stewardship of our natural resources and environment?
Performance transparency helps answer all these questions, allowing us to work more aggressively for gains and to assess our collective progress in achieving sustainable development for the Saudi business community as a whole.
If we subscribe to the idea that public transparency is a performance driver, and acknowledge that we are already doing much of the underlying work of sustainability management and performance tracking, then a reasonable goal would be to mobilise 10 sustainability reports in Saudi Arabia by late 2011 and more than 30 by 2012. Based on the country’s progress in other areas, these goals are realistic.
Considering Saudi business as a whole, a critical mass of performance information will help recognise and reward strong leadership, while raising the bar for all. This will be our collective test to show the next step in our commitment to business competitiveness, our national competitiveness, and the sustainable development of our society as a whole.
What is Sustainability?
There are differing views about how sustainability should be defined. NCB’s definition is in line with many of the world’s leading corporations, and that of the UN’s Brundtland Commission. It includes not only sustainability’s environmental dimensions, but also its social and economic aspects.
Sustainability is about people: harnessing their expertise, creativity, and skills so we can compete successfully. It is also about our relationships with customers, business partners, and the community.
Sustainability is about planet: we hold the environment in trust for future generations and environmental stewardship is embedded in our Islamic values and integral to our corporate culture.
And sustainability is about profit: business cannot exist without creating economic value. Prudent management of risk and good governance are implicit in fulfilling this objective.
Sustainability management is the integrated management of economic, environmental, and social performance with the goal of creating value for all stakeholders. We simply consider it to be the next step in business excellence.
Abdulkareem A. Abu Alnasr is CEO of NCB