Can Data Collection in a Sustainability Report Prevent a Crisis?

As Volkswagen contends with a reputational crisis of epic proportions much of the focus has been on how it needs to manage the fallout from its emissions cheating scandal. While dissecting a crisis communications strategy for Volkswagen best practices makes for compelling theater, this incident is an opportune reminder for corporate leaders to focus on something much more mundane: the critical importance of accurate data in a sustainability (or CSR) report. 

Volkswagen is an illustrative example: Volkswagen built a reputation as a responsible company committed to producing vehicles that emitted fewer harmful emissions than the competition’s. Its diesel cars were the centerpiece in that narrative. Consumers purchased Volkswagen’s diesel powered cars because they liked driving a sporty and fun vehicle that was assumed to be not terribly harmful to the environment.

Volkswagen had a complete breakdown between its actions and the story it told the public, both in its marketing efforts as well as in its corporate sustainability report. For example, Volkswagen’s 2014 sustainability report made this bold (and now patently inaccurate) statement: “We consider the environmental impacts of our products, particularly their CO2 emissions, at every stage of their life cycle.”

What ultimately was the Achilles heel for Volkswagen was faulty and deliberately misleading data. While Volkswagen certainly is an extreme (and hopefully isolated) example of how data used in the wrong way will trigger a crisis, it does serve as a reminder that accurate data is what leads to an authentic and genuine report. 

Public audiences such as consumers and investors want to know about the performance of the company on those issues deemed most material to its long-term success, and a sustainability report is where they increasingly look for that information. Therefore, the content of a sustainability report must be developed in such a way to create a relationship of trust, and factual data is the best way to do that.

Volkswagen stock prices have at least temporarily settled at about 30 percent below the market value on 18 September when the U.S. EPA notified Volkswagen of violations to the U.S. Clean Air Act for select Volkswagen diesel cars. VW has acknowledged some wrong doing, according to details available at the U.S. EPA's website, however spokesman for Volkswagen told Western press in early November that this is really about whether the US [government] wants competition in the U.S. auto market.

As someone who has advised organizations on their sustainability reporting process and led the development of the sustainability report for Hill+Knowlton Strategies, I can attest the data collection process is tedious, laborious and often frustrating. It is surprisingly rare that data is held in one place and in a consistent format, accessible to key decision makers so they can guide the organization in its short and long-term operations.

I have consistently seen two common mistakes. First, the entry of data inputs into the system used to manage the sustainability report is often treated as a required exercise to be done as quickly is possible. Rarely are those collecting the data in that process encouraged to take a strategic view of the information while applying a critical eye to ensure it is both accurate and meaningful.

Second, the data is often siloed. Each department or business unit collects its respective data and sends it to the next step in the process with little thought to how the data is connected to the operations of the company or the broader corporate narrative being shared with the public. In not all organizations is someone empowered to cast a critical eye on the data to look for gaps or lack of alignment with broader operations, brand and reputational objectives.

One suggested course of action to overcome those mistakes is to create a fully transparent collection process. Specifically, the data is stored in one place and displayed in a manner that can be seen by those across the organization involved in the data collection process. While the concept of a “dashboard” is often overused in the PR industry, it is applicable in this case. An online platform that displays the relevant financial and non-financial performance metrics of the company along with the accompanying data to measure the performance can overcome the issue of siloed information. Moreover, if the data is widely shared with those inputting the data, they are empowered to do their job in a more thoughtful manner.

Furthermore, improving the data collection process and distilling that information into a clear and concise format will encourage greater oversight from key actors such as the board of directors and even outside experts such as legal counsel. Such a review process is another important check and balance to prevent a crisis caused by false and misleading statements or actions.

A truly effective sustainability report is more than a document or a website. It is a forcing mechanism that requires the leadership of the company to take an honest look at its performance and prospects for future success. Central to that effort is an effective, transparent and well-managed data collection process.

Robert Ludke

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