This section presents the ranking results for the sustainability reports for the year 2015 and some comparisons with the results from previous years. We focus, in particular, on the reporting trends identified.
Increasing number of sustainability reports
The number of reporting companies has increased since the 2011 ranking. At that time, there were 56 stand-alone sustainability reports published by the 150 largest German companies and 127 reports from SMEs (IÖW and future 2012a, 2012b). The figures for 2015 are significantly higher, reflecting 72 reports from large companiesFootnote 8 (as of: January 2016) and 165 from SMEs (as of: February 2016). This is a clear increase compared to the previous rankings: in the years 2005, 2007, 2009, and 2011, the number of sustainability reports fluctuated between 53 and 56 of the 150 largest German companies. Consequently, a number of new reporters are among the companies included in the ranking for 2015 that had not yet published stand-alone reports in 2011.
The number of companies that provide their stakeholders with information on sustainability issues in other ways, (e. g., reports from the parent company, in special brochures, on websites, or in the annual report) also increased. Fig. 1 shows a listing of the 150 largest German companies broken down by category, which identifies the form and intensity of the reporting.
However, the trend does not hide the fact that there are still a number of companies that do not publish sufficient information (if any at all) about their social and environmental impact. Of the 150 largest German companies, 17 publish only some minimal information about sustainability issues and five publish none at all.Footnote 9 The highest proportion of these non-reporting companies is found in the food, media/information services, insurance, and trade/clothing sectors.
Report quality improving at SMEs, dropping at large companies
The overall report quality for large companies as determined by the ranking is declining. The average rating of all reports dropped from 353 points in 2011 to 311 points. One of the main explanations for this is the high number of new reporters, who often still present an incomplete database and who leave gaps in some topics or provide little meaningful information. Only six of the 22 new reporting companies added since 2011 are among the top 50. The highest ranked newcomer achieved 19th place.
Among long-standing reporters already ranked in 2011, there was only a slight downward trend. These companies achieved an average of 337 points in the 2015 ranking. Some large companies were able to roughly maintain their 2011 results. Others were able to significantly improve by expanding their report coverage. In contrast, there were also some reports that could not live up to their 2011 level in this ranking. One reason for this is the selective tightening of the ranking requirements (for example, regarding supply chain responsibility), but also, some companies reduced the scope and depth of their reporting on sustainability aspects.
Fig. 2 shows how well the reports of large companies meet the main ranking criteria. Roughly half the companies fully or mostly met the requirements in the areas of “Vision, strategy, and management”. Many reporters succeeded in explaining the megatrends and general conditions affecting corporate activity and derived priorities for their sustainability strategy and, in a second step, concrete objectives and measures. These companies often show a very systematic approach and base their strategy process on a materiality analysis. Nearly 40% fully or mostly meet the main criteria “Objectives and programs” and “Societal responsibility.” Large company evaluations were much worse in the other criteria. This refers, in particular, to the “Supply chain responsibility” that is satisfactorily met by only half of the reporters. The descriptions of the supply chains in terms of the most important procurements and the regional allocation of the prime suppliers reveal considerable gaps. Moreover, the reports can hardly convey any systematic determination of the environmental, social, or human rights risks in the supply chains. The presentations fare somewhat better in describing environmental, human rights, labor and social standards, for example, those defined in codes of conduct for suppliers. So far, the systems for implementation and review of these requirements are identifiable only in rudimentary form and are not adequately documented by complete figures, such as with supplier audits and their results.
Another trend was identified among SMEs: compared with 2011, they manage to achieve a significant improvement in average values in almost all criteria. Many SMEs have expanded and professionalized their reporting over the last few years so that their reports can now compare to those of large companies in term of scope and quality. The newcomers also have a more positive assessment than those among the large corporations. But, on average, the new reporting companies fare significantly poorer than the established reporters. However, some of them have already ideally implemented the ranking requirements in their first sustainability report.
Fig. 3 shows how well SMEs meet the top ranking criteria. Again, it is the requirements in the areas of “Vision, strategy, management”, and “Societal responsibility” that are best met. In terms of vision and strategy, some SMEs present convincing individual approaches, for example, by highlighting their sustainability vision against the background of the company’s history and by explaining their specific approaches and strategies for sustainable action. The weakest results by the SMEs are seen in the main criterion, “Employee interests.” Specifically, weaknesses are found in the reporting on diversity, working time models and temporary workers.
Many reports focus on materiality
Companies are increasingly focusing their reports on material issues identified on the basis of a materiality analysis: it has become standard practice at most large companies to evaluate the relevance of sustainability aspects from a corporate and stakeholder perspective to derive the priorities for reporting. The exact process for identifying and prioritizing key issues, however, is often not made sufficiently transparent. Most reports now include a materiality matrix that highlights the importance of sustainability issues for the company and its stakeholders.
This trend is also recognizable among SMEs. For many years, the orientation of SME reporting focused primarily on their actual activities and performance: only a few exceptions systematically derive report contents and the main sustainability topics. This is increasingly changing: Many SMEs are now systematically approaching the definition of priority topics and present the results, for example, in the form of a materiality matrix. SMEs also increasingly capture stakeholder expectations and include them in the process.
There appears to be a significant streamlining of the report content by some long-time reporters, especially, among the large corporations. Reporting of the sustainability aspects, which are material from the company’s point of view, remains stable or is even expanding among the long-standing reporters, while their presentation of other topics seem to be losing scope and depth. In the context of the “comply or explain” principle, often the explanations as to why individual topics are omitted are hardly meaningful or are even entirely missing.
Format variety still increasing
The traditional printed report is becoming less significant as the leading document for sustainability reporting. Although the majority of the companies in the ranking still publish a printed sustainability report, this is often just one of several media, especially, among large companies.
When printed reports are published, they are usually supplemented by extensive online information. 28 of the large companies in the ranking are now publishing online sustainability reports. Some of them additionally offer a PDF version on their websites, while others publish their own PDF or print report in addition to the online report. PDF reports with interactive features are increasingly popular. These offer the possibility to navigate within the report and to immediately select internal cross-references and online links.
The change in the reporting formats is noted, in particular, among the advanced reporters: Among the Top 10 large companies in the ranking, only one still relies on a single print report. In contrast, the reporting by SMEs remains largely centered on the printed sustainability report. But, five of the 40 companies evaluated publish online reports.
A target group-specific differentiation is also noted in the reports. We find platform concepts consisting, for instance, of a corporate responsibility (CR) journal, a GRI report, and a CR online journal with an interactive key performance indicator tool.
A growing number of integrated reports
The number of integrated reports has increased significantly in large companies compared to 2011. While there were only five in 2011, in the 2015 ranking there were 16 integrated reports. The trend is particularly evident in the chemical and transport/logistics/tourism sectors. The number of evaluated integrated reports in the SME ranking is much lower and currently totals three, all from energy companies.
Unlike in 2011, when an integrated report placed third in the ranking, the integrated reports in 2015 scored mostly below average in the ranking of large companies. The best ranking among the integrated reports was rank 14. Many integrated reports can only partially complete the range of the ranking requirements. The integrated reports usually have less space available for the presentation of sustainability aspects. In some cases, this leads to a stronger focus on the material aspects of sustainability, as the less relevant aspects are partly eliminated. However, the portrayals of material aspects such as product and supply chain responsibility often lost scope and substance with the transition to integrated reporting. Most reports do not exploit the special potential of the integrated reports: rarely do these reports truly mirror an integrated approach at the companies. For example, this is evident in the predominantly weak presentations of the organizational and strategic anchoring of sustainability in the company.
In all fairness, the lack of completeness is sometimes accompanied by greater data reliability and, in return, a particularly high degree of credibility: While in most cases, an external audit of the base data can only provide limited assurance, five of the integrated reporters were able to achieve reasonable assurance.
In practice, the concrete implementation of integrated reporting is varied between companies. The framework set by the International Integrated Reporting Committee (IIRC) in 2013 offers a recognized standard, but only a few of the ranked companies refer to this in their reporting.
Importance of GRI guidelines continues to grow
The Global Reporting Initiative (GRI) guidelines have become established as the standard for reporting among the large German companies. Of the large companies surveyed in the 2015 ranking, 68 reported based on GRI, 32 on G3, and 36 according to the G4 guidelines published in 2013. The overwhelming majority of G4 users chose to follow “Core” option. Interestingly, only six of the large companies opted for the more sophisticated application level “Comprehensive”, which requires that all material aspects and indicators be reported according to the “comply or explain” principle.
The share of GRI reporters in the large corporations has risen again slightly to 86%, up from 83% in 2011. Striking is the fact that the top 50 large companies in the ranking without exception all report in accordance with the GRI guidelines. The significance of the GRI guidelines is also increasing among SMEs. Overall, 28 SMEs reported according to the GRI. Of these enterprises, 18 are already applying the newer G4 guidelines, three of which are using the “Comprehensive” option. Only 30% of SMEs report without explicit reference to GRI. Unlike the large companies some of the SMEs, in particular, the experienced reporters are able to fully and substantially disclose material sustainability issues in their report even though they do not follow the GRI guidelines.