First published by Lexis PSL Environment blog

The National Audit office (NAO) has published its review of the quality of sustainability reporting by central government departments in the UK in 2013- 2014.

By way of background, HM Treasury first introduced requirements for central government organisations to report on sustainability issues in their annual reporting in 2011. The government’s vision for sustainable development and what this means in practice was set out in Defra’s 2011 report on ‘Mainstreaming sustainable development’.

While compliance with many requirements was achieved in 2012, the Environmental Audit Committee recommended in 2013 that Defra and HM Treasury take ownership of sustainability reporting and that reporting on sustainable procurement be improved.

Sustainability reporting is about ensuring that an organisation’s annual report reflects its environmental, social and economic performance.

The focus of the review was to look not only at the good practice and understanding how sustainability is being integrated into the departments but what was missing.

For better

Most departments make a commitment to embedding sustainability in policy making and decision making. All departments have reported on performance against the Greening Government Commitments for reducing greenhouse gas emissions, waste and water from government buildings and business travel. This is probably unsurprising given the legislative constraints on organisations to reduce their impacts in relation to these issues and the costs in failing to address reducing impacts.

The information that was made available was seen as valuable for stakeholders interested in the direct environmental impacts of the government.

There was also some improvement in how departments report, and in a few cases the publication of a separate document (such as the Home Office’s stand alone report).

However, the NAO’s review identifies areas where reporting can be improved. When looked at objectively, this raises some key questions on just how effective the reporting has been, and indeed, how central government might achieve improvement in the areas identified.

For Worse

Effective and transparent sustainable reports require a coherent narrative on sustainability performance. The review established the need for departments to articulate how they have identified those sustainability issues most relevant to them (known as ‘material’ issues) and how those material issue in turn inform their objectives (strategy).

There appears to be a focus on direct environmental impacts and very little information on normalized data (i.e reporting data on a per m2 or per person basis) for greenhouse gas emissions and waste. What of the social impacts?

The variation on how departments influence sustainability issues through their policy and on sustainable procurement is great. Sustainable procurement in government is legislated by the EU but despite the growing importance of this issue, the review found that only the Home Office reported quantitative data on their suppliers environmental impacts such as carbon emissions. As the review highlights- without metrics it’s hard to judge.

Senior buy-in and responsibility for sustainability is the key to any successful sustainability programme, both in the private sector and in government. Governance and assurance is a critical factor to be considered in sustainability reporting. Those responsible at the senior level should be named in the sustainability report. Surprisingly only 3 out of the 16 departments linked responsibility to an individual board member, indicating a lack of accountability at executive level for sustainability programmes.

Assurance also builds trust for stakeholders to understand if the information that has been set out in a report is trustworthy and credible. Only 3 departments explicitly state that the internal audit had reviewed the data and less than half of the departments explain external assurance arrangements to assess the quality and completeness of the information.

What is interesting is that the review does not raise or discuss the fact that the reports do not address the impact of the social aspects of their activities. Given that the social dimension is a central pillar of sustainable development this raises a number of questions on why there is no attempt to address this issue.

For richer or for poorer

Critically, the report recognises that the departments will need to identify the support they will need to ensure that sustainability is embedded in performance metrics with sufficient transparency.

Like any marriage, an honest review of the state of play is necessary to make some adjustments or improvements as time goes on. This review has highlighted both positive and negative aspects of sustainability reporting, but the challenge will be the progress that is made over the next year.

For further information on sustainability reporting, see LexisPSL Practice Note: Sustainability reporting for public bodies produced in partnership with CLT envirolaw.

For more information on sustainable procurement, see Strategic Sustainable Procurement: Law and Best Practice for the Public and Private Sectors