Peter Bakker

is a dis­tin­guished busi­ness lead­er who joined World Busi­ness Coun­cil for Sus­tain­able Devel­op­ment as Pres­i­dent and CEO in Jan­u­ary 2012. Until June 2011, Mr Bakker was pre­vi­ous­ly the CEO of TNT NV, the Nether­lands-based hold­ing com­pa­ny of TNT Express and Roy­al TNT Post. Mr. Bakker is an appoint­ed Com­mis­sion­er for the Glob­al Com­mis­sion on Busi­ness and Sus­tain­able Devel­op­ment, and in 2016 he was named an SDG 12.3 Cham­pi­on for his com­mit­ment to reduc­ing food loss and waste. In addi­tion, he is the Chair­man of War Child Nether­lands.

cap­i­tal mar­kets

The new business reality

By Peter Bakker / Illus­tra­tion: Anne Lück

It’s time to wake up and face facts: inte­grat­ed report­ing and ful­ly informed decision-­making must be the new busi­ness real­i­ty. It is the only way to scale up our ­efforts to improve the state of the world.

Busi­ness as usu­al isn’t going to work for much ­longer. The pop­u­la­tion is grow­ing, the cli­mate is chang­ing, and we need to be smarter and do more with less if we’re going to sus­tain more than 9 bil­lion peo­ple liv­ing well, and with­in the bound­aries of the plan­et, by 2050. Sci­ence is clear­ly telling us that human­i­ty is push­ing up again­st the planet’s bound­aries. We are con­front­ed with the pos­si­bil­i­ty that we may very well destroy our capac­i­ty to suc­ceed – not only as busi­ness­es, but as an entire species.
Last year the world sent a pow­er­ful sig­nal that it’s ready to make a change. The Sus­tain­able Devel­op­ment Goals (SDGs) and Paris Agree­ment form the basis of a new glob­al devel­op­ment frame­work that calls on every glob­al cit­i­zen to con­tribute. Busi­ness has a clear oppor­tu­ni­ty to lead the way and change the sys­tem accord­ing to this new frame­work. But in order to make a real impact, we need to get seri­ous about under­stand­ing our own impacts, the world around us and our effect on soci­ety and the envi­ron­ment so that we can make appro­pri­ate ­deci­sions accord­ing­ly.

Inte­grat­ed report­ing for bet­ter busi­ness deci­sion-mak­ing

Using inte­grat­ed report­ing for bet­ter busi­ness ­deci­sion-mak­ing is one of the clear­est and most effec­tive ways to accom­plish this. Focus­ing sole­ly on finan­cial per­for­mance has – for too long – allowed com­pa­nies to neglect impor­tant aspects of mate­ri­al risk man­age­ment and dis­clo­sure, rein­forc­ing busi­ness pat­terns that are some­times harm­ful; for the ­envi­ron­ment or the peo­ple in our sup­ply chains.
Com­pa­nies are begin­ning to see that it’s ­imper­a­tive to inte­grate addi­tion­al per­for­mance met­rics in order to set appro­pri­ate goals, under­stand pro­gress and share accu­rate and appro­pri­ate ­infor­ma­tion. By incor­po­rat­ing a wider set of met­rics into cor­po­rate report­ing, com­pa­nies will improve their vis­i­bil­i­ty on glob­al chal­lenges, while equip­ping them­selves with the best infor­ma­tion for accu­rate deci­sion-mak­ing. And as reg­u­la­to­ry frame­works and con­sumer pref­er­ences change, trans­par­ent, sus­tain­able com­pa­nies will come out on top, attract­ing invest­ment as true lead­ers in the new glob­al econ­o­my. The trick is under­stand­ing where to start, what to mea­sure and how to com­mu­ni­cate the results. 

Inte­grat­ed report­ing is the gate­way to chang­ing the sys­tem and to sav­ing the world.

Lack of con­sis­ten­cy

As more com­pa­nies pur­sue sus­tain­able out­comes as a busi­ness strat­e­gy, a lack of con­sis­ten­cy has emerged – with each com­pa­ny using its own met­rics and meth­ods for putting togeth­er an inte­grat­ed report. This means that the process for pub­lish­ing a ­com­plete and use­ful report has become unclear, par­tic­u­lar­ly for investors. This is a prob­lem for busi­ness­es and for the cap­i­tal mar­kets, who need a solid direc­tion, log­i­cal busi­ness case and a fea­si­ble exe­cu­tion plan in order to go full force and/or to invest. For­tu­nate­ly, there’s a great deal of work around clar­i­fy­ing the cor­po­rate report­ing space through the online report­ing plat­form, the Report­ing Exchange (reportingexchange.com).

The Report­ing Exchange

Using a crowd­sourcing mod­el, the Report­ing Exchange iden­ti­fies report­ing reg­u­la­tions, rules, poli­cies, prac­tices, ini­tia­tives, stan­dards, codes and guid­ance that make up the report­ing land­scape as it evolves over time – and this pro­vides much need­ed clar­i­fi­ca­tion to busi­ness. Under­stand­ing what to report on, and how to report, will bring busi­ness ­ a long way towards achiev­ing sus­tain­able devel­op­ment as an out­put of dai­ly oper­a­tions. The Report­ing Exchange will also be a use­ful tool for reg­u­la­tors, investors, aca­d­e­mics, NGOs and civil soci­ety, help­ing them find the reg­u­la­to­ry approach that works best for busi­ness, while enabling them to under­stand how to best encour­age trans­par­ent report­ing and good cor­po­rate behav­ior. Once com­pa­nies get a han­dle on how to report, next step will be to ensure that com­pa­nies who “walk the talk” and report well are reward­ed in the mar­ket­place. Which basi­cal­ly means, if we’re going to get any­where, the finance sec­tor needs to get involved. 

Finance leads much need­ed change

Our cur­rent sys­tem is defined by incom­plete infor­ma­tion about the busi­ness impacts on nat­u­ral and social cap­i­tal. As a result, we often don’t ­incor­po­rate socio-envi­ron­men­tal exter­nal­i­ties into every­day busi­ness con­sid­er­a­tions. All of this is about to change. In July 2016, the world took a giant step towards nat­u­ral cap­i­tal account­ing with the Nat­u­ral Cap­i­tal Coalition’s launch of the Nat­u­ral Cap­i­tal Pro­to­col – the first ever stan­dard­ized frame­work for busi­ness­es to mea­sure and val­ue their impacts and depen­den­cies on nature. The Pro­to­col pro­vides a gen­er­al­ly accept­ed path­way for com­pa­nies to move towards nat­u­ral cap­i­tal account­ing. It helps ­com­pa­nies under­stand their rela­tion­ship with the nat­u­ral world. By think­ing strate­gi­cal­ly about nat­u­ral cap­i­tal deci­sions and imple­ment­ing the Pro­to­col, for­ward-think­ing com­pa­nies now have the oppor­tu­ni­ty to real­ly move the dial on sus­tain­abil­i­ty.

It’s time for busi­ness to make the first move.

Race to the top

The com­bi­na­tion of inte­grat­ed report­ing and ­nat­u­ral cap­i­tal lit­er­a­cy will trans­form the glob­al econ­o­my, and busi­ness has the oppor­tu­ni­ty to lead the way.
New sys­tems like the Report­ing Exchange and the Nat­u­ral Cap­i­tal Pro­to­col are the first steps. From now on, lead­ers will need to be edu­cat­ed in new ways, CEOs will need to become sus­tain­abil­i­ty e­xperts and investors will need to demand inte­grat­ed reports, simul­ta­ne­ous­ly reward­ing com­pa­nies who per­form well on finan­cial, social and envi­ron­men­tal met­rics.
We look for­ward to a world where the biggest indus­tries com­pete on sus­tain­abil­i­ty per­for­mance, ini­ti­at­ing a swift “race to the top” for com­pa­nies across the globe. It’s time for busi­ness to make the first move and to keep on going. Inte­grat­ed report­ing is the first step. It’s the gate­way to chang­ing the sys­tem and to sav­ing the world.