11.4 Consider triple bottom line reporting and sustainability-related KPIs

In order to support their corporate strategy, Cbus incorporates numerous KPIs (defined in Section 11.1) into their sustainability reporting agenda which are informed by the United Nations Sustainable Development Goals or SDGs. By identifying target levels of performance and relating them to performance indicators, organisations, like Cbus, form perceptions of their actual performance. In this way, accounting numbers drive desirable behaviours among employees and increase the likelihood that organisational outcomes are achieved. In terms of meeting business’ goals and outcomes, they can be simply communicated through a Sustainability Balanced Scorecard like Cbus has. The snapshot of Cbus’ Balanced Scorecard is provided below and it allows stakeholders to get an understanding of what is critical to the organisation, associated targets and results and if they are meeting desired results (progress column):

How might sustainability indicators be developed and operationalised (made to work)? A measured approach must be taken in developing KPIs for an organisation to ensure the mission statement and associated goals and objectives are supported. As such a 7-step checklist for the development of aligned sustainability KPIs in organisations is considered below. The checklist elements have been matched to the climate change action KPI from Cbus SDGs in the diagram below to gain a deeper understanding of how they are applied:

 

1. Identifying a strategic imperative– Align goals consistent with an organisation’s strategy. An organisation’s strategy defines how it pursues the attainment of its objectives. Therefore, whatever indicators we devise must be consistent with an organisation’s strategy. In the case of Cbus, members are the nexus of decision making. Cbus is creating desirable outcomes for its members by operating sustainably, protecting the environment and community in which they live and providing better returns on investment supports the 3Ps, profit, planet, and people.[1]
2. Broad operational categories relating to strategic imperatives– Focuses on broad areas relating to that strategic imperative. In order to achieve an organisation’s strategy, management usually focuses on broad areas relating to that strategic imperative. For example, an organisation that seeks to maximise profits might focus on customers to raise revenues, as well as processes to reduce costs by minimising non-value-adding activities. Here, Cbus provides a broad range of economic, environmental, and social factors which reflect their mission statement, as outlined in the diagram above. For examples, take urgent action on climate change SDG 13, which benefits members and society.
3. Selecting financial and operating information to help chart the operational categories– Within each of these categories, we select key pieces of information. It might be revenues, number of customers, overall production costs, wastage, staff hours lost through employee injury, etc. Any financial or operating number that we think contributes to telling a story about our performance. As indicated in Cbus’ balanced scorecard above, action on climate change is required to meet a rating of 5.5 stars (target column). Some aspects continue to be developed.
4. Assess relationships between the information selected to create performance indicators for categories – By combining different information pieces to create ratios, or by simply using individual information as raw numbers, we populate each category with a series of indicators that paint a picture of our performance in that category. As indicated in Cbus’ balanced scorecard above, the progress on this climate action KPI is meeting set targets (results and progress columns). The first four steps above lead us to establishing sustainability performance indicators and these indicators must be SMART – Specific; Measurable; Achievable/Attainable; Realistic/Relevant; Timely. How do we make these sustainability KPIs work in businesses, Steps 5 to 7 is required and detailed below:
5. Identify levels of performance for indicators– Having determined a raw number or ratio as being an indicator, what levels do you believe necessarily define ‘good’ performance? The setting of a sufficient level is extremely important as good measures can be rendered irrelevant by target levels being too difficult or to easy to attain. For example, Cbus has zero emission in property portfolio by 2030 as good performance related to progress and action on climate change.
6. Defining rewards for their attainment– If employees attain these indicators, how are you going to reward them? Reward systems usually motivate employees. In the instance of Cbus, the business has not indicated or disclosed a reward basis and this is not discussed within this KPI as it is a question of relevance to climate change action. It would be incorporated with KPIs over employee performance (for example Cbus provides open and inclusive relationships and good working conditions resulting in reduced staff turnover ~ 4.29% when compared with industry standard ~12%.
7. Identify feedback systems to manage success/failure in attaining indicators– At the end of a period, what do we do when a target is or isn’t met? It is as important to reflect on the extent to which we might improve targets that have been met, as it is to consider how we might change our practices to ensure the future attainment of targets that have not been met. In Cbus case, its sustainability balanced scorecard provides clear advice on whether targets are, or are not, being met and links to other parts of the report with a deeper discussion on outcomes.

 

The financial reports produced in the <IR>, provided below, are very similar to an annual reports, as compliance requirements over Australian Accounting Standards and the Corporations Act 2001 (Cth) must still be met: