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2006-04-01 -
Achieving Sustainability of Government Operations: State of Sustainability Reporting Among Federal Agencies
Executive Summary
Since the 1990s, efforts have increased to improve the ability to quantify the economic, environmental, and social performance of companies. In 2004, the Global Reporting Initiative (GRI) indicated that 500 companies (including 49 of the 100 largest multinational corporations reported progress against economic, environmental, and social indicators [also known as sustainability performance] or triple- bottom-line [TBL] indicators). In recent years, U.S. government agencies have faced increasing pressure to report their results against an integrated set of performance indicators. These efforts are in an early stage of adoption.
This report assesses how 28 departments and independent agencies of the U.S. government measure and report progress. Focus is on the economic, environmental, and social performance indicators presented in each agency’s strategic plan, annual performance report, and environmental report for 2004. The information presented by these federal agencies is compared to the performance indicators required by legislation and executive orders (EO), recommended by the GRI’s Public-Sector Protocol for Sustainability Reporting, and reported by leading private-sector firms and government agencies from other countries.
This study is one of the most comprehensive surveys to date of economic, environmental, and social responsibility reporting by U.S. government agencies. This study reached the following conclusions:
Corporate sustainability reporting is becoming part of the mainstream. A 2004 review of the reporting practices of the 250 largest multinational corporations shows that corporate sustainability reporting has been steadily increasing since 1993 and has become a mainstream practice—with 64 percent of the companies producing separate sustainability reports or including sustainability information in annual reports. GRI guidelines were most widely referenced by corporations in 2004,[1] with 40 percent of sustainability reports from the 250 companies referencing GRI guidelines.[2] The data also point to a rising trend in the number of companies including this information in their annual reports.
Reporting requirements exist, but no overarching driver exists for federal agencies to report their performance against economic, environmental, and social responsibility indictors. This review of all EOs and five major laws found that federal agencies are required to regularly report progress against 9 economic, 23 environmental, and 8 social responsibility performance indicators.
U.S. agencies publish a variety of the economic, environmental, and social responsibility performance data required by law or EO as part of their annual performance report. Twenty-five percent (7 of 28) of the federal agencies included an environmental or social section in their annual report or produced a separate annual environmental report. The Department of Defense (DoD), Department of the Interior (DOI), Tennessee Valley Authority (TVA), and the U.S. Postal Service (USPS) publish the most information describing the environmental and social responsibility performance of their operations.
Agency reports did not contain all the economic, environmental, and social responsibility data required for tracking by law and EO. The data reported were assessed against the 9 economic, 23 environmental, and 8 social responsibility performance indicators required by the laws and EOs included in this review. More than one-half of the agencies publicly reported data against all nine economic indicators. However, few agencies included environmental or social performance indicators required by law or EO in their annual report.
Even with the Government Performance and Results Act (GPRA), President’s Management Agenda (PMA), and Office of Management and Budget (OMB) guidance for conducting annual performance reports, most agencies measured and reported program performance differently. Agencies used different formats and different measures of operational performance. Some reports focused on agency performance, whereas others looked at national trends without supporting a casual relationship between those trends and agency actions. Agencies provide independent assurances of financial results to stakeholders. However, none of the agencies provided independent assurances of nonfinancial data.
As federal agencies include more performance information in their annual performance reports, they can keep costs down by reporting what they currently measure and leveraging the experience from existing voluntary efforts such as the GRI’s Public-Sector Protocol for Sustainability Reporting. Agencies that want to initiate sustainability reporting should start with what is required and, in most cases, already measured but not publicly reported. This reporting can help to keep costs down while building commitment from agency leadership to institutionalize this type of performance reporting. Also, agencies should integrate these sustainability metrics into their annual performance report, not only to keep reporting costs down but also to provide a single forum for presenting the agency’s economic, environmental, and social responsibility performance.
Although the existing and emerging voluntary guidance related to sustainability reporting provides a common approach, it provides little insight into how agency managers can show a linkage among the life-cycle costs of decisions, funds requested, funds spent, and the results they achieve in any of the performance categories. As a result, managers still lack methods to estimate the life-cycle costs of different decisions and estimate the changes in performance metrics, given changes in funding levels.
As noted in the beginning of this report, organizational sustainability reporting is just emerging and the intention of this study is to provide a starting point, or baseline, for tracking the progress of U.S. agencies. The public reporting of economic, environmental, and social responsibility performance is an essential element of an organization’s overall efforts to operate in a more sustainable fashion.
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