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From Transparency to Performance: Industry-Based Sustainability Reporting on Key Issues

Domini Chief Investment Officer Steve Lydenberg, in collaboration with Jean Rogers of the consulting firm Arup and David Wood of the Initiative for Responsible Investment, has published From Transparency to Performance: Industry-Based Sustainability Reporting on Key Issues.

The authors believe that mandatory sustainability reporting is urgently needed in the U.S. and that the development of industry-based key performance indicators can play a crucial role in any such mandatory reporting scheme.

"It is our hope," they write, "that establishing KPIs [key performance indicators] for all sectors will enable companies to move from a compliance driven 'disclosure' mindset to one of managing — and even competing on — performance on the sustainability issues that matter most."

The reports builds on the important work done by the Global Reporting Initiative in establishing a "credible set of universally applicable indicators" and outlines a method for the development of KPIs within the context of this broader set of indicators.

This method for developing KPIs relies on three principles: simplicity, materiality, and transparency. This method should be useful for regulators and stock exchanges considering target requirements, corporations seeking to improve their sustainability reporting, and stakeholders and investors who wish to improve their assessment of the progress of companies toward sustainability.