Last month, the French government accused Nestle of a serious legal violation. Although the firm has always advertised its Perrier mineral water brand as one that represents "natural" water, the government charged that Nestle actually disinfects and processes the water before bottling it. Thus, according to French law, it isn't "natural" at all, and must not be advertised in that manner.
Before sustainability accounting and reporting became a public concern twenty to thirty years ago, this event would have been perceived as an internal management issue. In addition, it would have been seen as an external brand management and public relations matter.
So what has the rise of sustainability accounting and reporting processes contributed to our ability to assess Nestle's exposure to this type of problem? We can now review Nestle's Performance and Reporting web site section, noting that the firm utilizes the two major sustainability reporting standards (the GRI and the SASB) to guide its selection of sustainability metrics.
We can also see that Nestle employs a Big Four global public accounting firm (EY) to perform assurance activities on those metrics. And we can compare Nestle's supply chain management and water processing measurement and reporting choices to the choices that were made by its major competitors, thereby assessing its levels of corporate performance against comparative industry data.
Conversely, the absence of reported data may compel us to feel concern. Nestle does not appear to rely on the U.N Sustainable Development Goals (SDGs) to the same extent that it does the GRI and the SASB. The SDGs provide an important complementary view because they define sustainability metrics from a public interest perspective.
Furthermore, Nestle does not directly address the impact of its "natural" emphasis on its brand value. That's an important factor because Interbrand has estimated that the Nestle brand is the 71st most valuable brand in the world. However, Interbrand estimates that the value of its brand shrank by 1% last year; thus, controversies involving its Perrier product line may reinforce this negative trend.
Clearly, a business analyst who is ignorant of this sustainability data will be unable to assess the implications of Perrier's "natural" controversy in a comprehensive manner. Likewise, an analyst who focuses exclusively on sustainability data (and not at all on supply chain or brand valuation information) will not be able to assess the implications either.
These observations explain why many corporations have not created fully staffed "Departments of Sustainability" in their organizations. It's not that the firms are ignoring sustainability business processes. In fact, the reverse is true; these companies have indeed embraced such practices, and have absorbed them into their mainstream business activities.