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Sustainability Reporting

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WHAT IS SUSTAINABILITY REPORTING

A sustainability report is an organizational report that gives information about economic, environmental, social and governance performance.

It can also be said to be a report published by a company or organization about the economic, environmental and social impacts caused by its everyday activities. 

Sustainability reporting is not just reporting of collected data, it is a method to internalize and improve an organization’s commitment to sustainable development in a way that can be demonstrated to both internal and external stakeholders.

A sustainability report also presents the organization’s values and governance model, and demonstrates the link between its strategy and its commitment to a sustainable global economy.

In the business world today, organizations must ensure they have a robust system for sustainability management and reporting with regards to:

  • Transparency
  • Traceability
  • Compliance
  • Corporate Governance

The era of Corporate Sustainability Reporting started in the late 1980’s when companies in the chemical industry published the first environmental reports, this was due to serious problems they had with their image as contributing to the degradation of the environment.

The next groups of early sustainability reporting were groups of few committed “Small and Medium-sized Businesses – SMEs” with Advanced Environmental Management System (AEMS).

The reporting of non-financial information such as sustainability and Corporate Social Responsibility (CSR) reporting is a recent trend which has been expanded over the last 2 decades starting in the late 1990’s. Today a lot of companies have chosen to produce annual sustainability reports which have a wide array of ratings and standards around them.

The core reason for this new trend of reporting by companies is that they want to be “vessels of transparency and accountability”. The other main reason for them is that they want to use it to improve their internal processes, engage stakeholders and persuade investors.

Organizations can improve their sustainability performance by measuring, monitoring and reporting on it, helping them have a positive impact on society, the economy, and a sustainable future.

So what is the true value to an organization of reporting on sustainability? What does best practice in reporting looks like? Are reports the right vehicle for a company to communicate its sustainability story to its stakeholders? How can the reporting be improved?

Based on the questions above; today an increasing number of companies and organizations want to make their operations sustainable and contribute to sustainable development.

Sustainability reporting can help organizations measure, understand and communicate their economic, environmental, social and governance performance. Sustainability – the ability for something to last for a long time or indefinitely – is based on performance in these four key areas.

Systematic sustainability reporting helps organizations to measure the impacts they cause or experience, set goals, and manage change. A sustainability report is the key platform for communicating sustainability performance and impacts – whether positive or negative.

Sustainability reporting is therefore a vital resource for managing change towards a sustainable global economy – one that combines long term profitability with ethical behavior, social justice and environmental care.

Sustainability reporting provides companies and organizations numerous benefits both internally and externally some of which include the following;

Internal Benefits

  • Increased understanding of risks and opportunities
  • Emphasizing the link between financial and non-financial performance
  • Influencing long term management strategy and policy, and business plans
  • Streamlining processes, reducing costs and improving efficiency
  • Benchmarking and assessing sustainability performance with respect to laws, norms, codes, performance standards, and voluntary initiatives
  • Avoiding being implicated in publicized environmental, social and governance failures
  • Comparing performance internally, and between organizations and sectors

External Benefits

  • Mitigating – or reversing – negative environmental, social and governance impacts
  • Improving reputation and brand loyalty
  • Enabling external stakeholders to understand the organization’s true value, and tangible and intangible assets
  • Demonstrating how the organization influences, and is influenced by, expectations about sustainable development

The key drivers for the quality of sustainability reports are the guidelines of the Global Reporting Initiative (GRI), which enable all organizations worldwide to assess their sustainability performance and disclose the results in a similar way to financial reporting.

The largest database of corporate sustainability reports can be found on the website of the United Nations Global Compact Initiative.

Finally with the recent signing into law of the Financial Reporting Council (FRC) Act of 2011, it has become necessary for companies and organizations to disclose more on their governance management systems and the impact of this on the business of the organization.

As such now is the time for companies to start developing their strategies and systems towards collecting and reporting on the impact of their businesses on the sustainability of such business in the short, medium and long term.

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