Design a company sustainability report
Sustainability reporting is an important way for businesses to take responsibility for their environmental and social impact. By utilizing sustainability reports, businesses can show investors and other stakeholders the progress they are making on sustainability efforts, and performance. Companies that have committed to sustainable development should invest in corporate sustainability reporting to ensure transparency and accountability of their operations. Sustainability disclosures can provide comprehensive information about the company’s efforts in tackling climate change and other sustainability goals.
An organization's sustainability reporting should be a reflection of its business strategy, objectives, and performance across various dimensions of sustainability. By ensuring accurate, transparent, and timely information in the report, companies can gain the trust of investors and other stakeholders and help drive their overall sustainability agenda.
Overall, designing a business sustainability report should be done with utmost importance to ensure that all necessary information is included for investors and other stakeholders to view. This will help them make informed decisions about the company's operations and ensure that the company remains accountable for its sustainability efforts. By doing so, businesses can help create a more sustainable future.
In this resource, we discuss:
What is sustainability reporting?
Why is corporate sustainability reporting important?
6 essential elements for a top-notch sustainability report
Topics to include in your Sustainability Report
Sustainability reporting frameworks
Has your company created s sustainability plan? If not, you’ll want to have that in place before embarking on your sustainability report. Learn more about crafting a sustainability plan here.
Do you want to learn more about the fundamentals of sustainability, see Why businesses should embrace sustainability.
What is sustainability reporting?
Sustainability reporting is the practice of systematically measuring and disclosing an organization’s performance on environmental, social, and economic sustainability initiatives. Through sustainability reports, companies disclose quantitative data about their operations, including climate change impacts, climate-related financial disclosures, and sustainable development goals.
These reports are used to demonstrate transparency and accountability to investors and stakeholder groups and other interested parties, including the private sector, civil society organizations, and industry experts. Many investors actively work with companies to improve their Environmental, Social, and Governance (ESG) ratings by analyzing company disclosures across a wide range of sustainability issues. To read more about how how green companies attract investment with environmental initiatives, check out of resource here.
Companies are increasingly utilizing sustainability reports to provide a comprehensive view of their performance. Some companies reporting more than one-third of their total annual report as dedicated to sustainability data and information.
This approach provides stakeholders with valuable insight into the company’s overall strategy and performance across environmental, social, and business dimensions. As such, many companies are working to improve their sustainability reporting framework to meet the expectations of investors and regulatory requirements. Senior executives and board members also increasingly task management teams with further developing the company’s sustainability strategy.
Sustainability reports can help companies demonstrate progress towards goals related to climate change, greenhouse gas emissions, and other impacts, as well as an organization’s performance in meeting the UN Sustainable Development Goals. Sustainability information can provide insights into both the positive impact and negative impact of the company’s overall sustainability performance.
By leveraging a sustainability reporting standard such as the GRI Standards and The Greenhouse Gas Protocol, companies can further develop their sustainability disclosure and reporting initiatives. This will help to ensure that investors have access to the information necessary to make informed decisions about their investment in the company’s sustainability efforts, along with its financial performance.
Sustainability reporting is a rapidly evolving field, as companies strive to meet the increasing demands of investors for transparency and accountability around performance in meeting their sustainability goals. Companies that are engaging in sustainable finance, proactive in developing their sustainability reporting frameworks and engaging with stakeholders will be best positioned to succeed going forward.
Why is sustainability reporting important?
Sustainability reports help companies to improve financial performance and stakeholder engagement by:
Mitigating risk: A sustainability report provides shareholders with a clear overview of the organization’s performance on environmental, social, and economic issues. It helps to reassure investors that the company is taking meaningful steps to manage the risks associated with these areas and is working to improve its performance.
Improving efficiencies: Sustainability reporting can help companies become more efficient and successful in their operations. By creating an accurate picture of their sustainability efforts, companies can more easily identify areas for improvement or where progress has been made. This helps them to stay ahead of any potential risks that may arise in these areas.
Improving business confidence and reputation: Sustainable reports boost a business's credibility and reputation among customers and investors in terms relating to sustainability disclosures, risk management, cost optimization, financial management, and financial analysis.
Supporting decision-making: Having a comprehensive understanding of their performance in various sustainability initiatives can help companies make more informed decisions when it comes to managing risks and opportunities. Sustainability information can also be used to develop strategies that address any issues or capitalize on emerging trends. Sustainability reporting also allows businesses to better communicate their progress and commitment towards environmental and social responsibility which can sway investors.
Increasing employee engagement: Creating and maintaining a sustainability report can help to engage and motivate employees by providing them with an understanding of the company’s commitment to environmental and social responsibility. This type of reporting is also beneficial for recruiting new talent, as it demonstrates that the company is actively working towards a more sustainable and responsible future.
6 essential elements for a sustainability report
Creating a comprehensive sustainability report can be a daunting task, but there are five essential elements that all reports should include.
1. Materiality: Companies should determine which sustainability topics are most material to their operations and then focus on those in the report. Materiality refers to the impact that certain issues have on a company’s performance and its stakeholders.
2. Targets: A sustainability report should also include measurable targets that the company is striving to achieve. This can be used to track progress and measure success.
3. Strategies: Companies should include detailed information on their strategies and tactics for addressing environmental or social challenges in the short, medium, and long term. This could include a commitment to transitioning to renewable energy sources or creating more sustainable production methods.
4. Data: An effective sustainability report must include both qualitative and quantitative data. This data should provide an accurate picture of sustainability disclosures and performance in areas like greenhouse gas emissions, environmental protection, resource management, waste management, and social responsibility. Without this data, it will be impossible to accurately assess the company’s progress and performance.
5. Benchmarking and progress: Finally, the report should include benchmarking against industry standards and progress updates on any initiatives that are in progress. This will provide readers with a comprehensive understanding of the company’s sustainability efforts and whether it is making positive strides toward its goals.
6. Disclaimer Language: Lastly, it is important to include a disclaimer language that indicates that the report represents the company’s current view and is not a guarantee of future performance. This will help protect the company and it's investors and other stakeholders from any potential liabilities. Other important items to include might be:
A CEO letter that communicates to stakeholders that ESG is important to leadership by expressing their renewed vision for the company and their sustainability strategies.
Showcasing stories or case studies that illustrate progress in various sustainability initiatives. One example might be a community outreach project with a great story and photos.
Design a layout that is both visually appealing and easy to navigate
Hot topics in Sustainability Reports
Organizations include a range of sustainability disclosure that reveals its sustainability strategy, sustainability activities, sustainability performance using sustainability data, and major sustainability issues. It is usually released at the same time as its annual reports. Sustainability reporting at each company's report is different according to its material sustainability factors. Common themes that companies report on include:
Environmental Disclosures
Risk Mitigation: Discuss how they are mitigating environmental risks, such as through the use of insurance policies or risk management strategies.
Waste Management: Disclose information on their waste management practices, such as recycling, composting, or hazardous material disposal as well as information on reused or recycled materials.
Energy Efficiency: Report on their efforts to reduce energy use and implement renewable energy sources, such as solar panels or wind turbines.
Resource Management: Discuss how they are managing natural resources, such as water, timber, or minerals. They may include information on resource conservation and replenishment strategies.
Human Capital Management
Diversity and Inclusion (qualitative): Report on their efforts to foster a diverse, inclusive workplace. This can include activities like recruiting from different sources, mentorship programs, implementing flexible working policies, promoting gender equality, and providing unconscious bias training for employees.
Diversity (quantitative): Provide quantitative data on the diversity of their workforce, such as gender and ethnicity breakdowns.
Training: Provide information on the type and amount of training provided to employees, such as health and safety, and technical or professional development courses.
Health and Wellness: Report on efforts to improve the health and well-being of their employees, such as providing ergonomically designed workstations or promoting healthy lifestyle choices.
Employee Engagement: Provide information on their efforts to engage employees, such as implementing employee surveys or hosting regular town hall meetings.
Health and Safety: Provide information on safety measures such as providing proper protective clothing and equipment, minimizing hazardous material use, and conducting regular safety inspections.
Community Impact and Philanthropy
Community Impact: Disclose information on their efforts to positively impact local and global communities. This can include activities such as providing educational opportunities, investing in infrastructure or donating to charitable causes.
Corporate Philanthropy: Discuss their efforts to support the community, such as through donations or sponsorships of events and organizations. Community
Current Social and Economic Issues: Issues such as COVID-19 and Black Lives Matter have had a major impact on businesses. Companies outline their response and the measures that they are taking to ensure social justice and racial equity. They may also provide information on how they are supporting employees, customers, and local communities during difficult times.
Governance
Ethical Business Practices: Disclose information on their ethical business practices, such as anti-corruption and bribery policies.
Board of Directors: Provide information on the composition and activities of their board of directors, such as directors’ qualifications, any conflicts of interest, and attendance at meetings.
Supply Chain Management: Report on efforts to evaluate, monitor, and manage their supply chains to minimize the environmental and social impacts associated with sourcing raw materials or products. This can include activities such as supplier monitoring, traceability, and transparency initiatives.
Risk Management: Discuss their risk management strategies, such as insurance policies or procedures for identifying and managing risks.
Data Security: Provide information on how they protect customer data and ensure the privacy of personal information.
To learn proactive ways to put some of these strategies into action, check out 21 sustainable business practices and 70 ideas for reducing waste at work.
Choosing a sustainability framework
Choosing a sustainability framework — also known as a sustainability reporting standard — can be challenging due to the wide range of options available. They should consider the value that their chosen framework will bring to stakeholders such as investors and regulatory compliance. A handful of firms even customize their own framework to meet their specific needs.
To increase greater uniformity of reporting across industries, the Financial Stability Board (FSB), a sustainability accounting standards board, has created a voluntary task force that is working to create a common set of global ESG disclosure standards. Here are some of the most popular sustainability standards.
Global Reporting Initiative (GRI): GRI is a comprehensive framework for sustainability reporting. It guides corporate social responsibility and sustainability reporting and covers sustainability disclosures from climate change and human rights to labor practices and anti-corruption. The GRI standards offer detailed guidelines on how to disclose information in the report as well as advice on setting targets and measuring progress.
The GRI standards are an excellent choice for companies that are looking for a comprehensive framework to create their sustainability reports. The guidelines are detailed and clearly define what should be included in the report, which makes it easier to follow. Additionally, the GRI reporting standards are one of the most widely-adopted frameworks and thus providing strong credibility when presenting your sustainability report.
However, many businesses find the framework too complex and time-consuming to implement in practice. Additionally, it does not provide enough guidance on how to communicate results to stakeholders or how to measure progress over time.
The GRI is an excellent choice for larger organizations that have the resources and capacity to implement a comprehensive sustainability reporting framework. It can also be beneficial for smaller enterprises that are looking to establish their credibility in the eyes of investors and others.
The Sustainability Accounting Standards Board (SASB) is a framework for creating sustainability reports that focuses on the financial materiality of ESG issues. It provides businesses with guidance on how to identify and measure material ESG disclosures and how to communicate those disclosures in their reports.
The SASB is an attractive option for companies looking to focus on financial materiality sustainability disclosures when creating their reports. Additionally, the SASB is one of the few reporting standards that allow companies to incorporate investors input into their reporting process. However, businesses often find the framework difficult to apply in practice, as it requires a detailed understanding of financial materiality.
The Carbon Disclosure Project (CDP) framework provides businesses with comprehensive guidance on how to collect, report and disclose information related to their greenhouse gas emissions, as well as advice on setting targets and measuring progress.
The CDP is an attractive option for companies looking to measure and manage their carbon emissions. Additionally, the CDP allows businesses to track their overall progress toward reducing emissions over time. However, the reporting standards are designed mainly for large companies with the resources and capacity to manage their emissions.
The CDP is an excellent choice for larger organizations that are looking to actively manage their carbon emissions. It is especially beneficial for companies that are looking to track their progress toward reducing emissions over time.
The best frameworks for small and medium sized business (SMEs)
The Global Reporting Initiative (GRI) is a great option for medium and small businesses looking to create sustainability reports. The framework provides comprehensive guidance on how to collect, report and disclose information related to sustainability impacts such as human rights, labor practices, environment, and more. Additionally, the GRI allows businesses to set targets and track progress over time. Beware though, this is a very complex standard and should only be taken on with the appropriate level of resources allocation.
The United Nations Global Compact (UNGC) is another great option for medium and small businesses looking to create sustainability reports. The framework guides corporate sustainability, including how to collect, report and disclose information related to human rights, labor practices, the environment, and more. Additionally, the UNGC offers resources that enable companies to set targets and track progress over time.
Finally, the International Standards Organization (ISO) is an excellent choice for businesses looking to create sustainable reports that focus on corporate social responsibility and performance. The framework provides comprehensive guidance on how to collect, report and disclose sustainability information related to human rights, labor practices, the environment, and more. Additionally, the ISO allows businesses to set targets and track progress over time.
B-Corp certification is yet another option. The certification provides an independent assessment of companies’ environmental, social, and governance performance. Companies must meet certain requirements to achieve certification, including meeting certain standards related to ESG ratings and performance. Additionally, the B-Corp certification allows businesses to track progress toward achieving their goals over time.
Conclusion
In conclusion, sustainability reporting and disclosures are an important part of corporate responsibility. Companies must have a comprehensive understanding of their impacts on the environment, society and economy in order to ensure long-term financial performance. Additionally, stakeholders such as customers, investors, regulators and other interested parties expect companies to produce accurate and timely sustainability reports and disclosures.
The CDP, GRI, UNGC, ISO and B-Corp certification are all great options for a business looking to create sustainability reports. With these frameworks in place, businesses can track their progress towards achieving sustainable goals and ensure that they meet the expectations of investors and other stakeholders.
