Every other day or week, we are bombarded by news that suggests our planet is headed to a cataclysmic end. From 80,000 acres of tropical rainforest that are cleared every day to every country racing to enrich its nuclear capabilities, among others, the biggest question is, “Is there a way out? Can we halt this race to self-destruction?
This post comes with good news because, yes, it is possible to address these challenges. The solution is corporate sustainability reporting. This is a process targeted at long-term economic stability, profitability, and progress that will redefine the society.
This post takes a deeper look into ESG sustainability reporting to determine how you can get it right to enjoy associated benefits.
What is Corporate Sustainability Reporting?
If you are a new manager, leader, or entrepreneur, the first step to implementing ESG sustainability reporting is to understand what it is. ESG sustainability reporting is the disclosure of an organization’s details about its impacts in three main areas, social, environmental, and corporate governance. The process is not limited to the report, but extends to enriching the organization's operations to inform change towards a sustainable economy.
The reporting is hinged on the results of two global UN conferences, the World Summit on Sustainable Development(WSSD) of 2002 and the UN Conference on Environment and Development. These meetings demonstrated that sustainability should become part of every development as a way of ensuring both the current and future generations enjoy resources on the planet (click here to know more about ESG report)..
Sustainability reporting demonstrates the inherent conviction that if everyone plays his/her part, we can change the planet.
Some of the main benefits of corporate sustainability reporting include:
· Better awareness of opportunities and risks for a business.
· Better long-term planning and strategizing.
· The link between financial and non-financial company performance becomes clear.
· Helps to improve company reputation.
· Stronger relationship with company stakeholders.
· Enabling customers to make informed decisions based on the presented information.
The Main Corporate Sustainability Reporting Principles
We have just scratched the surface to unearth the benefits outlined above; the list can be a lot longer. To enjoy them and see your organization grow from one level to another rapidly, it is prudent to grasp and follow the corporate sustainability reporting principles .So, here are some of them:
· Transparency and Accountability
This principle requires managers to be honest about the information they include in their reports. If you targeted to cut emissions by 50% but only managed 25%, provide the correct information.
Also, highlight the possible causes, and remedies that you are installing for better results. When such remedies help you to hit a high emission reduction rate, interested stakeholders will be convinced to invest in your company or buy your products.
Another thing when it comes to transparency is that you need to also capture the negative side of the story. It is true that corporate sustainability reporting is about increasing the positive impacts, but all positives with no negative occurrence can raise a red flag.
So, go ahead and tell stakeholders about things such as costs that came from installing new equipment and training.
· Consistency and Comparability
There are many calculations, frameworks, and formulations that you can use during the sustainability reporting process. Consistency makes it easy for stakeholders to compare performance for evaluation and benchmarking. To make your organization stand out, try to make sustainability efforts progressive by building on the previous achievements.
· Materiality
Another important principle of sustainability reporting is materiality, which is aimed at helping to prevent the report from being too long or cluttered. Therefore, you are required to focus on information with direct or indirect social, economic, and environmental impacts. For example, if you have a manufacturing facility, some common sustainability actions might be adopting green energy and treating wastes.
· Flexibility
The unique thing about corporate sustainability reporting is that you are given the freedom to choose the preferred action. This principle has been very instrumental in making more companies adopt sustainability reporting because they can set goals for their achievements. For instance, you might want to start with training staff and the community on sustainability in 2022 and then shift to buying and installing new equipment for higher efficiency in 2023.
Corporate Sustainability Reporting: The Information to Include
Armed with the principles of corporate sustainability reporting, the next thing is determining the type of information to include. In line with the definition of ESG sustainability reporting, here are the five main categories of information that you might want to include:
· Your company’s information on consumption of non-financial resources. Try to be as accurate as possible about the use of resources such as forestry, water, energy, and fossil fuels.
· Waste production from the facility. Does your facility release liquid and solid wastes? How are wastes discharged?
· Your participation in matters of the community. If you have initiatives that involve working with NGOs, faith-based organizations, or health support groups, among others, the details should be captured in your report.
· Innovations initiated by your organization to create products or services that support the sustainability agenda.
· Training your sustainability team or entire organization’s employees on sustainability. What was the goal of the training? What about the costs?
As you can see, the information to include in your repot can vary depending on your organization and its goals. Therefore, make the objectives genuine, and try to get everyone on board so that achieving them can be easier. You might also want to use sustainability reporting programs to make the process easier and increase accuracy. All about SASB certification here.
A Step-by-Step Guide to Implementing Corporate Sustainability Reporting
The process of sustainability reporting closely resembles other performance-based processes, implying that it includes goal setting, measurement, analysis, and action. However, it differs slightly because of the information that you are dealing with. If you will be dealing with a lot of data, advanced applications for analysis might be required.
Step One: Define the Goals for Sustainability Reporting
You can only be able to achieve the targeted goals for sustainability if there are clear objectives. Although sustainability reporting is expected to provide a holistic outlook of the company on matters of sustainability, being general can make it challenging. This is where the principle of materiality comes into play.
Think of the company’s vision and try to link it with a better future. When crafting the goals for sustainability, it might be a good idea to reach out to external stakeholders (investors, customers)and internal stakeholders (employees, managers, and shareholders) and ask them what should be prioritized. For example, you might be surprised to hear more clients want the company to support social justice while you had thought of promoting species diversity.
Make sure that for every goal you set, there is a performance indicator for checking it and a clear schedule. You also need to pick the preferred reporting framework, such as Global Reporting Initiative (GRI) or the Greenhouse Gas Protocol(GHG Protocol), to guide you with data collection along the way. Remember to make the target and data gathered therein as accurate as possible.
Step Two: Set a Budget, Initiate Actions
To make your corporate sustainability reporting effective, it should be funded accordingly. So, set aside enough resources and direct them to the right team for action. If you have a large organization, setting aside a budget should also come with delegation of duties. Here, you might want to introduce experts or use the already available staff.
Following your timeline to initiate specific actions, gather data progressively. For example, if you have scheduled regular maintenance of the machines for higher efficiency, make sure the activities are undertaken and results measured. If you have sustainability management software, it might be possible to add data immediately after it is collected.
Step Three: Evaluate Performance
The data you collect might require validation or confirmation to ensure that only the right details go into the final report. Then, it needs to be evaluated and then converted into useful information. The evaluation should involve careful calculations to determine if the performance targets were achieved, missed, or surpassed.
Evaluation should include a deeper evaluation of the whole corporate sustainability reporting concept inline with the organization's targets. If you managed to cut down the emissions by 40% and water use by 25%, how do the two impact the company's overall performance?
If the profit shot down because of the new facilities acquired by the company, what are the new projections? The shareholders should be told, “Look, we just started sustainability reporting, which involved these costs, but the next phase will come with bounty in productivity, and sustainability?”
Step Four: Reporting and Communication
The last step in your sustainability reporting process is reporting and communication. As we indicated earlier, the report you create should be released for stakeholders to use to make decisions. Therefore, start by sitting down with internal stakeholders and evaluate the successes. This might also be the time to ask the hard questions, such as "Where did you go wrong?" and "What can be done in a better way?"
Finally, publish the report on different platforms, such as the company's website, and social media networks. You can even share the report with friends of the company and regulatory authorities. You have done it. Congratulations!
Corporate sustainability reporting is a comprehensive process that requires inherent evaluation and adoption of goals for improving an organization and making the world a better place. Remember that it does not matter the size of your organizations; you can make a difference by adopting sustainability reporting.
