Reporting is an important part of your company’s overall sustainability strategy.
Reporting is an important part of your company’s overall sustainability strategy. Ernst & Young, a Toronto-based tax and transaction advisor, cites research that shows more than 3,000 companies worldwide, including two-thirds of the Fortune Global 500, issue reports, and they’re being used to drive better decision-making.
“Canadian businesses that produce quantifiable and data-rich sustainability reports establish a reputation for transparency and build stakeholder trust. The practice is also expanding to areas such as the supply chain and risk management. Ernst & Young offers 10 reporting tips:
• Use a recognized framework to structure the report and add credibility. Although no universal reporting standards exist, several frameworks developed by non-governmental organizations are in widespread use, including the Global Reporting Initiative Reporting Framework and the AccountAbility standards.
• State your company’s vision and commitments. Stakeholders want to know that your company’s sustainability initiatives are driven by a long-term vision that aligns with your corporate strategy. There should be a unified vision between the company’s annual financial and sustainability reports.
• Set and report on targets by establishing non-financial key performance indicators (KPIs). Reports should provide a balance between qualitative and quantitative targets that address your stakeholders’ concerns and material issues. Setting targets as KPIs also creates accountability for your company to meet publicly stated goals, leading to better measurement and tracking.
• Include stakeholder engagement. Companies that do so better understand and respond to the material concerns of those stakeholders. This adds credibility to your report.
• Identify opportunities for strategic innovation and market building. Stakeholders want to see their companies identify and tap into new business opportunities. Undertaking sustainability innovation drives growth by creating demand, opportunities and new markets.
• Show performance trends. Reports should provide historical data whenever possible and provide feedback on why performance has changed over time.
• Be frank about difficult issues and shortcomings. Investors hate surprises, so acknowledge in the report sustainability risks your organization faces and highlight any short- and long-term initiatives underway to mitigate such risks. Also, be forthcoming with your readers if you miss a target. Stakeholders will see this is a journey and want to understand what corrective actions you are taking.
• Develop a corporate governance structure with clear reporting lines. Sustainability reporting is a mandate that requires backing from senior leadership and accountability at the operating level. What’s more, companies should consider creating robust systems and processes that help collect, store and analyze sustainability information.
• Obtain third-party assurance. While sustainability reports don’t need to be audited just yet, they’re being more closely monitored. As this trend continues, those who use sustainability information will come to expect it to be validated by a reliable third party.
• Consider creating a specialist advisory board. It could include academics, lawyers, non-governmental organization representatives and industry experts who would provide an independent assessment of your report.