Sustainability Reporting

What are sustainability reports?

Sustainability reports are based on non—financial information and are the key platform to communicate sustainability performance and impacts. They are a tool to show stakeholders how the organisation’s strategy, governance and performance lead to value creation.

They cover areas such as:

How to report on sustainability?

(All types of organisations can report on sustainability.)
It is broadly expected from consumers, financial institutions, investors, customers, own workforce and many other stakeholders that businesses need to act on sustainability. Transparent communication on environmental, social and governance matters will support long-term resilience.  The best way forward to do this is to report on all these elements based on reliable standards such as the ESRS, IFRS-S or GRI.
It will give a canvas to create a balanced report as a reflection of the company’s business model based on all elements that are part of the company’s strategy.
A good practice would be to start with a materiality analysis, or the double materiality as it has been defined within the new ESRS standards, where the impact analysis on people, planet and the environment will be done, but also the impact that those have on the company’s business and connected to its financial consequences.

In order to be resilient and to adapt, business leaders need to evaluate sustainability-related risks and opportunities and their financial impact on the company.

Sustainability reporting is based on two underlying fundamentals of a business – trust and transparency. It is a broad concept and covers various parameters of business performance, such as environment, social and governance.

Beyond financial performance, sustainability reporting standards cover the impact of business on various environmental resources, steps the companies are taking to cut down on their carbon footprint and socially how they are engaging with the workforce. It also sets standards on the governance aspect of the business and how well companies are performing on it. Stakeholders expect companies to publish an integrated management report so that the relevant links between financial and sustainability information can be highlighted.

What is the use of such a report?

Driven by the market, CFOs and CSOs are invited to work closely together to respond to the stakeholders' interests and needs. This is accomplished by engaging on the various sustainability topics and translating the company’s strategy into a transparent and well-balanced report. As mentioned before, this new perspective evolves corporate reporting to a tool allowing the user to access information about both financial and non-financial topics. This highlights the connections between financial and sustainability performance. A sustainability report provides those companies that have engaged in efforts around environment and climate justice, sustainability and human rights, with a means to translate this into their annual report.  

Furthermore, financial institutions, shareholders, credit providers, but also your own employees, new talents and customers increasingly prefer working with companies that drive a sustainable path.

Achieving sustainability can lead to improved decision-making, operational efficiency, customer attraction, and talent acquisition.
 

Risk management

Sustainability is intrinsically linked to resilience. Understanding potential risks and their financial impact must be part of the risk management strategy to be able to develop preventive actions and to ensure business continuity.
It is here that the value of sustainability reporting lies. It's not just a report but a guide to build the company’s future business processes, predict changes and plan them in time to improve the overall efficiency.

Optimising efficiency

The sustainability report can be a catalyst for transforming your business model and enhancing your operations’ efficiencies. By adopting sustainability as a ‘way of life’, a company can not only find opportunities and efficiencies through business optimums.  A sustainability report gives a company room to focus on its core mission and streamline efforts to achieve the pre-determined objectives.

Shifts and claims

A sustainability report gives a partial but important view of the future.  It provides valuable insight into environmental and societal shifts. It helps to share your company's strategy and ambition to mitigate and adapt to those shifts.
Legal frameworks are getting more precise and comprehensive. These increased reporting demands for companies lead to a higher vulnerability to sanctions and claims.
In tandem with this, the assurance required on a sustainability report will enhance reliability of the content of the report for stakeholders.

Stakeholder engagement

With the demand for transparency on the rise in all sectors, this new type of reporting will be necessary to retain customers and employees. Stakeholder attach a lot of importance to strong sustainability performance and they expect commitment from the organisations they work with or for. The reporting gives tangible information to answer their concerns and demonstrate the actions taken.