Sustainability reporting is no longer optional—it's a stakeholder expectation. Most business leaders understand this: 90 percent of S&P 500 companies now issue public sustainability reports. By reporting, they capture a number of external and internal benefits, which include meeting regulatory requirements, improving relationships with stakeholders, enhancing trustworthiness and reputation, clarifying a company’s performance on sustainability issues (which can trigger a greater focus on improvement), and identifying sustainability risks and opportunities.
However, the reporting landscape is shifting, increasing expectations of what is needed in the sustainability report. In the past few months, several new proposals and announcements have shaken up the space, including:
- A Statement of Intent to Work Together from five reporting framework and standard setting organizations that emphasizes alignment and harmonization;
- A proposal from the International Financial Reporting Standards (IFRS) Foundation to create a new Sustainability Standards Board (SSB) that would develop global sustainability standards;
- Pending changes to the Non-Financial Reporting Directive (NFRD) in Europe; and
- The World Economic Forum International Business Council paper that puts forth a global set of 21 core metrics for disclosure, building on existing sustainability reporting standards and frameworks.
These developments imply future changes to a company’s reporting structure and process. Most significantly, they lay the groundwork for a closer linkage to financial reporting, which would mean that companies will need to treat sustainability information with a higher level of rigor, akin to information included in financial reporting.
Sustainability reporting is both a beneficiary and an enabler of good performance on a company's material issues.
Even with the new developments, two key points remain clear: first, the sustainability report will continue to play an integral role in the future of company disclosure, and second, stakeholders—the users and readers of the report, including investors, customers, suppliers, NGOs, and others—expect high-quality and robust information on both the company’s impact on sustainability and sustainability’s impact on the company.
Meeting stakeholders’ increasing expectations can be a complex task. As a result, BSR has published a practical guide, Five Steps to Good Sustainability Reporting, to help companies master the fundamentals of decision-useful disclosure that enables positive sustainability outcomes. In the guide, we have distilled the complexities of sustainability reporting into key principles and common steps, combining existing guidance from leading reporting standards with practical case studies from 10 BSR member companies.
As reporting practitioners likely already know, sustainability reporting requires continuous learning and improvement. Accordingly, this guide may be utilized by new reporters and experts alike. Those just starting out on their reporting path can lay the groundwork for their first disclosure and set out a strategy for year-on-year improvement. Expert reporters can "sense check" their reporting processes, learn from other companies, and use the document to educate peers and build capacity internally on what it takes to get the report done.
As report readers and users increasingly seek comparable, balanced, and performance-focused sustainability disclosures, there is an increasing need for companies to not just tell their story, but to also link it back to the core business and be confident that the issues they’re prioritizing and communicating are the right ones. Sustainability reporting is both a beneficiary and an enabler of good performance on a company's material issues. As part of a company’s process of identifying and addressing the sustainability issues that impact their business and stakeholders, reporting is a tool that can not only build a sense of purpose and unity within a company, but also one that promotes change within and across industries.
BSR works with companies all along the reporting journey, from those working on their first sustainability report to expert reporters who need help developing a long-term reporting strategy. If you’re interested in learning more about this work or in joining our Future of Reporting initiative, in which members learn from each other and share reporting best practices, please don’t hesitate to reach out.
Originally appeared on BSR.
KEYWORDS: BSR, sustainability reporting