5 key elements to make your sustainability report a good one

For any business, the best way to become more conscious of sustainability impact and to really ensure that sustainability is incorporated into the business model, is through sustainability reporting.

Sustainability reporting is a way for companies to measure and track their sustainability data, to better understand their impact on society and the environment, and also to communicate that impact to their stakeholders and the public. In 2020, 96% of G250 companies (the world’s 250 largest companies by revenue) reported on their sustainability impact.

Companies undertake sustainability reporting for a myriad of reasons, including: legislative and regulatory pressures such as the upcoming Corporate Sustainability Reporting Directive (CSRD) in the EU, external pressures from stakeholders (such as investors or consumers), or to track, measure and improve impact and progress.

But, what makes a good sustainability report? Many companies are taking the chance to highlight their positive impact in their once-a-year sustainability report, connecting it to SDGs they’ve helped improve (sometimes running the risk of SDG-washing), conveniently under-reporting or even omitting their negative impact – but to what end? (Especially if they are obscuring and under-reporting their negative impacts?) We’d say as a general guideline, a good sustainability report is one that includes data on ALL your impact areas, especially your biggest one – and regardless of what direction it takes, it needs to be a report that is holistic, transparent, and complete.

In this blog, we dive deeper into how you can write a good sustainability report, and the five key elements you should include in your sustainability report to make it a good one, to serve a purpose of greater impact. This blog will cover:

• What is sustainability reporting?

• Why is sustainability reporting important?

• What are the benefits of sustainability reporting?

• How to write a good sustainability report?

• 5 key elements to make your sustainability report a good one

What is sustainability reporting?

The term ‘sustainability reporting’ was coined in the 1990s by Oak Ridge National Laboratory, which defined it as "a company's use of internal data and external benchmarks to assess progress towards environmental, social, and economic sustainability." It is most often used by large organizations, but is quickly becoming an important topic for small businesses too – for example, in the EU, the upcoming CSRD will increase the number of companies legally required to report their sustainability activities from the current 11,000 to 49,000.

Sustainability reporting is a way for organizations to share their environmental and social impact and information with the public and their various stakeholders. This type of reporting is important because it provides transparency, accountability, and insight into an organization's performance. A sustainability report can also demonstrate the link between a company’s business model and its sustainability impact.

Why is sustainability reporting important?

An effective sustainability report can help investors, clients, and other stakeholders be more aware of a company's efforts to lessen its adverse effects on the environment, as well as reveal certain risks and opportunities.

A company’s long-term performance and sustainability can also be enhanced with sustainability frequent reporting, by means of providing accurate, data-driven decision-making material to drive important decisions.

What are the benefits of sustainability reporting?

If you’re not already doing sustainability reporting, here are some compelling reasons why you should probably start ASAP:

• 61% of companies indicated that sustainability reporting adds value to their organization and strategy.

• More than 80% of mainstream investors rely on sustainability disclosures and reporting to make decisions.

• Sustainability reporting leads to a 56% increase in the likelihood of a company setting emissions reduction targets or objectives to be achieved.

• Over 90% of consumers say that transparency by a brand is important to their purchase decisions
  
  

Besides these numbers, we’ve also observed and compiled a list of other benefits that sustainability reporting will bring to you and your organization:

1. Keeping an overview so you know what to focus on

2. Ensuring regulatory compliance

3. Becoming more attractive to customers

4. Attracting and retaining talent

5. Build employee pride and loyalty

6. Becoming more attractive to investors

7. Upgrading the status of sustainability in your company’s agenda

8. Increasing transparency, credibility, and accountability

How to write a good sustainability report?

Creating a report that brings a relevant, balanced and truthful narrative for stakeholders is no easy feat – what is important to one group may not make an impression to another.

Regardless of your stakeholders’ varied demands and interest areas, here are three unmissable pointers that would serve every and any business well, in terms of how to write a good sustainability report.

1. Make sure you use a suitable sustainability reporting framework

Nothing can be worse than a sustainability report without aim or structure – good thing there are already sustainability reporting frameworks out there for businesses to make use of!

As a first step to ensuring proper structure into your report, pick a suitable sustainability reporting framework. Existing frameworks include: Global Reporting Index (GRI) , Sustainability Accounting Standards Board (SASB),Climate Disclosure Standards Board (CDSB) , Carbon Disclosure Project (CDP) , and Task Force on Climate-related Financial Disclosures (TCFD) . Using a framework to organize your sustainability data collection and reporting also adds another level of reliability to your final report.

2. Understand sustainability reporting standards and legislations

Another important tip for businesses to consider when creating a sustainability report: make sure to understand which standards and legislation applies to you and your business! There are certain expectations that every business needs to be mindful of them when executing sustainability in their operations. As more and more new policies and laws are being drafted and quickly coming into force, it can feel overwhelming trying to keep up with regulatory requirements and making sure you don’t end up with fines and penalties for being ignorant (which is why we’d say, it’s better to be proactive with your sustainability efforts and reporting rather than reactive…but moving on)

For now, to ensure you’re up to date on the latest in sustainability standards and laws, be sure to read our articles on the 4 key sustainability regulations you should know about in 2022, and 4 sustainability standards you should know about .

3. Ensure transparency and traceability

We cannot discuss reporting without emphasizing the value of transparency. The idea behind corporate sustainability reporting is to provide the business and its stakeholders a better view into the business’ impact and the progress and outcome of its sustainability efforts.

But no matter the wealth of information and data a company presents in its sustainability report, it doesn’t matter unless stakeholders can trust that the information presented is reliable and accurate – this is where transparency and traceability comes into play.

Ensuring transparency and traceability into your sustainability reporting processes will allow you to gain credibility and build trust with your stakeholders and the public, which is fundamental for any type of sustainable value creation.

For your sustainability reporting to be transparent and traceable, so must be your data: Read this article to find out more about why data transparency and traceability are important for sustainability, and how you can enforce it.

5 key elements to include in your sustainability report:

Now that we’ve got all the basic information of what a sustainability report is and why it is important out of the way, it’s time to dive into the nitty-gritty!

We’ve curated five key elements you should include in your next sustainability report, to make it a good one. Including these key elements will ensure that you are providing a meaningful and relevant sustainability report that not only meets the legislative requirements and that of your stakeholders, but also helps you efficiently track, measure and improve your sustainability efforts to create real impact.

1. What is material for you?

For any business, in order to come up with a relevant and successful sustainability strategy, it is important to first understand where impact lies – and we’re talking about both negative and positive impacts.

Similarly, before you dive into the rest of your report, it is crucial to provide information on what is material for your business – where do your impacts lie? What are the matters and focus areas that are most relevant for your company to address?

Beginning your sustainability report with what is material to your business not only shows that you understand your impact areas well, but also it successfully sets the scene for the rest of your report: it provides context for your strategy, your targets and the key performance indicators (KPIs) you will measure track, and lends more weight to your goals and progress.

Being transparent about your material impact also helps you stay clear of greenwashing (you know, the bad apple companies that only highlight the good stuff while casually omitting the negative consequences).

2. What are your targets?

The next key element to include in your report are your targets. Since you’ve already recognized your impact areas in the report’s initial section, outlining attainable targets and your motivation for these targets become considerably easier. Your targets should support the achievement of your larger goals (e.g. becoming carbon neutral by 2045).

For better accountability, targets should be broken down into sub-targets where necessary, and accompanied with a clear timeline and roadmap. For example: if, after a material assessment of your supply chain, you realize the largest impact comes from specific materials you purchase, your overall goal could be to reduce the emissions from those materials in your supply chain, and you might want to set targets related to reducing, reusing, or replacing existing materials with more sustainable alternatives.

3. What is your strategy over the short, medium and long term?

Now that you’ve outlined your targets in your sustainability report, it’s time to set out a thorough plan on how you’ll meet them. This includes breaking down each target into its risks, possibilities, and the actionable steps necessary to achieve it, and then plotting them against the short, medium, and long term. In addition, keep in mind the specifics and insights that investors and other stakeholders will be looking for while developing your sustainability strategy.

Companies that clearly communicate its sustainability goals and action plans across departments make it simple to comprehend how sustainability is incorporated into the business. Effective sustainability reports are ones that are able to explicitly outline their overall sustainability agenda over the short, medium, and long term, as well as demonstrate how these plans align with, and serve the purpose of fulfilling the main objectives and goals.

4. Definitions and KPIs

There’s no use setting targets and coming up with a strategy if you don’t measure and track your progress. Therefore, one of the most crucial parts of implementing a sustainability strategy is being able to track your progress – and therefore knowing what to measure – so you can adjust your strategy as you go.

To measure your progress and success in reaching your targets, you need to set definitions and pick out the relevant KPIs to measure, in order to quantify and track your progress. Afterall, we like to say that what can’t be measured can’t be managed, and therefore can’t be improved.

Definitions are important to ensure consistency throughout your sustainability reports in the future, and they become particularly important, for example, in scope 3 emissions, since that may differ from organization to organization, and is not as straightforward as scope 1 and scope 2.

Alignment in reporting makes data easily comparable between organizations. In fact, the EU Taxonomy was established with the aim of providing clear and standardized definitions, and a clear framework for concepts of sustainability and reporting, in particular, exactly defining when a company or enterprise is operating sustainably or environmentally friendly.

5. Performance measuring and benchmarking

Today, investors are increasingly requesting more information about a company's sustainability impact and performance on a regular basis, either directly or through the use of several sustainability benchmarks or indices.

Make sure you have the necessary infrastructure in place to keep track of all ongoing sustainability efforts, as KPI benchmarking depends on effective data collection and project management. Having an infrastructure with a KPI library that serves different purposes can save you time, and also ensure that you are providing the right information when it comes to different benchmarks.

Closing: How to do sustainability reporting right

There we have it! We’ve highlighted the 5 key elements you should include in your sustainability report to make it a good one. Don't forget that being able to justify your actions is just as vital as being able to articulate what you are doing.

All in all, we understand that sustainability reporting can be tricky given all the various legislative demands, pressures, and other considerations – it’s not easy having to ensure a good balance between being comprehensive of all essential components, while keeping it simple enough for all your stakeholders to understand and act on the information.

You might also face some sustainability reporting challenges along the way, but we’ve got you covered – what can help you fix and avoid these issues is a solid sustainability management platform – one just like ours!

Contact us or schedule a free demo with us to find out more about how our platform can give you better insight into your sustainability impact, solve your sustainability reporting challenges, and accelerate change within your organization!

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