Many organizations are creating sustainability reports, but what's the motivation behind it? This article addresses that question. EHS Research.
Recently we discussed the ‘why’ behind producing sustainability reports. This debate tends to rage on as some feel we ought to produce sustainability reports, others find value in the process, and others think they are worthless documents, designed only to cultivate prestige and foster a sense of progression in a field where so many lag.
But as we have also discussed, more than 90% of the world’s most profitable organizations engage in some form of sustainability reporting. It’s not so much a chicken-or-the-egg question to ask whether organizations that have achieved sustainability successes are profitable as a result of reporting, or whether reporting organizations do so simply because they have achieved best-in-class financial performance and feel they ought to report because they are in that prestigious sphere.
Instead, what is clear is successful global manufacturers do report on sustainability performance. Whether they feel it is a driver of success or whether they are ‘reporting for reporting’s sake,’ market leaders feel compelled to report. Knowing that leading organizations choose to engage in sustainability reporting, let’s look at the key things organizations do to develop winning reports.
1. Focus on Metrics and Accomplishments
One key criticism that has been leveled against many sustainability reports—and indeed the criteria presented by the reporting organizations they adhere to—is that they are simply providing their own narrative of their own supposed successes. Sometimes this is true, but it also depends on how they are reporting. Organizations may report for regulatory reasons, or they might provide sustainability reports that don’t meet any sort of external framework, or, in many cases, they may build datasets based on external guidelines (like GRI or CDP) and then provide to stakeholders that are 'certified’—for lack of a better word—by third-party sustainability reporting organizations.
What’s often lost in all of these pursuits is a focus on metrics and accountable accomplishments. It is one thing to say you have engaged in x initiative to reduce carbon emissions, with a lot of marketing gloss. It is quite another thing to state what kind of emissions reduction targets your organization has met, and to back up those accomplishments with provable metrics.
We can all tell a story in our sustainability reports, of course. There’s nothing wrong with adding color and context to our achievements. However, we always have to fall back on hard data, and we need to provide data in our reports, sourcing not only the numbers but also the methodology that went into determining those numbers.
Bottom line: a sustainability report describing your progress with a glossy narrative does little for your organization or sustainability efforts at large. Provide clear metrics, benchmarked against historical progress and, where available, industry standards to provide a clearer and more accountable assessment of where you’re at against competitors.
2. Appoint an Executive Owner of Reporting and Report Consistently
Many organizations willy-nilly commit to the ‘idea’ of sustainability reporting without establishing a clear internal champion of the effort involved in that commitment.
Whether we’re aligning reporting with regulatory bodies, reporting frameworks like GRI, or even providing ad hoc reports to stakeholders on our own terms, there’s a lot of leg work involved in generating reports. It can take a ton of time and effort to collect the key metrics that communicate sustainability performance and progress.
This cannot be left to one individual in one department, as the effort requires cross-functional participation. Executive-level sponsorship of a companywide endeavour to seriously engage in sustainability reporting will go a long way in streamlining information gathering.
With that, it is important to appoint an owner of the process. If you have a Chief Sustainability Officer, that would be the obvious go-to for an internal champion of such an initiative. But if you don’t have someone of this capacity, consider electing someone else that can own the sustainability reporting process. Also, the owner of this process can ensure reporting is consistent, on at least an annual basis. Often organizations that claim to report have documents on their websites that are two or more years old. If you invest in reporting, report on a consistent basis.
In my experience many organizations desire to develop sustainability reports, but are encumbered by a lack of executive ownership. If it is clear leadership wants quality reports developed and published consistently, then there needs to be a clear directive from the top down and the bottom up to make reporting initiatives a successful reality.
Here I would add that there’s a place for reporting in almost all organizations, of any size. Yes, we tend to assume reporting is only for large global enterprise. However, there is a role for small and medium businesses. In fact, implementing a scalable sustainability reporting framework with defined ownership earlier in a company’s maturity could in fact fuel a more streamlined, effective, and closed-loop reporting process in the future.
3. Map Report Structure to Reporting Requirements
I remember helping a sales team at other organizations write responses to RFPs. When aiding them, my first question was: “Did you read the RFP?” Often the answer was an uncertain sigh or an outright ‘no.’
And yet the situation is no different with successful sustainability reporting. The organizations that define reporting requirements actually define reporting requirements quite explicitly. In many ways, you do not have to reinvent the wheel when coming up with your strategy on how to report sustainability performance progress. Take what’s out there and start with that.
Whether looking at GRI, CDP, IIRC, A4S, or any other reporting framework that is widely adopted, you find a set of standards that is very clear in terms of what kinds of sustainability metrics an organization ought to provide and what kind of information ought to be submitted.
This goes back to the “Did you read the RFP?” question. We have a lot to do internally to collect information supporting the quantitative metrics and qualitative behaviors that inform these reports, but our burden can be eased significantly when we simply look at the key requirements of the reporting framework we are aligning to and develop a set of metrics accordingly.
4. Embrace your Deficiencies
Sounds crazy, right? Bring your weaknesses right up front? But this process will serve you well in the long term, and it also bridges a significant cleft that reporting bodies and auditors hone into when they look at sustainability reports. If you are glossing over a significant weakness in your sustainability progress and don’t acknowledge it directly, that will only become fodder for criticism of your overall sustainability strategy.
Instead, discover where you are weak—be it on emissions, safety performance, training, etc.—and clearly acknowledge where you are weak, why you are weak, and how you plan to recover from this weakness, strategically. This will go a lot further than simply ignoring a problem astute evaluators will identify in the gaps within your sustainability performance metrics and narratives. It will also help you continually improve as an organization.
This also leads to the importance of using reporting to continually improve. Deficiencies are opportunities in disguise, and as we discussed in our previous post, a sustainability reporting approach that embeds goal-setting and continuous improvement into its model (and this onus is typically on the reporting organization) is more likely to generate year-over-year improvements in sustainability performance.
5. Remember Reporting is for Clients, Prospects, and the World at Large
In business we frequently submit to a narrative where all of our actions are ultimately executed in the name of profitability. That’s fair to some extent. Businesses need to make money. But the question sustainability reporting brings us to, in essence, is ‘how well are we doing at sustaining our business, our human capital, the environment around us, and the world at large?’
This notion might sound like a moral imperative, but it speaks to the absolute heart of why we're invited to produce sustainability reports in the first place. It can be beneficial from a business perspective to generate these reports, account for our impacts, and continually improve. But it is also important to ask how we ultimately add value to the world, and to the human enterprise.
This speaks to the narrative component of the sustainability reports we generate: sustainability metrics, accomplishments, progress, and achievements are all important, but when developing the narrative for your sustainability reports, consider the 'why?' Consider why an emissions reduction factor is relevant or why a safety incidence is important when building your narrative. That will go a long way in making your reports more meaningful to stakeholders.