The path to sustainability reporting is not merely a regulatory obligation but a strategic journey that can help define your company’s purpose and increase value in the eyes of your stakeholders. When done “right,” a well-crafted sustainability report serves as a powerful communication tool that showcases your competitive advantages and shapes perceptions among investors, customers, employees, and more. When done “wrong,” you risk falling into the greenwashing trap, delivering mixed messages, and eroding stakeholder trust and brand equity.
Did you know? In 2022, 90% of Russell 1000 companies published a sustainability report, up from 81% in 2021 and 70% in 2020.
Here we review five of the most common questions we are asked by clients as they develop their sustainability report, and our advice on key best practices to maximize their impact.
What sustainability topics should I feature in my report?
Your report should identify and clearly convey your strategies for managing the environmental, social, and governance (ESG) topics that pose the most substantial risks and opportunities for your business. Consider conducting a peer benchmarking and gap analysis or materiality assessment to ensure that your efforts align with the most impactful and relevant aspects of sustainability and to strengthen the credibility of your commitment.
What sustainability standards & reporting frameworks should I align with?
Many stakeholders have distinct expectations regarding the information they want to see in sustainability reports. Regulation and frameworks provide a structured reporting approach and consistent basis for assessment, ultimately contributing to comparability within the industry. By complying with regulations, such as the IFRS Sustainability Disclosure Standards and reporting against established frameworks like the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-Related Financial Disclosures (TCFD) and the Sustainable Development Goals, you ensure the information provided aligns with stakeholder expectations, thereby enhancing the value and credibility of your report. Consider, for example, mapping your information to standards throughout your report as well as publishing supplemental tables for easy reference.
How do I create a compelling business case for sustainability?
In the wake of much “anti-ESG” noise this is a question that remains top of mind for many companies. Articulating a holistic sustainability strategy with a well thought out narrative serves as a key mechanism to communicate your organizational focus and strategic underpinnings for sustainable practices. A sustainability report that lacks a narrative runs the risk of not only having little impact but presenting your company as a poster child for ‘check the box’ greenwashing. By integrating sustainability into your corporate strategy, you affirm your long-term commitments and show that sustainability is embedded in how you operate your business, manage opportunities, and navigate risks – ultimately, demonstrating how you are leveraging sustainability as a competitive advantage that generates stakeholder value.
How can I demonstrate the impact of my sustainability efforts?
In creating an impactful sustainability report, it is important to integrate key elements that not only quantify your objectives and progress but also showcase the real-world impact of your initiatives.
- Set clear, measurable, and substantiated sustainability milestones & targets. Clear milestones and targets form essential components of a sustainability report, cultivating transparency and accountability within your organization and among external stakeholders. Milestones help to create a tangible roadmap to steer decision-making and resource allocation and establish measurable benchmarks for stakeholders (inside and outside the organization) to monitor progress and assess the effectiveness of your sustainability initiatives. It’s crucial, however, to ensure that metrics are validated, and targets are real. Consider setting science-based targets to add another layer of precision and enhance the credibility and impact of your efforts.
- Integrate KPIs, case studies and stories to bring your narrative to life. Provide stakeholders with a holistic understanding of your sustainability efforts and progress by adding depth and context to your report through key performance indicators (KPIs) and accompanying case studies and stories. KPIs offer quantifiable metrics to assess performance, and case studies contribute qualitative insights that illustrate the real-world impact of your initiatives. This dual approach not only strengthens the credibility of the reported progress but also engages internal and external stakeholders by highlighting your achievements and weaving a narrative around your numbers.
What resources do I need to develop a sustainability report?
Developing a sustainability report is a team effort that requires strategic resource allocation and involves a dynamic blend of skills. From collecting and validating data to crafting an authentic strategy and narrative that resonates with diverse audiences, ensuring the right mix of internal and external resources is critical for success. Internally, you will want to line up a cross-functional project team with clear roles, responsibilities, and deadlines. Additionally, consider leveraging third-party data platforms (like Novisto), integrating AI tools, and tapping into external expertise to drive the project to completion.