Sustainability Reporting: From Routine to Strategic

By Nana Guar

When was the last time you read a truly interesting sustainability report? For many people working in corporate responsibility, the annual reporting process has become dull. The last 20 years has seen a massive explosion in the number of non-financial reports. But who actually reads them? What difference do they really make?

Sustainability reports, impact reports, corporate responsibility updates. Call them what you like. More and more organizations are producing them due to rising demands for transparency and accountability. Today, more than 10,000 companies produce some sort of account of their non-financial performance.

Many companies are also crying out for a more meaningful engagement with their stakeholders.  That’s easier said than done. Does anyone actually read these reports? And what difference do they make for the organizations producing them?

I recently completed some in-depth research for the organization I work for, Corporate Citizenship, looking at the trends, challenges and solutions to the perilous state that reporting finds itself in. We interviewed practitioners from across the world. Everyone seems to agree that too many reports simply fail to create value for companies producing them. Something needs to change.

Confusion breeds failure

Reporting has become confusing and overwhelming for many. What’s the aim of the report? Who is it designed for? How do you choose what content to include and what to leave out? What data should be used? Which standards should be followed? What format should you publish in? How should you engage audiences? How can the report be ‘brought to life’?  There’s a lot to consider.

Despite best efforts to make reporting engaging and relevant, frankly, for many companies the results are uninspiring. While practitioners recognize the importance of communication on sustainability performance, many find the reporting process challenging and often frustrating. The end result often fails to land the right messages with the right audiences, let alone create value and improvements for the reporting organization.

Is it all worth the effort?

It seems that for all the time and effort that goes into sustainability reporting, many organizations fail to extract maximum value. However, the growing number of reports suggest that the practice is here to stay. So, how can companies address these challenges and progress from dry, routine reports to more strategic and engaging communication?

Four key trends that are reshaping reporting emerged from our research. They point to some exciting opportunities ahead. These trends are evolving fast, and companies need to be aware and position themselves to take advantage of emerging opportunities if they want to get more value from the reporting process. We call these critical trends the Four Drivers of Change.

Four Drivers of Change

1. Strategic alignment: Closer alignment between sustainability and commercial decisions has become a business imperative.

There is a heightened awareness of the impact that responsible and sustainable business practices can have on financial performance. This is about much more than reputation. Companies are seeking to demonstrate that integrating sustainability into their business can help with cost-efficiencies, risk management, creative innovation and long-term growth.

2. Issues expansion: The scope and significance of issues are expanding across extended value chains.

There are mounting social, environmental, ethical and economic challenges for companies right across their extended value chains.  The scope of responsibilities has widened as companies are expected to be accountable for indirect impacts concerning their suppliers, distributors, contractors and business partners – on top of all the direct impacts the business already has.

3. Standards proliferation: There is a rapid proliferation of sustainability-related standards, rankings, ratings and indices.

These initiatives either offer guidance on reporting or rate companies’ performance based on set criteria. Each one serves a unique purpose and targets different audiences; but they sometimes have overlapping criteria or principles.

While responding to such initiatives is an opportunity to engage colleagues across the business, streamline data collection, and improve reporting and performance, making sense of it all can be overwhelming.

4. Digital innovation: Digital innovation offer new ways of presenting data and communicating with audiences.

Practitioners are increasingly facing demands for more data and narrative to a variety of audiences. This can result in lengthy, dry, technical reports that aren’t effective engagement tools. Innovations in digital platforms and social media allow companies to present data, narratives and impacts in ways that resonate with a variety of audiences; and audiences are able to interact, feedback and share opinions instantly. Technology-driven engagement also presents opportunities to connect with stakeholders across geographies, demographics, and varying interests in ground-breaking ways.

From routine to strategic

The dynamic, shifting landscape is causing headaches – but also throwing up some fascinating opportunities. Companies that are able to harness the Four Drivers of Change will create real value for the business and the audiences of its reporting. As reporting becomes increasingly interactive, innovative, and audience–led, the benefits will be most tangible for companies that are crystal clear about the first question: What is our objective?

Communicating about sustainability can be a minefield of nebulous jargon and opposing viewpoints. It is time for a re-think. We need to go back to basics and understand the reporting journey as well as the current trends that are creating pressures on the reporting process. Companies need to cut through the complexity and get back to shining a search light on what the company is actually doing and invite in friends and foes alike for a frank discussion about how they can do a better job. That would make reports a lot more interesting for everyone and more useful to businesses.

Image credit: Corporate Citizenship Inc.

Nana Guar is a Senior Consultant at Corporate Citizenship, a global management consultancy specializing in sustainability and corporate responsibility. She works with clients to identify their most material issues, define relevant performance metrics, and communicate their performance to a variety of audiences. When she is not immersed in sustainability reporting, reporting standards, CR strategy and implementation, Nana is applying her expertise to sustainability challenges in emerging markets.