With corporate sustainability reporting on the rise, how do you report on it effectively?

It is widely recognised that companies should develop long-term, sustainable strategies for their business and make regular reports on progress publicly available. This is the thinking behind corporate sustainability reporting, which addresses three areas of sustainability - environmental, social and governance (ESG).

Environmental concerns include the circular economy and climate change. Social awareness covers issues like wellbeing, equity and human rights. Effective corporate governance is founded on ?accountability, transparency, probity and a focus on sustainable success over the longer term?.

KPMG's 2020 global survey found that the UK has a sustainability reporting rate of 94 per cent, while responses to a recent PWC survey indicated that 57 per cent of FTSE 100 companies have set out a clear sustainability strategy.

The regulatory environment for sustainability reporting is dominated by coexisting standards organisations, such as the recently merged IIRC and SASB in the USA and the Amsterdam-based Global Reporting Initiative (GRI).

The most influential international principles are the UN's Sustainable Development Goals (SDGs). Several of these goals focus on the environment, although some - such as SDG3 on ?good health and wellbeing? - are directly relevant to companies? employees, local communities, and wider society.

On the BBC Today programme in March, Mark Carney emphasised that resilience has been undervalued in finance, as has the sustainability of health outcomes and livelihoods.

In a podcast on ESG trends accelerated by the pandemic, the ESG impact investing specialist Guillaume Mascotto discussed how Covid-19 has shed new light on sustainability's contribution to financial growth and performance. ?There have been solid margins of safety to endure systemic shocks,? he said, ?and a clear focus on long-term resilience.?  

Those companies that had business continuity measures, supply chain auditing, and traceability in place - together with solid human capital programmes where staff are well treated - were often able to outperform their competitors.

From a fund manager's perspective, Mascotto stressed the value of holistic due diligence, whereby investors combine ESG and quantitative financial data in their company analysis. A compelling corporate sustainability report can form a vital input to this hybrid approach.

Companies need to provide investors and other financial firms, such as lenders and insurers, with the information they need to support their decision-making. However, the audience is much broader than that. Companies should also use reports to build relationships with clients, consumers and civil society, based on shared ESG values and priorities.

Additionally, the growing need for transparency and employee welfare makes communication with existing staff (and potential hires) a priority. An accurate sustainability report shows how they can initiate or become engaged in their employer's ESG projects and serves to highlight areas where the company may be deficient.

Corporate sustainability reports must demonstrate progress on the substance - or ?materiality? - of sustainability, whether tightening occupational health and safety, reducing the discharge of effluents or eliminating waste. Our audit technology solution Confirmation has helped clients to reduce waste by phasing out their paper-based audit processes.

By setting concrete targets, companies can measure progress against their strategy, and provide valuable performance data in their reports. According to BSR's Five Steps to Good Sustainability Reporting, the best content will combine this data with more personal case studies. These should describe how the company set out to achieve its goals, and the impact its ESG projects had on people and the environment.

To be effective, this integrated style of reporting depends on having a well-defined sustainability strategy, understanding and connecting with your audience, and - of course - making your business genuinely more sustainable.

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