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Sustainability Reporting: What Does “Good” Look Like?

3p Contributor | Friday June 14th, 2013 | 1 Comment

good jobBy Graham Sprigg, director, IMS Consulting.

Sustainability reporting has become commonplace for businesses that want to communicate with and engage their stakeholders. However, amidst the deluge of information available, it can be difficult to determine what makes a report relevant and valuable.

A “good” sustainability report will deliver value, whether internal or external, to the business and its stakeholders. Too often, sustainability reports read like they were produced to meet a marketing need or to plug a gap in corporate communications.

This pitfall can be overcome by ensuring that your report is aligned to your sustainability and business strategy. Strategy development is the process of identifying long term ambitions and setting shorter term targets for your business’ priority areas. Intelligent key performance indicators (KPIs) and metrics can then help to indicate progress.

Having a strategy in place not only gives purpose and credibility to sustainability communications, but also provides a robust method for measuring and reporting progress. Sustainability reports tend to be as good or as bad as the sustainability strategy that underpins them. Without linking progress to a strategy, reporting will tend to lack direction, relevance and purpose.

Effective stakeholder engagement

Another key element in delivering value is ensuring your report is relevant. For this, it needs to effectively target your stakeholders. This means, firstly, knowing who you want to talk to, and secondly, building two-way dialogue with these groups that both informs your report and provides them with something of value.

In the context of corporate sustainability, different stakeholder groups will have varying opinions about which issues and impacts are the most important, with respect to how they receive value from the business. This makes understanding their needs and communicating with them crucial. Although stakeholder engagement can take place through various mediums, online and offline, the most powerful tools allow ongoing two-way dialogue between a business and its stakeholders.

Rather than being a one-off exercise, ongoing stakeholder engagement will also help to inform your future strategies, help to determine which issues are business priorities and provide feedback on your reporting and progress.

Determining the material issues

The Global Reporting Initiative (GRI) defines material issues for a business as those that have ‘a direct or indirect impact on an organization’s ability to create, preserve or erode economic, environmental and social value for itself, its stakeholders and society at large’. In essence, materiality is simply a method by which sustainability issues are prioritized. A formal materiality analysis can help you to combine findings from stakeholder engagement with an assessment of your organizational priorities, identified during strategy development.

Materiality is crucial in sustainability reporting because it helps businesses to understand their impacts both now and in the future. It encourages a longer term and more holistic view which considers a wider set of issues than short term profit and loss.

Measuring and reporting performance and progress – ‘the good, the bad and the ugly’

As well as supporting the development of a materiality matrix to shape your report, stakeholders are important when it comes to measuring sustainability performance and progress.

Measurement should be relevant to stakeholders and to the business in terms of achieving continual improvement. There is sometimes a tendency to assume that measuring and reporting large amounts of data and KPIs makes for a ‘good’ report. However, this isn’t necessarily the case; intelligent use of KPIs shows progress for material issues, is meaningful to stakeholders, uses data that is measurable in a robust and consistent way, and is aligned with industry standards. In short, KPIs that lack context are meaningless, while too many KPIs can dilute their value.

Another challenge in measuring and reporting performance is transparency. In wanting to demonstrate progress, it can be tempting to only disclose the data that is positive or shows improvement on previous years. However, this puts businesses at risk of greenwashing. To avoid this and ensure that you communicate with your stakeholders in an honest way, it is important to report information transparently, balancing the positive and negative impacts, and explain plans for making improvements.

Getting feedback

Once your report has been published, whether online or as a hardcopy, it is crucial to gather feedback from stakeholders. This can be done either by inviting readers to provide feedback, typically using an online survey such as StakeholderTALK™. Alternatively, some companies have established stakeholder panels, consisting of representative external stakeholders and other independent experts to advise on reporting.

Whatever the medium used, understanding what your stakeholders think of your measures, performance and progress will help to inform your future strategy and shape your next report, making it meaningful and relevant.

The subject of sustainability reporting can be a complex one, with differing and often conflicting opinions on what ‘good’ looks like. So now that there is consensus on the key elements, what does the future hold? As the practice of sustainability reporting continues to evolve, issues such as integrated versus stand-alone reports, more regular reporting and online versus offline delivery are coming to the fore. While the jury’s still out on how much of an improvement these will make, many companies are already considering ways in which to deliver more value to their stakeholders and their business through sustainability reporting. After all, sustainability is a journey and a good report should guide you every step of the way.

About IMS Consulting

For over 20 years IMS Consulting has specialised in helping clients unlock their sustainable potential throughout their strategy, engagement and communications. It has delivered sustainability reports for leading companies, including Skanska AB, Morgan Sindall Group, Saint-Gobain and Jewson. As a CDP Accredited Provider, IMS Consulting’s engagement and communication platform, StakeholderTALK™, is used by British Land, the Green Construction Board and British Water.

www.imsplc.com

[Image credit: stevendepolo, Flickr]


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  • Dude, Sustainable!

    It’s a good set of guidelines, but it assumes that stakeholders care about sustainability. More business need to integrate sustainability into core practices to drive effective stakeholder engagement.

    Nelson
    -dudesustainable.com