In an era of increasing global challenges, businesses have a critical role to play in addressing the ongoing sustainability of humanity. Sustainability has moved beyond the demand for “green” products or improving energy efficiency. Today, sustainability touches every aspect of business, from supply chain management to ethical business practices to financial reporting.

Corporate sustainability reporting has emerged as a powerful tool to foster transparency, accountability, and positive change. By systematically measuring, disclosing, and communicating their environmental and social impacts, companies can align their operations with sustainable development goals while generating long-term value for stakeholders. 

But what exactly is sustainability, and how is it reported in business contexts? More importantly, how can corporations create sustainability programs and reporting that are meaningful to stakeholders like customers and investors, without wasting valuable time and resources?

What Is Sustainability?

Although the term “sustainability” gets used a lot in the business community, definitions and priorities vary. What is considered a sustainable business practice in one industry can be very different from another. And what is possible to achieve sustainability will also be different from one jurisdiction to the next.

It helps if we think of sustainability as a goal rather than a methodology. Whether we’re talking about reducing greenhouse gasses, improving human rights in the labor force, or adopting transparent leadership practices, these may all fall under the umbrella of sustainability for specific businesses.

If you’re looking for a specific list of outcomes that could be achieved through sustainability, the United Nations Sustainable Development Goals (UN SDGs) provide a list of 17 goals to be achieved by 2030. These are:

1. No Poverty
2. Zero Hunger
3. Good Health and Well-being
4. Quality Education
5. Gender Equality
6. Clean Water and Sanitation
7. Affordable and Clean Energy
8. Decent Work and Economic Growth
9. Industry, Innovation, and Infrastructure
10. Reduced Inequality
11. Sustainable Cities and Communities
12. Responsible Consumption and Production
13. Climate Action
14. Life Below Water
15. Life on Land
16. Peace and Justice Strong Institutions
17. Partnerships to achieve the Goal

Achieving these sustainability goals would change not only the business community but the world in general. But without proper frameworks, quantifiable targets, and verified methodologies, these goals are difficult to tackle. 

Why Is Sustainability Important?

Sustainability is more than just a feel-good exercise to be shared on a website. Businesses who adopt sustainability as part of their operations find that it yields a number of different benefits. 

First, sustainability reporting helps organizations identify and manage risks and opportunities. It enables companies to proactively address potential negative impacts on the environment and society, mitigate reputational risks, and identify innovative solutions that lead to operational efficiencies and cost savings.

Secondly, sustainability reporting enhances transparency and accountability. Companies can build trust with stakeholders, including investors who increasingly consider sustainability factors in their decision-making processes. Transparent reporting allows investors to make informed investment choices and encourages responsible investment practices.

Third, sustainability reporting promotes effective stakeholder engagement. By engaging with communities, customers, NGOs, and other stakeholders in a meaningful dialogue organizations are able to foster collaboration and build relationships. Ultimately, this helps companies better understand the expectations and concerns of different stakeholder groups.

What Sustainability Is Not

If sustainability is a goal, then it needs defined targets to make it meaningful. Businesses have already made significant strides over the past decades. They have reduced the use of hazardous chemicals, introduced safer labor practices, and incorporated energy efficiency into purchasing decisions. Surely that must mean they are sustainable?

The answer is, at best, maybe? Without a means of quantifying progress and proving when goals have been achieved, every business is both sustainable and not, all at the same time. 

Companies who want to show they have achieved sustainability need to adopt some kind of framework and standardize their reporting. This allows them to show their progress year over year, and empower stakeholders to compare that progress to other organizations within the same industry or jurisdiction.

The UN SDGs help to standardize efforts toward sustainability by increasing granularity, but they in and of themselves don’t provide methodologies for achieving the 17 goals. To find methodologies and frameworks, we need to look toward published sustainability and Environment, Social, and Governance (also called ESG) standards.

What Sustainability and ESG Standards Are Available?

Several sustainability and ESG reporting standards exist to guide companies in their reporting journey. Here is a list of some widely recognized standards:

• Global Reporting Initiative (GRI): The GRI Standards are the most widely used framework for sustainability reporting. They provide a comprehensive set of guidelines for companies to report their economic, environmental, and social impacts. The GRI Standards offer flexibility and allow companies to tailor their reports to their specific circumstances.
• Sustainability Accounting Standards Board (SASB): SASB provides industry-specific standards for reporting financially material sustainability information. These standards help companies identify and disclose ESG issues that are most relevant to their industry and stakeholders.
• Task Force on Climate-related Financial Disclosures (TCFD): TCFD provides recommendations for companies to disclose climate-related risks and opportunities. The framework assists businesses in assessing and reporting their climate-related financial impacts, ensuring that investors have consistent and decision-useful information.
• CDP (formerly the Carbon Disclosure Project): CDP is a global platform that encourages companies to disclose their environmental data. It focuses on climate change, water security, and deforestation, providing insights to investors and companies on how to manage and reduce environmental risks.

There are also a recent number of geographically-specific standards. These were developed to provide consistent reporting within a particular jurisdiction. Examples include the BRSR in India, the CSRD in Europe, and the proposed  SEC Climate Disclosures in the US.

The requirements in each standard will vary, depending on the priorities of the organization who has prepared it and the intended use of the data. Some ESG standards are designed with specific end users in mind, like investors or insurance underwriters. As a result, the content and format of the report will vary to meet these diverse needs.

What Is Included in a Sustainability Report?

The specific information in each sustainability report will depend on the standard being followed and the company doing the reporting, but generally you can expect to see the following information:

• Executive Summary: This section provides a concise summary of the report, highlighting key achievements, challenges, and future sustainability goals. It serves as an overview for business leaders to quickly grasp the organization’s sustainability performance.
  
• Company Profile: This section provides an introduction to the company, including its mission, values, and overall business strategy. It describes the business’s operations with details like its location, the size of the facilities and workforce included in the report. It also outlines the organization’s commitment to sustainability and how it aligns with its core business activities.
  
• Materiality Assessment: A materiality assessment identifies the most significant environmental, social, and governance issues for the organization and its stakeholders. This section explains the process of identifying material issues and how the company plans to address them. This section is critical to building an effective and relevant sustainability program.
  
• Environmental Performance: This section focuses on the company’s environmental impacts and initiatives. It may include information on energy use and efficiency, greenhouse gas emissions, water usage, waste management, and efforts to mitigate environmental risks and take advantage of environmental opportunities.
  
• Social Impact and Stakeholder Engagement: Here, the report highlights the organization’s efforts to address social issues, such as employee well-being, diversity and inclusion, community engagement, and philanthropy. It may also discuss stakeholder engagement strategies and initiatives.
  
• Governance and Ethics: This section provides insights into the organization’s governance structure, ethical principles, and risk management practices. It may include information about board composition, executive compensation, anti-corruption measures, and policies on responsible sourcing.
  
• Performance Indicators and Targets: Having quantifiable targets is critical to showing progress year over year. This section discusses performance against targets and benchmarks, allowing decision makers to assess the effectiveness of sustainability initiatives.
  
• Future Goals and Strategy: This section outlines the company’s sustainability roadmap, including its long-term goals and strategies. It demonstrates a forward-looking approach, indicating the organization’s commitment to continuous improvement and innovation.
  

The goal of using published sustainability and ESG standards to prepare reports is consistency. End users want to be able to see and understand the organization’s progress over time, and be able to compare it to other companies within an industry or investment portfolio. 

It is often a requirement of sustainability reporting standards that the final report – or at least summary of it – be made publicly available. This enhances the organization’s commitment to transparency and accountability. Some organizations, like the CDP will also give an independently-verified score to give readers an at-a-glance idea of sustainability performance.

How To Collect Data for Sustainability Reporting

One of the most time-consuming aspects of sustainability reporting is often data collection. Depending on the size of your organization, a number of different individuals and departments can be involved. These could include teams like:

• Purchasing
• Accounting and finance
• Human resources
• Production and manufacturing
• Maintenance
• Environmental, health & safety management

Modern sustainability standards often also require data to be collected from the supply chain and customers. The goal is to provide a holistic picture of sustainability risks and opportunities, including factors like greenhouse gas emissions involved in the transportation of raw materials, as well as safe disposal of products at the end of their lifespan. 

The team involved in data collection is generally responsible for: 

• Identifying relevant data sources and collecting data in a consistent and accurate manner
• Collaborating with other departments to gather necessary information
• Ensuring data quality, including data accuracy, completeness, and timeliness
• Implementing data management systems or software to streamline data collection processes
• Conducting regular audits and validation processes to verify the integrity of data
• Documenting data collection methodologies and maintaining an audit trail for transparency and verification purposes
• Adhering to reporting frameworks and standards to ensure compliance and comparability of data

If there are any changes to data collection from year to year, these need to be carefully documented because it will impact performance data and may give an inflated sense of progress. 

For example, the highest data quality is always direct measurement, but this may not be immediately available for organizations new to sustainability reporting. Standards allow for estimates based on production rates, facility size, or other published emission factors. However, if directly measured data becomes available, the current report will need to accurately reflect this change to provide important context.

Make Sustainability Reporting Easier

If you’re new to sustainability reporting, it can be hard to know where to start. Even deciding which standard to follow can feel daunting. The data collection learning curve is steep and with so many people and departments involved, it can be easy for costly miscommunications and delays to occur.

It’s not uncommon for sustainability reporting to feel like a year-round undertaking. The team may feel like they spend the whole year collecting data and building reports, only to have to start all over again the following year. With so many months spent on data gathering, there’s no time left for implementing the improvements needed to progress toward sustainability goals. 

To avoid making sustainability feel like a paper exercise that brings no value to the organization, efficiency is the name of the game. You need your team to get up to speed on the relevant standards as quickly as possible, streamline data collection, and generate reports that are meaningful to all stakeholders.

A sustainability software partner like FigBytes can do a lot of the heavy lifting for you. It’s designed to make data collection easy, using a cloud-based platform that can be shared with users throughout your organization and even up and down the supply chain. Annual updates are made simple, and the software keeps up to date on relevant standards for you, so you know your sustainability report is compliant.

If you’re not sure where to start, or if you’ve already begun reporting and need help making the process easier and more valuable, FigBytes can help. Speak with an advisor today to find out more.