Increased awareness of the impact of human activities on the environment means companies need to demonstrate in a trustworthy and compelling way their commitment to sustainability; it’s all about transparency. As the market continues to be more vocal about accountability from businesses, many organisations face challenges to provide clear and verifiable information about their operations to offer consumers the confidence they want to make informed choices. According to a 2022 report by Mackenzie 88% of consumers lacked brand trust, meaning that more transparency through operations is required.
But, it’s not just customers who care, investors, staff, product distributors and retailers all want to know if a product meets expectations. In particular, there is a growing desire among consumers to understand the environmental and social impact of the products they purchase for their very personal consumer choices , such as clothing or food at a granular level. Is it GMO? Is it dolphin-safe? Is there palm oil used in the manufacture that is destroying the habitats of Orangutangs? The value of this transparency can represent substantial competitive advantage as well as increased sales and enduring loyalty from stakeholders.
In response to the many evolving climate, environmental, and social challenges, international organisations and governments have begun to implement a variety of standards and certifications to draw business into aligned positive action that addresses these issues. Many of us look for these standards on packaging, certified organic, cruelty-free etc.
These regulations often require businesses to provide detailed reports on their activities and performance in these areas. In this blog post, we will examine the significance of businesses providing transparent and accurate information about their environmental and social performance, and how companies can utilize these reporting tools to enhance their overall success and meet the expectations of their stakeholders.
What is sustainability reporting?
Sustainability reporting is the communications process of measuring, disclosing and being accountable for an organisation’s economic, environmental and social performance to their stakeholders. This can include information on a company’s environmental impact, social responsibility practices, and economic performance, as well as any goals or targets they have set to improve their sustainability in the future. Sustainability reporting can take many forms, from a simple report on a company’s website to a comprehensive report that follows a specific framework or standard, such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB).
While sustainability reporting can relate to an individual company but it can also be very valuable viewed through the macro lens. Countries report on their sustainable actions too. Australia launched the State of Climate 2022 report to “underline why the Australian Government is acting with urgency to tackle climate change in line with international obligations and expectations of the Australian people”.
Thanks to this report the Minister for the Environment and Water Tanya Plibersek MP, could prove they have “ already legislated our 43% emissions reduction target and are investing in transforming our energy systems”. Not only could they share important facts about Australian climate change, as Australia’s climate has warmed on average by 1.47 (+ / -0.24) degrees since 1910, leading to more frequent extreme heat events, but they could also communicate about the resources allocated to solve these problems. Within our $15 billion National Reconstruction Fund we have dedicated up to $3 billion towards renewable and low-emission technologies, said the Minister for Industry and Science Ed Husic MP.
How to choose which standards to report on?
Depending upon the industry in which a business operates there are both compulsory and non compulsory standards and certifications that apply. For the non compulsory standards choosing which to report on can be a daunting task. There are various standards and frameworks available, such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), each have their own unique focus and requirements. To determine which standards to report on, consider the significance of the particular challenges and opportunities.
For example, an organisation in the automotive industry may choose to report on the ISO 14001 standard for environmental management, as it addresses issues such as reducing emissions from vehicle production and use.
Ex: Nissan is strengthening their business foundation to tackle environmental issues. Thanks to their 2020 report, we know they have acquired the certification ISO 14001 since 2011 and “have appointed an environmental manager to oversee all their environmental activities”. Following the international standards, they have “developed Nissan Engineering Standards (NES) for the restricted use of substances, which identifies the chemical substances whose use is either prohibited or controlled”.
Furthermore, SME or Enterprise should take into account the expectations and needs of their stakeholders, as well as any legal or regulatory requirements that may apply. Choosing the right certifications and the right way to disclose them can be a complicated task, as there are several ways to create effective ESG disclosures.
How can you leverage your sustainability report to fuel transparency and ignite market growth?
A sustainability report is a powerful tool for companies to demonstrate their commitment to environmental, social and governance (ESG) performance. By clearly communicating their efforts and progress in these areas, companies can increase transparency and build trust with stakeholders, including investors, customers and employees.
Furthermore, by leveraging their sustainability report to fuel transparency and ignite market growth, companies can differentiate themselves in a competitive marketplace, attract new customers and investors, and even improve their bottom line. Sustainable businesses earn more money because of reduced business costs, innovative strategies, an improved reputation, and new customers who value sustainability. If your company creates a comprehensive way to present their sustainability actions, they will profit from them.
One way to leverage a sustainability report is by using it as a tool to communicate with investors. Many investors today are increasingly interested in companies that prioritize ESG performance and are willing to invest in companies that demonstrate strong performance in these areas. By providing a detailed and transparent report on their efforts and progress in these areas, companies can attract and retain these investors.
Transparency and sustainability reporting are an increasingly important factor for corporate success. Companies must display their commitment to these values by providing clear, accurate information about their social and environmental performance if they wish to build trust with stakeholders while also accessing new markets or opportunities that may have otherwise been inaccessible.
It is also essential that companies stay up-to-date on cutting edge trends in transparency and sustainability disclosures so as not to be left behind competitively – both investments into sustainable practices as well as stakeholder expectations continue evolving at a rapid pace!