Friday, May 24, 2024

The power of transparency: Unveiling the need for sustainability reporting by corporates to drive sustainability and foster a sustainable future.

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In recent years, Global Reporting Initiative (GRI) – provider of the world’s most widely used sustainability reporting standards – has taken a proactive approach in how corporates communicate about the changes as well as the challenges in the ESG landscape. By disclosing ESG information in a balanced, accurate, comparable, reliable, clear and timely manner, organizations are able to embed their business strategies, enhancing control in the external and internal environment.

Achieving sustainability may seem like an elusive goal and it certainly comes with a ton of requirements. However, reporting will help to maintain an overview all around. The whole process allows companies to reflect on the past reporting period and answer various questions: In what areas have we made progress? In what areas are we lagging behind? Were the goals too ambitious or do we need to do more to reach them? Armed with real data and reporting personnel, one is better equipped to reach their goals and set stronger plans going forward.

Governments everywhere are under increasing pressure to pass laws to mitigate the effects of climate change. Whether banning the single use of plastics or limiting carbon emission levels, new regulations occasionally have an impact on companies. Non-compliance may result in penalties, not to mention damaging one’s reputation among stakeholders. The ideal way to ensure a corporate is staying compliant with the ever-shifting pool of rules and regulations is through sustainability reporting. One can set goals based on whether you want to meet minimum compliance requirements or shoot for more ambitious targets and become a sustainability leader. Thereafter, collect and monitor data over time to ensure its attainment.

Recently, consumer tastes are shifting more strongly in favor of sustainability. Consumers are not only considering the environment when making purchase decisions but also getting smarter on greenwashing and SDG washing matters. In order to gain consumer’s trust, organizations should have data to back up their disclosures. Sustainability reporting is the best way to ensure one is not washed away in the tide of changing customer preferences. With this level of transparency, your company turns into one that consumers can trust and develop a bond with, boosting customer loyalty.

It is not just on the consumer-side that individuals prefer sustainable businesses. Research shows that human rights, social equity and climate change are among the issues of growing importance for employees. It is more likely for them to work for a corporation with stronger environmental, social and governance policies. By publishing sustainability reports and building credibility as an organization, you make it an attractive workplace for potential job applicants. Becoming a more transparent, sustainability-reporting company may also give your current employees a reason to be proud of where they work. This results in retaining your top talent longer and giving them an incentive to help your company succeed.

Sustainability reporting is a snapshot of a corporate’s performance and management approach regarding ESG matters during a certain year. By having all sustainability metrics gathered in one place you have a unique opportunity to assess your company’s performance against your peers as well as comprehend what your position within your sector is. This unpacks a number of opportunities, since you may discover areas, your company is leading and use that achievement as an effective marketing tool. On the other hand, you can also identify areas where your performance is lagging and there is room for improvement. Hence, an insightful benchmarking tool.

Transparency is increasingly being valued among a corporate’s stakeholders, from consumers, investors to employees. In order to achieve this, a company should report the full extent of its impact on products throughout their life cycles as well as greenhouse gas emissions and water usage. Through sustainability reporting, one declares their intentions for improvement in various ways and in subsequent reports, you detail your progress towards those goals. Thus, having the public to hold you accountable, which can serve as a great motivator.

After all, sustainability reporting is all about disclosing on a corporate’s most important (material) impacts, whether positive or negative. Through materiality analysis which takes into consideration both the significance of the topic or impact and the stakeholders’ views. Conducting materiality analysis right while integrating KPIs of a company’s performance on those issues, can be a great input for your sustainability strategy. If an organization has not yet developed a strategy, they can use the results of the materiality analysis as a starting point.

The data collection process is often a tedious task with lots of room for error, leading to infrequent reporting among companies. The result is a lack of qualitative, up-to-date decision-material, weak follow-up of sustainability targets and ultimately an inefficient execution of the sustainability strategy. Partnering with competent sustainability practitioners will ease the process through stakeholder engagements, gap analyses and track one’s progress against key performance indicators. A roadmap to attaining your sustainability targets.

Dr. Edward Mungai
Dr. Edward Mungaihttp://www.edwardmungai.com/
The writer, Dr. Edward Mungai, is a global sustainability expert. He is the Lead Consultant and Partner at Impact Africa Consulting Ltd (IACL), a leading sustainability and strategy advisory in Africa. He is also the Chief Editor at Africa Sustainability Matters. He can be contacted via mailto:edward@edwardmungai.com

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