Sustainability reporting ‘requires a rethink’

15 Desember 2019

Sustainability reporting has been a niche initiative by a small batch of leading companies. Now, though, it is going mainstream. Such reporting can make a impact and expectations towards sustainability reports are also increasing.

The new Reporting Matters report by the World Business Council for Sustainable Development unveils key trends and suggests a path forward for this rapidly growing field. The aim is to help sustainability reporting live up to the increasing expectations of stakeholders and members of the public.

To date, more than 800 organizations representing over 50% of the value of global capital markets have committed to disclose their climate impacts. According to a survey by PricewaterhouseCoopers, a London-based multinational professional services network, 83% of representatives of private equity firms are worried about the potential impacts of climate change on their business.

A related “explosion” of reporting requests and approaches in recent years has raised the importance of the transparency and accessibility of the reports to ensure their credibility. While 88% of WBSCD’s members have improved their overall score from the previous year, the influx of companies with little prior experience may challenge those achievements.

The new complex landscape creates challenges in comparing the performance of companies and making meaningful conclusions. Thus, the authors emphasize the importance of simplifying reporting frameworks, and rather than reinventing the wheel, focusing on the consistency and consideration of the frameworks already in place (see WBCSD framework below).

WBCSD Evaluation Framework. Source: WBCSD

To emphasize best practices in the field, the report explores the outstanding performances of selected companies in particular areas. For example, worthy of mention is the value creation model based on capital inputs used by Roya DSM N.V., which demonstrates how particular efforts lead to specific outcomes for people, the planet and profits.

Meanwhile, BMW AG provides extensive information on a due diligence system in place, showing how the company controls and verifies the performance of every relevant indicator throughout the value chain. Based on analyzing the available report database, the authors suggest that beyond showcasing performance, reports should emphasize important issues to be solved and facilitate the sharing of best practices. 

There is a global rush by companies to be sustainable, and the authors suggest avoiding cliches like “green,” “natural” or “ecological” just for the way they sound. Instead, they say, it’s better to focus on how sustainable practices actually link to a company’s brand and making those links visible and tangible for relevant audiences.

Also, the creators of sustainability reports should ensure that the narratives they create are actually backed up by solid data and not simply a desire to impress stakeholders. It will be crucial to avoid reporting based on wishful thinking. While companies often prefer to emphasize their achievements, both challenges and successes should be included in their reports.

Last but not least, changes need to be fast. Awareness of the urgency for change is rising and WBSCD suggests that companies need to scale up their momentum through simplified yet powerful frameworks while keeping eye on important details.

“Given the positive and negative impacts of business models on our world, it is imperative that businesses consider and communicate their own specific impact as a means of building trust with their stakeholders and establishing personal and industry accountability around sustainability efforts,” Robert Swaak from PwC Netherlands comments on the significance of changes suggested by the report.

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