What is the Importance of a Sustainability Report?
The popularity of Corporate Sustainability is growing
What is the Importance of a Sustainability Report?
Sustainability reporting has seen a surge of interest in recent years. It’s easy to see why. Climate experts and researchers around the globe are almost unanimous in their warning that we need to act quickly if we want to limit damage to our planet.
Though sustainability reporting is slowly becoming the norm, many businesses and organizations still wonder why it’s important. In this article, we’ll be giving you several answers to that question.
But before we do, it’s important to understand what sustainability reporting actually is.
What is sustainability reporting?
What is Sustainability Reporting?
According to technical definitions, sustainability reporting – a nonfinancial reporting tool – involves researching, writing, and presenting a document that represents and assesses an organization’s sustainability disclosures for a certain period of time.
If you’re new to sustainability reporting the definition above might be a bit confusing. Let’s simplify it a bit:
Sustainability reporting aims to produce documents – called sustainability reports – that give organizations insight into the scale and scope of their environmental, social, and civil impacts by comparing performance metrics with industry standards.
Ah, that’s better.
Sustainability reports are almost always written to engage a wide range of audiences – from company management to the general public. As such, they’re almost always written with accessibility in mind. That means they often employ comprehensions aids like charts, tables, colour coding, and illustration to help appeal to a wider audience. Sometimes, online sustainability reports even implement interactive elements to encourage engagement and improve accessibility.
With that definition out of the way, it’s time to give you some reasons why sustainability reports are important.
Why Are Sustainability Reports Important?
Now that we know what sustainability reporting is, we can start to go over some of the reasons why creating a sustainability report might be a worthwhile use of an organization’s time and resources.
Here are five reasons why sustainability reports are important:
Accountability is crucial
In survey’s done on the factors that motivate companies to produce sustainability reports, improving accountability is usually near the top of the list. In one survey by LNS Research, the percentage of respondents who chose increasing accountability as their primary motivation for producing a sustainability report was as high as 72%. With a majority like that they must be on to something!
When done correctly, sustainability reporting is a ‘warts and all’ endeavour. Weaknesses, mistakes, failures – all of these are displayed alongside strengths and successes. This focus on total transparency is what makes sustainability reporting such an amazing tool for improving accountability.
Throughout history, even well-meaning companies have fallen into the habit of sweeping things under the rug while telling stakeholders “everything’s fine!” Sustainability reporting removes that temptation.
“When things aren’t sustainable, they eventually have to stop”. @Anders Ankarlid
Consumers want brands to help them be better
Back in 2019, there was a survey conducted by Futerra in which they asked members of the public whether they wanted businesses and organizations ‘to help them be more environmentally friendly and ethical’. Over 88% of people surveyed responded ‘Yes’.
That’s certainly an overwhelming result, but capitalizing on it poses a tricky problem. As an organization, how do you demonstrate that you can help people be better?
Answers to this question usually involve cultivating a positive reputation. What are the most effective ways to do that? Increasing corporate transparency and reporting good deeds! Producing a clear and comprehensive sustainability report is a cost-effective way to kill two birds with one stone in this regard.
Like we discussed in the section above, ‘good’ sustainability reporting means admitting mistakes and weaknesses for the purpose of education and improvement. Counterintuitively, these less-than-favourable admissions actually help an organization’s reputation. Consumers see displays of transparency as signs of trustworthiness and motivation to do the right thing.
Investors are looking for sustainable investments
In addition to a spike in consumer interest surrounding sustainable brands, there’s also been a ton of interest in the investing world. Impact investing, ESG investing and sustainability investing are all terms used to describe the practice of seeking out investments that adhere to constructive environmental, social, and civil policies.
According to research from Morgan Stanley, around 95% of asset owners are in the process of adopting sustainable investing strategies. That’s a surprisingly high percentage. The fact that 45% of asset owners already have adopted sustainable investing strategies ‘across the board’ is even more surprising, though!
This is clearly an important trend. Just like the trend of consumer interest in sustainability, capitalizing on it requires that organizations both document and improve upon their sustainability performance. Sustainability reports are excellent tools for accomplishing both of these tasks.
They help make your organization more sustainable and efficient.
Sure, this might seem obvious, but no article on the importance of sustainability reporting would be complete without at least mentioning the actual sustainability benefits that it encourages. While a sustainability report doesn’t guarantee that your organization will become more sustainable, it does give you all the informational tools you need to take action and make positive changes.
Additional Benefits gained from Sustainability Reporting
In addition, the act of creating a sustainability report contributes to a culture that takes sustainability issues seriously. According to a study conducted by HBS, countries where sustainability reporting was common exhibited far greater levels of corporate activism than those where it wasn’t.
In addition, there’s an added bonus that comes along with creating a sustainability report. The research and analysis involved are great for giving organizations an in-depth look under the hood of their operations. The insights that a sustainability report offers allow them to make changes that increase efficiency and save money.
Hopefully, you found this article on the importance of sustainability reporting useful as you decide whether now is the right time to produce one for your organization. The process can be daunting but – as we’ve hopefully shown today – the hard work pays off.
If you’re still feeling overwhelmed, don’t worry! Hiring a consultant to produce the report is a cost-effective way to get the benefits of a sustainability report without the hassle.
Sustainability doesn’t mean the end of profitability
About the Author
At Sandpaper We have been around long enough to realize the importance of good report writing, research, and design. A thoroughly planned and executed report builds loyalty and trust among stakeholders.
In the 10 years of service, Sandpaper has managed a stay ahead of its competition; by developing and adapting to changes in both the global and local corporate landscape in the United Arab Emirates.