Why report? That was the question I used to get when I first started working on sustainability reports 20 years ago. I would make the case for demonstrating a sense of accountability for business impacts, for transparency driving improved performance, and for setting out the company side of the story.
While reporting has been on the increase and most of the world’s largest companies now issue some kind of sustainability report, there are plenty who don’t. The essential challenge remains, but many companies still query the investment in time and money and wonder how to get more gain from the pain of reporting.
More gain, less pain
Sustainability reporting is not straightforward, but there is help out there. There are a number of different reporting frameworks, guidelines and standards, foremost of which is GRI – the Global Reporting Initiative. Junxion is a Gold Member of the GRI, and we guide our clients through its Standards.
While the GRI has always been clear about reporting principles, too many companies use the Standards as a reference tool to determine which individual metrics they should cover in their report. They have lost sight of the big picture: reporting should be a company disclosure that moves the world towards a fair and durable prosperity for all.
The greater depth and clarity in companies’ answers to these questions, the greater the potential to build trust with stakeholders.
Reporting to the power of 4
How can your company use its report to move the dial? To produce a strong sustainability report, you’ll need to tell a coherent, honest and complete story across four inter-related areas:
Set the Context
The idea of ‘Sustainability context’ has long been in the GRI Standards. According to the GRI, companies should be discussing their performance ‘in the context of the limits and demands placed on environmental or social resources at the sector, local, regional, or global level’. However, this point is often reported partially at best or ignored completely at worst.
You’ll need to establish how your company sees the ‘state of the world’ and what you’re going to do about it. Or at least, how that state influences your business strategy.
In 2015, the UN launched a valuable set of guideposts to addressing these emergent ideas—the Sustainable Development Goals. The 17 goals and 169 related targets are a diagnostic tool analysing what the global community needs to fix, and they present companies with clear ideas on how they might tangibly focus their efforts.
One company that establishes its context well is steel giant Arcelor Mittal. They describe how they needed to focus more on the ‘global challenges of sustainability’ to really manage stakeholder expectations of their business. Arcelor Mittal’s approach is to be commended, and more companies need to follow their lead.
That leads to Purpose. The reason for a company to exist. By placing its Purpose at the service of society, a company operates on a wholly more mutually beneficial plane. The ground-breaking platform Reporting 3.0 has said that Purpose is the ‘the linking pin between inside and outside of an organisation’s perception’. One example of this comes from the much-maligned UK banking sector where Lloyds Bank has a purpose and a sustainability programme that are both about ‘Helping Britain Prosper’.
As you consider your company’s purpose, you’ll need to ask, Will we look at the root causes of the problems we see in the world, or seek only to respond to the symptoms? What is our leadership’s understanding of the scale of the challenge? And what is the company’s level of ambition?
The greater depth and clarity in your answers to these questions, the greater the potential to build trust with your stakeholders.
Responses to sustainability imperatives ought to drive innovation. Indeed, framing sustainability challenges as innovation opportunities is a key way sustainability professionals within businesses focus leadership attention on the issues.
In our guide to CSR, Corporate Social Returns, we profiled both incremental and disruptive business responses to sustainability challenges. Of course, incremental change has its place: making steady progress by carefully mitigating a negative impact over years can make a significant, accumulating contribution to global sustainability. But increasingly, society is looking for more dramatic and innovative shifts, to help solve the challenges of water scarcity or our climate crisis.
There should be a balance here: a company with a vaunted purpose statement risks being guilty of over-promising and under-delivering if its programmes are run-of-the-mill. On the other hand, reports have to be honest about the company, its capacity, and its opportunities to advance.
Whatever you choose to say here, it must be authentic: it has to link back to your company’s stated purpose and how you’re meeting the challenges of your context.
Company reports traditionally include a number of key performance indicators for separate impacts: how much have carbon dioxide emissions increased or decreased since last year, for example.
Companies like to use the phrase ‘sustainable business’. As in ‘we are on track to be a sustainable business’. As Jonathan Porritt, the former Friends of the Earth director, has pointed out: ‘there can be no sustainable business in an unsustainable world’. So companies must get better at telling us how they are making the world more sustainable through their efforts – not just how much less carbon they might be emitting.
One company that aims to adopt this approach is chemical giant BASF, with its Value-to-Society approach. BASF explicitly recognises that too much reporting is limited to inputs and outputs: this many health and safety training courses saw this many people trained… which tells us nothing about outcomes or longer term impact. Has this led to a drop in the number of accidents? How much value do people place on the difference that has been made?
By aggregating impacts across the value chain, BASF offers its stakeholders a useful snapshot of its total contribution to society – the difference it is making.
Bring it all together
Smart reporters will be able to stitch all this together: set the context, articulate their purpose, demonstrate innovation and showcase their impact. This is not a rubric of all the things to include in a sustainability report (see here for that), but connecting these four elements will create a strong thread running through a company’s report.
Tell this story with a healthy blend of humility and verve and you’ll have an engaging report that genuinely adds value to your business and society.
Adam Garfunkel is an owner and Managing Director at Junxion. He’s been involved in corporate sustainability and social responsibility for more than 20 years, writing award-winning reports and supporting the advancement of social responsibility on three continents.