Can you see the wood for the trees?
Over the past decade as a judge of the ACCA UK Sustainability Reporting Awards and the Charities Aid Foundation Corporates and Communities Awards provider of shortlisting for CorporateRegister.com’s unique CRRA Reporting Awards and an occasional independent report reviewer for CorporateRegister.com, I have had the pleasure of reading many hundreds of non-financial reports.
While these reports can be called by a wide variety of names, all present management information and performance data on issues not traditionally included (though increasingly finding a place) in the Annual Report and Accounts.
Some reports contain more than 400 pages, some occupy endless virtual spaces on internet sites, some are engaging and interesting, some are invaluable aids for the insomniac.
Many utilise, follow or borrow from the range of national, international, industry or sectoral initiatives designed to support the development of best practice in sustainability management and reporting.
When faced with such a flood of information on the sustainability approaches of companies from all over the world, you are faced with a fundamental question – which of these reports demonstrate meaningful, strategic engagement and progress in becoming more sustainable?
A torrent of helpful guidance
There are of course a wide range of best practice guidance approaches out there, used by companies and consultants to design and assess sustainability reporting. Best practice guidance initiatives such as the UN Global Compact, ISO 26000 and other sector specific information represent a constellation of useful advice. In addition, the GRI presents a fantastically detailed set of material guidance, indicators and content which is invaluable for any reporting company.
The trouble is, however, that all of these approaches and initiatives can be confusing and overwhelming, even for those companies experienced in producing non financial reports.
It all comes down to this…
Lets remember what a sustainability report is – a story about the sustainability management, performance and intent of an organisation. When judging such reports I believe that, below the level of the specific guidance and indicators used by a reporting company, any good report should be able to answer the following simple questions that may naturally occur to a reader.
Does the report:
- Provide a full description of the company and its activities?
- Give a comprehensive perspective on the environmental and social issues arising from company activities, including stakeholder views and how these were obtained?
- Highlight the priority (material) issues picked for management focus; how they were defined and how wider global trends are likely to affect these over the next few years?
- Describe how the management of these material issues has clear business implications in terms of cost, risk, reputational value and licence-to-operate?
- Give a clear vision or strategy for responding to and addressing material issues?
- Provide details of the structures and processes that will deliver that vision (governance)?
- Display evidence of actions implemented (or planned) likely to achieve the vision?
- Contain proof that the reporting company means what it says (third party assurance, commentary or verification)?
Balancing the fundamentals with the details
Of course, the detailed guidance and content support provided by the GRI remains the best source of reporting best practice and is an invaluable resource for the specific approaches and metrics which will make sense for your reporting.
However, the sheer weight and detail of such approaches can sometimes obscure the fundamental purpose of sustainability reporting – to communicate simply and clearly about what sustainability means for your organisation, how you intend to respond and how you are performing.
Reporting is moving fast into unknown waters
Such clarity is essential, and will become ever more important as sustainability reporting becomes an increasingly integrated aspect of overall financial reporting. In such a context, sustainability information risks being overly diluted through the attention of risk-averse company lawyers, ghettoised into a small, dedicated, part of a predominantly financial report or buried by caveats and clauses.
Sustainability performance will I believe, in time, become the predominant focus of those seeking to assess whether the reporting company is likely to be a going concern in the medium to long term.
Clarity, meaning, and resonance
The job of sustainability professionals, now and in the future, is to tell the strategic sustainability story in a way that can be heard by company leadership, investors, owners, customers and all stakeholders and which leaves them in no doubt that sustainability is critical to the company as a whole.
This story can only be told through the strength of a clear, meaningful, compelling and truthful narrative. It is this that makes a story worth listening to and re-telling.
GRI G4 update – January 2014
As noted above, meaningful sustainability reporting is all about business relevance. At the heart of business relevance is the concept of materiality, the significance of an issue to both stakeholders and the business as a whole.
The latest edition of the Global Reporting Initiative (GRI) G4 Guidelines put materiality at the heart of its approach. This represents a major step forward for reporting as it encourages a focus on business relevance – allowing analysis in the context of business risk, a language familiar to companies in the first place.
A materiality centred approach translates sustainability into the language and dimensions that have resonance for business strategy and performance. The G4 is a major step towards promoting the meaning and resonance of reporting for both specific company success and also the sustainability of business in general.
GRI Standards update – 2016
The Global Reporting Initiative (GRI) has standardised – the GRI has moved from its Guidelines to a set of Standards, the first global standards for sustainability reporting.