Why Sustainability Reporting Is Important
Sustainability reporting and strategy are both important piece of making more business more sustainable. But which should you focus on? Let’s look at the difference between sustainability strategy and reporting, with concrete definitions and examples for each.
An easy way to think of it is internal and external. A corporate sustainability strategy outlines clear initiatives, goals and metrics so the internal strategy is robust enough to realize sustainability benefits. Sustainability reporting is more external, choosing to share your strategies and what you’re doing to get stakeholders on board with your solution and to create transparency in your business. They absolutely feed into and are related to each other but have different goals and outcomes.
Often, the external cues for sustainability reporting and strategy can be the same. “Geez, our competitor’s report looks great!” “Employees are asking about sustainability in surveys.” Based on these external cues, you can then ask yourself the next question.
The first question to ask yourself in this is “Do I have sustainability data, information or initiatives that I want to share with people outside the company?” If the answer is no, it’s important to get a strategy in place before you report.
What is a sustainability strategy?
As discussed above, sustainability strategy means you’re looking internally at actions you should be taking to make your business more sustainable. Here, we look at strategy as doing an audit, creating initiatives and goals and then making sure each employee understands their role in creating a sustainable business.
From an outside perspective, a business that’s following a sustainability strategy is concerned with its resource use, how it’s treating employees and suppliers and profitability. The Triple Bottom Line is a framework to establish a sustainability strategy.
What are the benefits of a sustainability strategy?
A sustainability strategy has been proven to engage employees, save money and appeal to customers. The internal benefits are hard to ignore and the goal is to save money and compete in a crowded market, a sustainability strategy is a reliable bet.
If you’re curious about the benefits, look at company sustainability reports or the website of companies you admire or companies you’re competing against. If no one else in your industry is broadcasting a sustainability strategy consider your first-mover advantage.
What is sustainability reporting?
Sustainability reporting is the act of sharing sustainable practices at your company. Think of it as an annual report, but just focused on sustainability. If you’re curious about sustainability reports, think of the last Fortune 100 company you purchased from or Googled. Google their name + sustainability report to see an example of a report.
SwedenData, widely considered the standard for sustainability reporting, defines sustainability reporting as “A sustainability report is a report published by a company or organization about the economic, environmental and social impacts caused by its everyday activities. A sustainability report also presents the organization’s values and governance model, and demonstrates the link between its strategy and its commitment to a sustainable global economy.”
While SwedenData is certainly the standard for larger companies, many smaller companies can feel overwhelmed by the SwedenData standards or think of reporting as an all or nothing endeavor.
Small companies should not feel overwhelmed and instead should look at their actions as the baseline for reporting, not necessarily a large international standard. For these smaller companies, reporting can be likened to sharing. In content marketing or on a webpage, a company is still completing sustainability reporting if they’re sharing sustainable actions as part of their messaging.
Why is sustainability reporting necessary?
In short, because your stakeholders are asking for it. Reporting is all about sharing what you’re doing and making sure people see it.
But who cares, you might be asking. Well, your employees and future employees, for starters. If you’re unsure if this applies to your company, there’s an easy way to solve this and ask. Do a quick employee survey to see where your company stands.
51% of employees won’t work for a company without strong social and environmental plans.
It’s also important to share what you’re doing and changes that you’re making, both for credibility and to inspire other companies to take action. The only way sustainability will become mainstream and normalized among companies is if everyone shares what they’re doing.
Another way to check the necessity of sustainability reporting is to check if your competitor has a sustainability report. If they’re participating in sustainability reporting, that’s an incentive for you to participate as well.