Sustainability reporting is the process of measuring and documenting an organization’s social, economic, environmental, and governance performance. It shows what a company does to reduce its negative impacts on society as well as what it does for positive change. Measuring these four areas can help companies make better decisions about strategic priorities like where to focus their resources or which charities to donate to.
Sustainability reporting is also a way for companies to be more responsible and accountable in what they do, which can help them manage their reputation better too. That’s because sustainability reports show what the company does well (think of it as getting credit for your achievements) as well as what needs improvement (learning from mistakes).
A sustainability report is like a scorecard for what the company does. It’s part of what helps show what kind of world the company wants to live in, or what they want their legacy to be. That means that reporting on these four areas can help companies make better decisions about how they operate and create a more sustainable future. And what’s better than that?
Sustainability reporting is a way that organizations can communicate what they are doing to reduce their environmental and social impact. This includes how much energy, water, waste, and pollution the organization emits as well as what efforts it has taken to address these issues.
This type of report also covers information about the company’s supply chain including its raw materials, labor practices, and what it does to address any human rights violations.
A sustainability report also includes what the company is doing in relation to community investments, how its employees are treated, and what benefits that they receive from the business.
Every organization will have a different type of sustainability report, but it usually breaks down three sections:
- Response to Issues
With so many businesses publishing sustainability reports, it can be difficult to understand how they all measure up against one another. Here are some of the key metrics used to measure what an organization is doing about sustainability:
- How much energy, water, and waste does this company produce?
- What percentage of its raw materials have been sourced ethically or recycled?
- Is there a diversity problem in leadership positions within the business (i.e. what percentage of the CEO, board members, and management are women)?
- What is this company doing to reduce its carbon dioxide emissions?
- Is there a problem with human rights violations in any part of the supply chain?
- Does this organization offer benefits or bonuses for employees that don’t include cash (i.e. free company stock, affordable health insurance)?
- What is the environmental impact of what this company does?
- Does this business have a broader societal goal like hiring more female employees or reducing its carbon emissions?
The following are interesting examples of what companies can do in response to sustainability issues:
- Efforts to reduce their energy consumption and incentivize employees to use public transportation by perhaps providing a monthly transit pass and $100 for biking or walking.
- Set up an “Environmental Product Disclosure” which is essentially a page that lists what the company’s environmental impact could be if it were not reducing its waste, packaging, energy consumption, and pollution levels.
- Commitment to sustainability by pledging that a company will get 100% of its energy from renewable sources and be carbon neutral perhaps in the next 12 years.
Sustainability reporting also includes what efforts have been taken with regards to reducing emissions, what steps are being taken to reduce environmental and social impacts, what the organization’s policies are with regards to responsible sourcing of materials or their employees. Sustainability reporting is a relatively new practice in business, but it has quickly become an important way for organizations to communicate what they’re doing about sustainability issues.
Below are other aspects of sustainability reporting:
- What is sustainability reporting and what are the main areas that this report covers?
- How do you know what metrics to use for measuring a company’s sustainability efforts?
- What types of things can organizations share in their sustainable reports, such as what they’re doing about issues or what responses have been taken?
- What are some of the main things that companies can do to reduce their environmental impact?
- Which organizations have you seen doing interesting things in response to sustainability issues and what are they doing?
What does Sustainability Reporting do?
Sustainability reporting is the process of gathering data about what an organization or company is doing to reduce its negative impacts on people, communities, and the environment. Those activities are then reported in a quantifiable way so that stakeholders can see what progress has been made over time.
Companies might report their emissions reductions targets for 2025 or how they are reducing their water usage in comparison to what they were doing four years ago.
Sustainability reporting can be expensive and time-consuming to produce. It involves a lot of data gathering, analysis, and what’s called “triple bottom line accounting.” That means that the impacts on people (social welfare), communities (local economic development), and the environment are all taken into account when measuring progress. Sustainability reports are typically shorter than traditional financial statements and often include what’s called “footprint metrics,” which are measurements of the company or organization’s environmental impacts.
But sustainability reporting can also be a powerful way to communicate what an organization is doing in a clear, quantifiable way — especially if that data will help convince stakeholders about what needs to happen next.
Once sustainability reporting becomes a common practice, it can become an important catalyst for what’s called “collective intelligence.” That means that stakeholders in the company or organization are able to see what they’re doing and what others are doing — and then learn from each other.
It’s also possible to coordinate collective group efforts by using data about what’s happening in the organization, what needs to happen next, and what kind of resources are available.
A sustainability report might also include a summary from what’s called “stakeholder engagement,” which is when leaders in the company or organization come together with stakeholders to talk about what they’re doing — as well as what still needs to be done. This is a way of making sure what the company or organization does reflects what stakeholders want. It also helps create what’s called “shared leadership,” which means that everyone in the group has an equal voice and takes responsibility for what happens next.