More and more companies are creating sustainability reports. At last count, 81% of the S&P 500 issued a CSR, Sustainability or Citizenship report, a huge jump from under 20% in 2011. And it’s not just the biggest companies. Small and mid-size companies are also creating reports, particularly B2B organizations with requirements for their supply chain. In fact The Conference Board reported 25% of public companies earning under $1B disclosed sustainability data, up from 15% in the prior year.
At the 2016 Ceres conference the dialogue about reporting was enthusiastic and practical. Here were the key themes:
Say yes to discrete reports
A robust website with all the information for mainstream and niche audiences is always appreciated, but it serves a different purpose than a discrete report. Courteney Keatinge, Director of ESG Research at Glass Lewis, made it clear she preferred a searchable PDF format, not a big website where the isolated annual information was harder to unearth. Ann Condon, Director of Resource and Environmental Strategies at GE, spoke about GE’s first integrated report, which contains high level information and serves as a roadmap to point stakeholders to other regulatory documents and websites for more information. Information can live in many places, but helping stakeholders and investors find the relevant information faster was desired. Suggestions:
- Include a roadmap or index linking directly to specific information (the GRI index is a good framework for this, even if your report is only ‘informed’ by G4).
- Many issues are qualitative, and they require engagement with stakeholders. Not everything can boil down to a number.
Quality not quantity
A major theme was information overload, but more is not more. An emphasis on what is relevant and material to your industry, your business and your stakeholders is clearly necessary. Many pointed to SASB as a good place to look for that guidance. Suggestions:
- Prioritize the information in the report. Keep it relevant and material.
- If you want help figuring out what to include, ask your top 20 investors. They will certainly tell you what they think is material.
Above all, clarity
Since the amount of information is easily overwhelming, curate it. Make what you want to say quickly digestible. Look to your marketing department to see how they talk about your business—your sustainability messaging should align. And, with Morningstar now rating mutual funds on ESG performance, there is even more focus on the underlying companies. Suggestions:
- Prioritize! Select the information that best tells the story. (You can always link to the rest.)
- Make the information visual. No one wants to read pages and pages of text!
- Give context. Align your targets with what the science is saying. How do your sustainability efforts align with corporate strategy? Be brief.
- Use plain English. Just because you speak “acronym” doesn’t mean your audiences do.
Assurance and comparability, the next frontier
Since reports are mostly unverified, there are questions about the reliability of the data. Adoption of external assurance is coming slowly, 12% of the S&P 500 in 2014, up from 8% in 2013. This is still an evolving area, but definitely the next battle in sustainability reporting.
Comparability is another area ripe for refinement. With competing frameworks and no standard way to measure and report on KPIs, stakeholders and investors are left to their own devices to compare companies. Although the stock exchanges are getting into the act, there is not yet a clear path forward to any unified standard. Yet.
What you can do now
Wherever you are in your sustainability journey, there is room for improvement:
- Assess what you do currently throughout your business. How can that be showcased in an annual point-in-time report?
- Find what is most important to the greatest swath of your stakeholders. Include the priorities in the report, and keep the rest on the website for your niche audiences.
- Visualize the information with compelling charts, infographics and callouts, so your information stays accessible and digestible.
- Consider third party assurance if you are ready.
- And, use your report as an engagement tool with investors, employees, regulators, NGOs, communities and all stakeholders. Many of these issues are qualitative and need engagement, not just facts.
If you’re looking to get started on your first report, here are some tips. And feel free to call or email with questions. Ideas On Purpose is always ready to help.