Sustainability Reporting - Four Key Considerations when Starting Out

The most important thing to recognise is that sustainability - and by extension the sustainability report - is all about the journey (especially in the early years). Think about the organisation’s sustainability journey, and report more broadly, in terms of continuous improvement over relevant time increments (e.g. one year, three years, five years) rather than an annual task on somebody’s ‘to-do list’.

The first sustainability report can be a sobering exercise because it can reveal to the organisation and its stakeholders the immensity of the task at hand. But it can also be a powerful statement that announces to the world that the organisation and its people are taking matters of environment, social and governance (ESG) seriously.

On the face of it, a sustainability report might appear to be all about disclosing information and making commitments. And this is true if an organisation views the report as a compliance obligation.

But, a sustainability report can also play an invaluable part in an organisation’s overall strategy. It becomes a tool that is vital for communicating matters of sustainable risk and performance to its stakeholders.

Viewing the sustainability report as a business tool will radically transform the way in which it is used to set the tone about change and the manner in which the organisation communicates its impact – positive or negative – on ESG matters.

So, it’s important to be clear from the outset on the purpose of the sustainability report for your organisation. Are you meeting regulatory compliance needs, driving strategic sustainable changes within the business, or both? 

Many organisations starting out on their sustainability journey will assign the responsibility of writing the first report to a middle or senior manager, perhaps in the finance or legal team. While there is no right or wrong answer to assigning responsibility, there is no doubt that the most successful sustainability reporting projects are those that take a whole-of-business approach and, critically, have executive support.

To ensure success, you should make sure that a member of the Board or executive leadership team is assigned as a sponsor to the project. The sponsor will act as a link to the Board, making sure there is alignment with the business and communication strategies, the project is properly resourced, and help to deal with any hurdles that may arise along the way.

Reporting on sustainability matters is most useful and relevant when it is aligned with an existing sustainability reporting standard or framework. Choosing a framework to use to prepare your first  Sustainability Report can be one of the most challenging decisions, especially if the organisation’s sustainability strategy is still in its infancy.

This decision is often driven by the purpose you’ve established for the report. If it’s compliance-driven, your framework options are likely to be guided by your jurisdiction's regulator(s). For example, in Australia, organisations guided by the regulations set out by the Australian Securities & Investments Commission (ASIC) have been strongly encouraged to follow the recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD) for some time now, with the new standards recently released by the International Sustainability Standards Board (ISSB) expected to become mandatory from as early as the 2024-2025 financial year.

On the other hand, if you are undertaking voluntary sustainability reporting, many options are available. These include:

• Global Reporting Initiative (GRI) Standards
• Sustainability Accounting Standards Board (SASB) Standards
• United Nations’ Sustainable Development Goals (SDGs)
• World Economic Forum International Business Council’s ‘Measuring Stakeholder Capitalism’
• And many more.

One approach that can be adopted in the formative years is to take elements of a few reporting frameworks that together reflect the current state of the organisation’s sustainability maturity. This method is often chosen when organisations don’t feel capable of meeting all the disclosure requirements of any single reporting framework in their early sustainability reports. But, this approach can leave organisations open to the risk of greenwashing if they only pick and choose the disclosures they want to make the organisation ‘look good’.

Ultimately, a sustainability report will evolve along the organisation’s strategy, and meet the requirements of the framework over time.