Maximpact Blog

Sustainability Reporting Framework 101

Mumbai, INDIA , September 8, 2017 Guest Contributor Vikram Shetty CEO 73bit Information Technology and Services.

A sustainability report is the key platform for communicating sustainability performance and impacts — whether positive or negative. It also helps topics that are relevant to the organization and prioritize those topics that are “material”. Another source of sustainability measures comes from companies’ reporting standards such as the triple bottom line accounting, as a growing body of firms and public institutions systematically reveal information about their environmental and social performance beyond the traditional financial statement.

Types of Reports

There are many different terms used to report namely Sustainability report, Non-financial report, Triple bottom line report, Corporate social responsibility (CSR) report, Assessment report, Benchmark Report, Transparent Report, Corporate Report, Responsibility Report and many more.

Over past several years, the various parties involved in developing the reporting frameworks have been working together to align their language and approach, and there are increasingly valuable synergies between the frameworks, which should make it easier for companies to evaluate and apply them while also reducing the amount of work and redundancy.

Corporate Social Responsibility (CSR) is most commonly known term. CSR is defined as “Enterprise should have a process in place to integrate social, environmental, ethical and human rights concerns into their business operations and core strategy in close collaboration with their stake holder.”

History of Reporting

Events 1960 to 1980

The upshot was the US Clean Air Act in 1970 and Clean Water Act in 1972. US society in the 1960s and into the 1970s was concerned about social issues — women’s rights, racial equality and world peace — which became a focus of corporate reporting. In UK and USA, deregulation and economics were emphasised over other issues. Correspondingly, social reporting waned during the 1980s.

Events 1980 to 2000

Chemical corporations pooled together to develop ‘Responsible Care’ programs in an attempt to avert government regulation. Responsible Care was launched in 1985 by the Canadian Chemical Producers’ Association (CCPA).

In 1991, Germany passed the Ordinance on the Avoidance of Packaging Waste under the German Waste Act, which held producers responsible for packaging waste. Denmark has required some corporations to disclose environmental consequences in annual reports since 1999.

In the mid-1990s, John Elkington, co-founder of the business consultancy SustainAbility, coined the concept of the ‘triple bottom line’ (Elkington 1998). The basic idea is that financial results do not provide a comprehensive summary of performance.

Events Post 2000

In 2000, GRI launched the first version of the Guidelines, representing the first global framework for comprehensive sustainability reporting. In 2002, about 70 per cent of the reports were published as Environmental Health and Safety reports; in 2005, about 70 per cent were published as Sustainability Reports.

The number of corporations providing CSR information continues to increase. In 2005, 64 per cent of the G250 corporations provided CSR reports, either standalone or as part of their annual reports. KPMG’s 2008 survey shows that nearly 80 per cent of the G250 provide CSR reports

Development of a framework for integrated reporting is led by the IIRC. The IIRC (2011) describes Integrated Reporting. An example of a company at the forefront of integrated reporting is Novo Nordisk, a Danish pharmaceutical company that is a world leader in diabetes care. Novo Nordisk has over 32,000 employees, working in 75 countries, and its full 2011 report is available at Novonordisk

New Generation Reporting

On September 25th 2015, countries (around 200 countries were in the UN when Sustainable Development Goals was adopted)adopted a set of goals to end povertyprotect the planet, and ensure prosperity for all as part of a new sustainable development agenda. Each goal has specific targets to be achieved over the next 15 years. It is called as Sustainable Development Goals (SDG)

Reporting Life Cycle

Companies needs to first decide on which sustainability goals they want to report. We need to identify the Key Performance Indicators. If you are a team who offer Sustainability reporting or benchmarking services in specific industry then you would already have questionnaires or performance indicators.

A reporting cycle is usually One year. There can be variations however it is aligned with the financial reporting cycle. Since financial reporting cycle is normally a year in any country. The few stages in the Cycle from the reporter’s point of view are mentioned below:

  1. Preliminary questionnaire preparation.
  2. Data Collections from individual / multiple stakeholders.
  3. Review and correct the collected data.
  4. Analyse and format with communicating information.
  5. Create report in meaningful and common language.
  6. Publish the report to all stakeholders.

Pilot phase

Each stage has different activities and outcomes which needs different skills and timelines. One of the ways to experience the whole cycle is to start with Pilot Phase. This is a most common practice used by many to kick start the reporting cycle. It consists of a smaller questionnaire for few departments or companies depending on your size and kind of service you are providing for reporting. It becomes easy to create a small initial set of questions. This is followed by collecting the data from the respective team or person. Thus helping the team creating the report (reporters) to work with a small amount of data and with fewer member in a team. This will make it easier when your real questionnaire goes live- you can also test functionalities. It is also a good way to test your online tool/framework/software use to collect the data, analyse and report. It is not compulsory to have a online tool, It can be done by collecting data using word/excel documents via emails and doing all calculations manually. However it is recommended to have a tool for detail analysis of the data collected and to create comprehensive reports using the information in hand.

Recommended good practice for preparing questions and collecting data

  1. Create a plan on the timeline for collection data through surveys, analyzing data and for creating reports. Thus, giving the team enough time to make sure the data is correct.
  2. Try to create more simple questions and question structure. Thus making it easy for both the stakeholder to fill in and reporter to review and revert.
  3. If possible, have a kickoff online webinar to explain the questions and the structure with stakeholders. Let them know what is expected in the respective section.
  4. Keep the list of all concerned team to notify them once the reporting cycle starts and the instructions to fill in the survey.
  5. Stakeholders should only see the relevant questionnaire set which are specific concern to them.
  6. Periodically follow up with teams and doing a spot check to see if the data is filled correctly. Also, make sure that the team is not facing any challenges filling the survey.
  7. Appropriate alerts and notifications are in place once the stakeholder has completed the survey.
  8. Once the survey (data collection phase) is done the stakeholders should not be allowed to modified the data. Thus allowing reporters to work on final data submitted by the stakeholder.

There are many industry practices out there. Above are the few mentioned with respect to someone who is new to reporting cycle.

There are generally two kind of data that is collected while reporting namely Qualitative data and Quantitative data.

Qualitative data is information about qualities; information that can’t actually be measured. Some examples of qualitative data are “what are the principle towards sustainability?”, “what is the companies motto?” and so on.

Quantitative data is information about quantities; that is, information that can be measured and written down with numbers. Some examples of quantitative data are “total number of employees”, “Reporting period”, “Percentage of recycled input materials used”, “Return to work and retention rates of employees that took parental leave”, “ Total number and nature of confirmed incidents of corruption” and so on. The advantage of quantitative data is useful in representing them graphically and via charts. It can be also used in comparative analysis. A benchmarking report is slightly different in that it provides peer comparison, which a sustainability report does not. However, both kinds can be used to track and show year-on-year progress,

Few tricks for working with quantitative data

  1. Make use of sub totals and totals in your final reports or in summary
  2. Take Averages by categories/industries, it will help you represent same data for multiple audiences
  3. Display them in tabular formats for summary information to give an overall picture.
  4. Create derived data form the raw data. For example Ranks, Quintile, etc
  5. Make good use of charts and graphs to represent data.

Advantages of Reporting

There are direct benefits to your organisation in the measuring and reporting of environmental performance as it will benefit from lower energy and resource costs gain, a better understanding of exposure to the risks of climate change and demonstrate leadership, which will help strengthen your green credentials in the marketplace. You should find it helpful to use environmental KPIs to capture the link between environmental and financial performance. Investors, shareholders and other stakeholders are increasingly requesting better environmental disclosures in annual reports and accounts.

Expanding upon how these frameworks can help in developing corporate programs, these frameworks and initiatives can also help push for transparency regarding management strategies and measurable actions. Furthermore, they can help companies target areas that will have significant and meaningful impact that ultimately translate to value for our customers and stakeholders. And that is where the true value lay.

Apart from monetary benefits the reports can provide in terms of explaining the impact on the environment and society in general. You can align your purpose as a company or business towards sustainable future. Thus being a part of the new revolution towards making world more sustainable and happier to live.

Hope you continue to do the work that you are proud off!

I want to give special thanks to experts who helped us, name mentioned in alphabetical order (Click on their name below to visit their profile):

Simona Kramer : Junior researcher at Access to Nutrition Foundation

Thomas Colquhoun-Alberts : Benchmark and Knowledge Manager at Business in the Community

There are many web resources I have used to create this post. Thanks to all who are publishing information towards Sustainability. Few are mentioned below:

Sustainability reporting: past, present, and trends for the future  Insights  and The University of Melbourne.

Related Post

Leave a Reply

Your email address will not be published. Required fields are marked *


*