Essentials for Sustainability Reporting

It’s that time again–time for annual sustainability / corporate responsibility / CSR / company progress reports. A report by any other name is still a long series of facts, stories and (hopefully) interesting infographics aiming to convey a past year of company effort and well-earned achievement.

Sustainability reports (which is the term I will use to cover the vast array of extra-financial reporting) have increased significantly in the last few years. For example, the number of sustainability reports from the Fortune 500 have jumped from 20% in 2011 to 72% in 2013.1

Reporting on environmental, social and governance (ESG) company information offers multiple benefits for businesses. These include, for example, identifying new avenues for risk management, business development, company differentiation, brand building and improving relationships with customers, employees and other stakeholders.

A lot of time and resources go into crafting a comprehensive sustainability report. While there are multiple factors to take into account, the level of Quality and Communication embodied in a report can shape it to be digestible, compelling and relevant to readers.

Quality reporting means finding the right balance

Reporting should highlight the year’s outcomes of sustainability and stakeholder initiatives, and not just list activities the company is involved in. This includes commitments to goals that have either been realized or are getting there, described with an appropriate gauge of progress. A clear set of multi-year sustainability goals and performance against these goals in the reporting year shows that a company is serious about sustainability.

There is a fine balance between focusing on the important issues, ensuring accuracy of information, and demonstrating commitment to the broader range of sustainability issues. It’s vital to:

1. Focus on priorities that are strategic to the company and its stakeholders

Example:

When Walmart began its sustainability endeavors it aligned its value proposition of having low prices with sustainability. With the assertion, “You don’t have to pay more for sustainability,” Walmart went on to save $4.8 million the first year from energy projects alone, which set them on track to reach a goal of saving $150 million on energy by 2020.2 By focusing on initiatives that aligned with Walmart’s strategic priority of always offering low prices, the company found a new way to address stakeholder concerns over environmental issues.

A clear set of multi-year sustainability goals and performance against these goals in the reporting year shows that a company is serious about sustainability.

2. Illustrate how the company balances financial and societal demands

Example:

Capital One decided to begin a new philanthropy approach where it connected skilled Capital One employees with local non-profits to offer pro-bono services.  Through this program, Capital One began to see a huge increase in retention and employee satisfaction as well as expand their commitment social responsibility.Tackling financial issues caused from employee turnover and under-engaged employees through a socially-minded approach, Capital One boosted retention rates and the productivity of its employees—aspects that are often costly and difficult to achieve.

3. Increase credibility by providing a clear picture of the company’s achievements and progress

Example:

Several companies, including Dunkin’ Brands, will include benchmarking graphs with labels showing the progress on particular initiatives. Through color coding or associated shapes, these companies can quickly convey their stated goals, progress so far, and what still needs work.

 dunkin

4. Aim for the highest level of accuracy and transparency

Example:

The last section of Nokia’s sustainability report (2011) is dedicated to data, which includes key environmental, economic, employee, ethics and supply chain data tables. The data is substantiated by footnotes and additional tables that break things down by region and category to inform readers and promote data transparency.4 This level of detail and transparency allows the highest level of accuracy to be communicated to stakeholders.

5. Acknowledge and make plans for future progress

Example:

Kingfisher’s 2013 Net Positive report included monthly progress reports that would be submitted to the Group Board for review and comment. Through committed goals and regular check ins, the company could increase chances of making significant headway in sustainability.5 This kind of process acknowledges that reporting is part of a long plan towards better success in terms of the company and its sustainability goals.

Compelling Communications is the biggest challenge in reporting

Sustainability reports shouldn’t be viewed as a dull but necessary part of sustainability compliance. Instead these reports should be seen as the raw material for dynamic sustainability storytelling that reaches communities far broader than the traditional target audience quartet of investor, employee, NGO and media stakeholders. It’s essential to:

1. Provide a narrative that is simple, clear and compelling

Example:

In a 2009 report by the Financial Reporting Council, nine companies were found to have a CSR section longer than their financial review compiled too disproportionally of immaterial clutter. Only 20% of the sample provided a convincing explanation of why CSR is important to their business.Establishing a clear, succinct and relevant narrative will convey volumes more than a bulk of disjointed stories and statistics.

2. Clearly translate the company’s commitment to sustainability

Example:

Citi dovetailed its sustainability commitment with its inherent strengths as a financial institution by developing new finance products for energy efficiency that it then tested across its own facilities.7 By “walking the talk,” Citi was able to successfully convey its commitment to sustainability.

3. Maintain a tone that aligns well with the company’s core brand values

Example:

Branding is important, especially when dealing with sustainability issues. A recent 2014 report from a brainstorm conference hosted by the Rainforest Alliance claims that “no one really understands what sustainability means,” and the concept is evolving.8 Now is an excellent opportunity to discover how sustainability aligns with the most pressing and appropriate values of the day—and those that your company can integrate or reflect in its messaging.

4. Make included information understandable and accessible

Communicating a company’s goals and accomplishments through data, storytelling and compelling visuals is challenging, but a vital aspect in sustainability reporting.

Example:

Although reporting can be technically focused and data heavy, there are many ways to convey these aspects in a communicable fashion. In addition, allowing access to information via an online presence or within the report itself is essential.

The Starbucks Shared Planet website is a good example of online stakeholder communication. The site provides information portals for stakeholders on issues like ethical sourcing, environment and community that contain clear reporting on progress, current initiatives, and future goals. The site also contains options for stakeholder feedback and submission of new ideas. The easily understandable and accessible website, plus its interactive approach, is impacting movement on Starbucks environmental efforts.9

5. Balance between providing engaging highlights and detailed content

Example:

The Coca-Cola Company released its 11th annual Sustainability report this fall that showcases three main pillars of focus: Women, Water and Well-being with each section beginning with a general goal such. Each section then concluded with a specific fact.10 This kind of balance of general highlights and more detailed content is ideal in conveying a believable and compelling message.

6. Don’t just inform readers, engage them

Example:

Often building a two-way dialogue with stakeholders through easily accessible communication pathways, like social media and the internet, is a beneficial way to inform and engage stakeholders of the report. Simon Mainwaring, author of the New York Times bestseller We First, even claims that connecting to stakeholders through web and media will play a differentiating factor for business success.11

7. Use appropriate and compelling visual aids to convey key concepts and simplify large amounts of data

Example:

It is the rare stakeholder, investor or employee who takes the time to read an entire sustainability report. Creating short, visually compelling snapshots of the report material helps streamline assimilation of the report’s most important elements. In Ben and Jerry’s 2013 Social & Environmental Assessment Report (SEAR), clever and creative infographics successfully communicate the company’s priorities in terms of sourcing, use of GMO’s and its Caring Dairy Program through the use of bananas, cocoa pods and happy cows.12

 b&j

Sustainability reporting is relatively new, and like any new endeavor, can be challenging. The practice, however, is growing in significance and sophistication, and is often the main avenue company’s have to convey many of the noteworthy and material aspects of their performance. While there is a lot of work that goes into compiling sustainability reports (believe me), they have the potential to illustrate new ideas and accomplishments that are incredibly important to the progress of businesses and society alike.

 

1 Governance and Accountability Institute. (June 2, 2014). Flash Report: Seventy-Two Percent(72%) of the S&P Index Published Corporate Sustainability Reports in 2013 —Dramatically Up from 52% in 2012 & Just About 20% in 2011. 

Walmart. (May 7, 2014). Factsheet: Walmart Solar/Renewable Energy Commitments.

Schuyler, M. & Berkowitz, C. (2009). Developing Talent Through Community Involvement: A

Winning Formula for Capital One. People & Strategy, 32(1), pp. 46-53.

Nokia. (2011). Nokia Sustainability Report 2011.

Kingfish. (2013). Net Positive‒The Start of our Journey Report for 2012/13.

6 Financial Reporting Council. (2009). Rising to the challenge: A review of narrative reporting by

UK listed companies.

7 Perera, A., Putt Del Pino, S., and Oliveira, B. (2013). Aligning Profit and Environmental

Sustainability: Stories from Industry. Working Paper. Washington, DC: World Resources

Institute.

8 Rainforest Alliance, BBMB and Domtar. (June 4, 2014). The New Sustainability Narrative.

Tapping into Meaning and Purpose: Innovation Workshop Report.

Starbucks Corporation. (2014). Starbucks™Shared Planet™.

10 The Coca-Cola Company. (2014). Coca-Cola 2013/2014 Sustainability Report.

11 Sustainable Brands. (November 12, 2012). Why Sustainable Brands Must Get Social To Survive.

12 Ben and Jerry’s. (2014). 2013 Social & Environmental Assessment Report.