Don’t let sustainability reporting derail your sustainability agenda
The Sustainability Reporting Trap: How your organisation can avoid it
In the last two years, the demands on businesses to get to grips with sustainability have skyrocketed.
There are several reasons for this, including rising numbers of those who have already understood how climate change and the nature crisis demand a change of course for the business. Yet it is the proliferation of sustainability reporting frameworks and regulations that have been one of the most important reasons why both businesses and investors have started to seriously engage with the topic systematically.
Jolting firms into taking action in this way was always the intention behind this new regime. Reporting is an essential aspect of sustainability through its promotion of accountability, transparency and measurement with a standard, robust set of metrics.
While this may appear like a big win for the cause of sustainable business at a time where such wins are so hard to come by, there is an increasing risk that what we have is a pyrrhic victory.
Instead of working on sustainability strategy and initiatives which respond to the big sustainability challenges, organisations are getting sucked in to a treadmill of data-gathering and reporting.
As a result, sustainability is increasingly at risk of becoming a compliance exercise, where reporting is seen as the totality of what is required and, given the resources that reporting demands, where meaningful sustainability initiatives are defunded, set aside or simply not prioritised at all.
A sustainability strategy that is merely a reporting strategy in disguise is a missed opportunity to create long-term value for the company, its stakeholders, and the environment.
In our experience, it takes effort for firms to avoid falling into this trap and those who do share some common characteristics:
Clarity on the role of reporting
Reporting standards are tools to help develop your sustainability strategy, not the sole focus of sustainability strategy. They are there to create transparency, not dictate the actions and areas you need to focus on.
A business initiative, not a sustainability initiative
Sustainability disclosure is one of the best ways of understanding future business risk and resilience as seen through the lens of climate, nature, human rights and other factors. The firms who harness this value see sustainability reporting as a strategic business initiative rather than a data-gathering, form-filling exercise.
Dedicate budget and resources to strategy creation
Sustainability reporting cannot happen without putting systems in place to identify and collect the right data. It’s critical however, that is not the totality of investment. Organisations need to build in bandwidth for teams to study the data, to interrogate what it shows about your performance in order to inform and progress sustainability strategy.
Take a whole systems approach to change
Working across multiple reporting standards – or even a single disclosure framework – will surface an array of areas which appear to require urgent action or present as a “quick win”. Resisting isolated interventions, seeking links across the business to implement change and considering the whole of the business value chain will always deliver better value.
Rightsizing and prioritising
Sustainability reporting can cover a vast array of subject matter, which means businesses need a proactive approach to prioritising the most important sustainability issues, and to use those insights to drive changes that align sustainability and the business strategy and that deliver value. This helps organisations rightsize the investment they make while avoiding the overstretch which goes with making too many commitments.
Business ownership
Translating insight to action requires firms to ensure that sustainability themes have owners within the business with the influence to act. Clearly delegated responsibility for issues from commodity sourcing to human rights or energy efficiency ensures a cohesive approach and accountability.
With its tendency to present multiple, urgent and often competing priorities to businesses and investors, there is no doubt that the sustainability landscape not only confuses but also frustrates firms who want to make progress.
It is with that in mind that the most important piece of advice we give to any client or prospective client as they approach any sustainability initiative – whether that is reporting or something entirely different –is to pause, stand back and ask yourself; what do you want to achieve? Approaching sustainability with a clear strategic business goal is always the best way of achieving the best outcome.