Anthesis recently held a roundtable event with senior sustainability professionals of FTSE 100 and FTSE 250 businesses from a range of sectors exploring the value in sustainability reporting. Yvonne Ngo picks out the highlights.
THE GROWING BURDEN
Sustainability reporting seems almost unavoidable, with a growing list of stakeholders demanding greater transparency and incoming legislation mandating the disclosure of ESG information. Reporters are inundated with frameworks, standards, guidelines, and indices. Latest on the list is the EU Non-Financial Reporting Directive which requires all Public Interest Entities with 500 employee or more to disclose social and environmental information. But this industry around disclosure is placing a growing burden on businesses to the point where reporting can feel more like box-ticking to fulfil the needs of stakeholders, rather than really about improving performance.
So on the November 9 we asked the question that nobody seems to want to ask: given the big investment and limited readership, is sustainability reporting really worth the money? Of all the things you could invest in to make your company more sustainable, is reporting earning its keep? How do we navigate the minefield that is sustainability reporting, and get the best return on investment? Here’s what we heard…
QUESTIONING VALUE IN THE INDICES
Sustainability Indices have positioned themselves as definitive ways for companies to show transparency and positive sustainability performance, and have given stakeholders some basis for comparing companies on the same criteria. But we found some of the people who spend their days completing the submissions are challenging whether these initiatives are telling the whole story. The methodology and process both raise concerns – particularly about how indices fail to capture specific actions and progress made.
And where is there business value? Opinions certainly varied. One participant spoke about indices as being a useful tool and an important driver of corporate reputation – both internally with support from senior management, and externally with stakeholders like the investment community. Meanwhile, another pointed out that despite reputational concerns, dropping DJSI had yielded no reaction whatsoever from the outside world, to wry smiles from our reporters.
STANDARDIZING REPORTING IS ALL WELL AND GOOD – BUT COMMUNICATIONS TELL THE STORY
There was little doubt in the room that the process of reporting is valuable. Whilst data collection places a burden on reporters, most agreed it helps businesses to understand and manage their environmental and social impacts. It can also engage stakeholders from across the business in the reporting process. Standardization of reporting might seem a logical step, automating this data collection and then reporting consistently through frameworks or indices. That may be a big part of the future, but there was a strong sense that it is not enough. Diverse communications of facts and stories through diverse channels including digital are still necessary to communicate what really matters to the business, give the whole picture and enable stakeholders to engage with the numbers.
LESS PRINT IS MORE?
We’ve heard it all before… ‘go for the glossy cover!’, and ‘I believe that opting for that pricey gatefold will really bring your report to life!’ – but is the printed report needed anymore? People are taking their reports online. One of our reporters had nervously abandoned a print version, only to find not a single person enquired about this move to digital only. Aside from the obvious benefit of the reduction in costs and reducing environmental impacts, there are clear advantages to moving content online such as being able to monitor who it is who actually reads your report. For companies looking to measure ROI from reporting (and a growing number are), knowing the readership of your content and what kind of information specific stakeholders are seeking also means information and future reports can be targeted more accurately.
SDGS… PLEASE! NOT ANOTHER FRAMEWORK!
The uptake of the SDGs has been impressive, and we have been helping our clients align their strategies with the global goals. Our reporters confirmed this trend, and noted there has been a huge drive from reporting initiatives, such as the GRI on aligning their own standards and pushing the uptake of the SDGs. However, some were concerned that the SDGs will be yet another reporting requirement added to the treadmill through yet another framework. While it’s great that companies want to contribute, some were concerned that fixating on mapping to the SDGs will mean sustainability strategies lose their innovation and individuality.
TO SUM IT ALL UP…
There were differencing experiences around the table – but the overall sense was that reporting is becoming more complex and as a result more active management is needed. Some leading reporters in transparency and sustainability disclosures see declining relevance in some of the mainstream indices and are focused on communicating directly with key stakeholders. Others continue to find some frameworks and tools invaluable. There is no right answer, but it seems clear that the starting point should always be on the ‘why’ of reporting, and particularly on what is needed to drive performance improvement in your own company. Get that right, and you are much better placed to provide what is expected and needed by your internal and external stakeholders.