While there is no universally accepted definition of Sustainability reporting, the term broadly describes an organization’s reporting on its economic, environmental and social impact.
The Global Reporting Initiative (“GRI”), the world’s most widely used sustainability reporting framework, defines it as “… the practice of measuring, disclosing and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development.”
The growing importance of Sustainability is undeniable, both globally and regionally; for this reason at Schema we believe Sustainability reports are a key component of an organization’s commitment to responsible practices, long-term growth and to its stakeholders.
While the benefits of Sustainability reports to an organization are numerous, some of the key advantages include:
Creation of a Sustainability Roadmap
When an organization commits to Sustainability reporting it has to evaluate its current sustainability levels and develop a clear roadmap with action plans to improve them, aligned with the organization’s vision and objectives.
Establishment of a Basis for Comparison
The organization’s Sustainability report serves as a basis for comparison, not simply to evaluate year-on-year progress, but also to compare performance against other organizations and global best practices.
Improved Stakeholder Relationships
Sustainability reports respond to growing stakeholder interest and concern in an organization’s environmental, social and economic impact, thereby improving relationships by demonstrating commitment to long-term growth, transparency and accountability.
Improved Risk Mitigation
All too often organizations focus on short-term gains and as a result consider only short-term risks; because Sustainability reports focus on the organization’s long-term success, the reporting process helps identify long-term risks which places the organization in a stronger position to take actions that mitigate those risks.
Opportunities for Access to Capital
As evidenced by the increasing number of Sustainability indices in capital markets (e.g. Dow Jones and FTSE), the decision making process of investors is evolving to include an evaluation of an organization’s Sustainability, and key to this evaluation is a review of the organization’s Sustainability report.
Stronger Relationships with Regulators
One focus area of Sustainability reports covers the actions taken by an organization to reduce its negative impact on the environment, documenting not only compliance to regulations but also initiatives taken by the organization, leading to stronger relationships with regulatory bodies.
As an organization evaluates its long-term Sustainability in a structured reporting process it uncovers challenges, operational inefficiencies and business opportunities, the solution to which may be found in innovative solutions that could have gone unnoticed if the focus was on short-term gains.
Improved Image of the Organization
Internal and external stakeholder perceptions of the impact an organization has on the environment and society are becoming increasingly important as they reflect the image of the organization; these perceptions can be improved through transparent and accurate Sustainability reports which can lead to increased loyalty and commitment.