The Ever Evolving Landscape of Sustainability Reporting
A key topic of the upcoming GRI conference - Expectations around sustainability reporting continue to increase and evolve.
Many companies struggle to keep pace with stakeholder requests for sustainability performance data. For our clients, telling their sustainability story publicly is no longer a nice to have, but a must have. Our clients are frustrated by the fact that these requests don’t always align well with what they believe their material sustainability issues are and what they should be focused on managing. It is extremely challenging to balance transparency (and wanting to respond to stakeholders) with the business value of that outreach. Many companies have reached a point where they aren’t seeing a return on investment for the additional communications with analysts, investors, customers, and are faced with the need to streamline their reporting and communication efforts.
The increase in the number of new sustainability reporting legislations and frameworks we are seeing is a significant piece of the story. The EU adopted a Directive that will require disclosure of certain environmental, social and governance (ESG) information by specific large companies beginning in December 2016. The Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) continue to push frameworks forward that outline best practices in transparent and meaningful sustainability reporting. These all call on companies to do slightly different things and report on different disclosures.
The challenge of real time data
We know that organizations like the Global Reporting Initiative (GRI) are also pushing for more real time data and information to be made available by companies on their sustainability metrics through “The Next Era of Corporate Disclosure”, their 2025 strategic planning initiative. One on hand, we love the idea of the potential power companies will realize from having this data and information available – just think of the Chief Procurement Officer who is able to show an investor in real time how he has reduced risk through the company’s supply chain efforts to mitigate potential human rights abuses when queried.
But with this comes a new and not insignificant challenge. How will we know all of this real time data is credible and accurate? Because we’ve supported companies in their individual reporting journeys for years, we have witnessed how these numbers come together for their annual corporate sustainability reports, environmental product declarations, health product declarations, etc. It can take years for companies to feel confident with the quality of their data, their baselines, and their assumptions. Many companies end up re-stating their baseline year after year due to errors in initial data collection, or due to gaps in their initial scopes that they realize were significant. The more data that is out there, the harder it will be to validate.
How should companies react to this changing pressure?
We’ve prepared a short whitepaper with more detail and some key steps you can take to respond to these challenges. We will also be attending the upcoming GRI Global Conference in Amsterdam this May. Titled “Empowering Sustainable Decisions,” the conference will focus on building a shared understanding of how the sustainability reporting landscape is changing, what this means for companies in terms of expectations for continued improvement, and engage in dialogue around the best path forward in addressing those expectations. thinkstep looks forward to tackling these issues and opportunities with our customers and hopes to see you there! Please come and visit our booth number 19/20. For a free copy of our whitepaper, please click here.