For companies and organisations across the globe, sustainability has become an integral part of culture, operations, and even new business models. But how can the impact of these efforts be measured and communicated? This is where sustainability reporting comes into play.
Sustainability reporting provides a comprehensive overview of an organization’s environmental, social, and governance (ESG) performance. Through regular reporting, companies disclose their sustainability practices, goals, and progress to both internal and external stakeholders.
In the past, sustainability reporting was optional. But in today’s world, stakeholders are demanding transparency around the ESG impacts of businesses. Major companies like Amazon, Apple, Nike, and Coca-Cola now publish annual sustainability reports. In fact, research shows that 90% of S&P 500 companies publish these reports.
So why has sustainability reporting gained such prominence? Let’s explore its evolution, benefits, and the need for standardisation.
The Origins of Sustainability Reporting: from Profit to Prosperity
Though formal sustainability reporting is relatively new, its origins can be traced back decades. The environmental movements of the 1960s and 1970s pushed companies to be accountable for their impacts.
Early reporting tended to focus on environmental factors.
Over time, social and governance issues like human rights, diversity, and executive compensation entered reporting as well. Frameworks were developed by organisations like the Global Reporting Initiative (GRI) to standardise disclosures across industries.
The release of the landmark Brundtland Report by the UN World Commission on Environment and Development in 1987 was another catalyst. It defined the goal of sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”
This intergenerational equity lens remains central to sustainability efforts today. It highlighted that economic growth must balance environmental protection and social wellbeing. Profit is beginning to converge with prosperity.
The Rise of ESG Factors
In the 2000s, the consideration of environment, social issues, and governance grew into the ESG investment movement. Investors realized these factors can significantly impact businesses and demand transparency.
The pivoting point was BlackRock’s declaration on their investment priorities: sustainable ventures only[PS. BlackRock is the world’s largest money manager ;-), a weighty voice, so to speak!].
This is why sustainability reporting has become mainstream. It provides the decision-useful ESG data that investors, regulators, employees, consumers, and society want from companies.
The Need for Reporting Standards
As sustainability reporting has expanded, the variability in disclosures has become problematic. With no standards, comparing companies and benchmarking progress was difficult. Evaluating investments with inconsistent data was also tricky.
To address this need, the sustainability reporting landscape has seen a push towards standardisation. Leading frameworks include the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the International Integrated Reporting Council (IIRC).
Each standard provides guidance on sustainability topics, metrics, methodologies, and presentation formats. This introduces consistency and allows meaningful comparison. Frameworks like the GRI are industry-specific, improving relevance.
The Power of GRI Standards
As a pioneer in sustainability reporting, the GRI strives to help businesses and governments worldwide understand and communicate their impacts. Its standards are the most widely adopted globally.
The GRI Standards feature a modular structure centred around three components:
Universal Standards that focus on organisational reporting fundamentals.
Sector Standards tailored to industries like oil and gas or mining.
Topic Standards that dive deep into issues like emissions, water, and waste.
This comprehensive suite of standards lends consistency and credibility. Over 10,000 organizations across 100 countries rely on GRI to report their sustainability performance. Companies can freely access and use these standards through GRI’s website and resources.
At U-Earth Biotech, we are aligned with the GRI standards for their rigor, scope, and industry adoption. We refer to GRI disclosures within our own Impact Factor.
The Future of Sustainability Reporting
Sustainability reporting has come a long way, but the journey continues. Frameworks are continuously updated to address evolving stakeholder needs and new challenges like the UN Sustainable Development Goals. Reporting is also being further integrated with financial reporting.
Regulations are emerging requiring climate and sustainability reporting for public companies. This includes the EU’s Corporate Sustainability Reporting Directive (CSRD) and the UK’s mandates. Global coordination to harmonise standards is also underway.
Ultimately, standardised sustainability reporting will help hold companies accountable and drive real progress. With standards like GRI, we can work collectively towards a just and sustainable global economy that protects people and the planet.