How to get started with sustainability reporting: 4 essential steps
It’s a fact: companies that are not currently collecting and sharing data on the economic, environmental, and social impacts of their operations need to start. Even those based in countries or regions that don’t require sustainability reporting or management are feeling the pressure — from investors, international partners, and customers — to not only disclose that information but do so accurately and with precision. What’s more, putting a sustainability reporting system in place before government regulations are imposed can be a serious advantage over the competition.
But like any other complex endeavor that spans across an entire organization, how a company starts reporting is just as critical as how the sustainability reporting process operates after it’s established. Setting a proper foundation can prevent a lot of headaches and course-correcting.
Here are some essential things companies need to do when they’re getting started with sustainability reporting:
Decide on what sustainability metrics and data to collect
This may seem like a simple decision, but it’s more complicated than most realize. While metrics and data come in number-based measurements that are universal — a kilowatt of electricity is the same no matter where or how it’s used — the classification and importance of those measurements often depend on a framework that uses additional data that also needs to be reported — like if that kilowatt of electricity comes from a solar farm or coal-burning power plant.
What framework, and thus the full extent of metrics and data, that a company collects for its sustainability reporting can hinge on a lot of different factors, like the regulations of its region and industry, any sustainability reporting frameworks used by others in its value chain, and its organizational goals and philosophy. It’s not uncommon for companies to collect data under more than one framework.
The denim brand Nudie Jeans has made sustainability a core part of its business and so collects a wide variety of data and metrics. According to the Nudie Jeans website, the company uses several different sustainability management frameworks and reporting frameworks. It uses the Greenhouse Gas Protocol (GHGP) to track emissions and set goals to help fight climate change. At the same time, it applies a framework by the Fair Wear Foundation (a non-profit focused on fair labor within the garment industry) to monitor data tied to social sustainability. But that’s not all. Nudie Jean’s annual sustainability report uses the Global Reporting Initiative (GRI) framework, the Fair Wear Foundation’s yearly Brand Performance Check, and the UN’s Sustainable Development Goals (SDGs).
Invest in sustainability reporting software
It’s no coincidence that the rise of sustainability management and reporting as a significant facet of business operations matches the availability of tech solutions for tracking sustainability metrics and data. Yet, many companies still don’t use software or platforms designed for sustainability reporting, relying on spreadsheets or something similar.
For the most part, software makes the sustainability reporting process a lot easier. Once it’s installed and calibrated, data is automatically collected and organized. Compared to manual reporting methods, it’s a much less labor-intensive job. Using a digital solution is also more conducive for gaining insight. Most sustainability management/reporting software feature toolsets that showcase the information in ways that can shed light and inspire action. Plus, all the time otherwise spent handling and sorting the data can be used for analysis. So any initial costs, whether it’s time or money, for sustainability reporting software should be seen as an investment.
Since sustainability is central to its business model, plant-based food brand Oatly needed to upgrade and invest in software for its sustainability reporting when its international presence snowballed. Initially, Oatly’s sustainability team used a task-heavy system to collect data, with spreadsheets and sent templates to be filled out at its offices and production facilities around the world. Oatly’s switch to a web-based platform to collect data not only allowed it to streamline the process internally but also integrate data collection from more than a dozen external partners. The company’s sustainability reporting now encompasses data input by over 100 people from approximately 30 sites but stored and analyzed in one place.
Organize stakeholder engagement strategies throughout the entire reporting process
Like sustainability, the concept of stakeholder engagement has become increasingly popular in the world of business leadership. And with good reason, identifying and interacting with those who affect and are affected by a company’s actions can be critical in its success. What’s interesting is that there’s evidence stakeholder engagement can also be crucial to sustainability reporting.
According to a 2020 study of stakeholder engagement in sustainability reporting, which looked at over 100 different companies in the energy sector based in 40 other countries, there are different levels of stakeholders and engagement intensity. What’s more, the companies studied seemed to “concentrate their engagement actions at the least complex levels” and missed out on opportunities for more complex and strategic engagement.
With massive holdings in agriculture, retail, and telecom, the Charoen Pokphand Group (CP Group) is the largest private company in Thailand and seems keen to find and thoroughly interact with others as it strives to become a carbon-neutral and zero-waste company by 2030.
According to the 2020 edition of the annual Reporting Matters publication by the World Business Council for Sustainable Development (WBCSD), which analyzes sustainability reports from member companies and gives an overview of reporting trends with examples of best practices, the CP Group is a premiere model for stakeholder engagement in sustainability reporting. The company focuses on ten identified stakeholders and is also transparent in any challenges to engage with them. It even provides some stakeholders with the opportunity to comment on and critique its sustainability efforts, which the WBCSD notes enhances “a sense of balance in the report.”
Ensure the correct sustainability data will be reported
The need to report sustainability data that’s accurate goes without saying. That’s why it’s so critical to set up safeguards to verify the information being reported is correct and to have them in place before reporting starts. There are any number of reasons for bad data, and using a system of governance to review and check it can help spot errors before it’s too late.
As a guide by the sustainable business consultant group BSR points out: “Reporting governance processes and systems will be unique for each company.” But BSR also notes that, atypical styles or not, a common benefit for setting up oversight procedures is buy-in from internal stakeholders across the organization.
Appliance manufacturer Electrolux is one of the largest multinational corporations in the world, which means it requires a serious system of governance to ensure its reporting and management are accurate and effective. In the most recent annual sustainability report on Electrolux’s website, the company lists a dozen auditing and monitoring processes, including several different types of audits, employee surveys, certifications, external verification, and even a third-party operated ethics hotline.
Launching a sustainability reporting program is a serious endeavor. Very few complex efforts or undertakings happen without an unexpected problem of one kind or another. But taking the time to put some essential aspects in place before any data is collected can go a long way in minimizing issues and establishing quick solutions beforehand. In the end, a company has to focus on being more sustainable, not fixing its sustainability reporting.