Value-based sustainable reporting can measure true performance

Companies today are under greater pressure to not only generate data and assess their sustainability performance and impact, but to make this information publicly available.

As per the McKinsey Sustainability Reporting Survey, 83% of investors ‘strongly agree’ that more standardization of sustainability reporting would help their firm manage risk more effectively, while 85% believe that it will help them allocate capital more effectively.

In general, good sustainability reporting can empower companies to communicate with stakeholders far more transparently about their business activities, whether related to non-financial management or performance aspects. There is also considerable evidence to suggest that financial performance is influenced positively by companies’ ESG focus.

Often, financial statements, by themselves, are not a good measure a company's performance as they provide a narrow view of a company’s performance as was proven during the 2008 banking crisis triggered by the fall of Lehman Brothers. There is now greater awareness about the role of environment or social initiatives of a company in judging overall performance.

There is sufficient evidence to suggest that a company should pay attention not just to profits, but also people and the planet.  Value-based Sustainability reporting therefore plays a key role in indicating a company’s survivability and future growth since it encompasses not just financial information but also the company’s responsibility in shaping the economy, society, and environment.

Sustainability reporting

The UNEP describes Corporate Sustainability Reporting as a potential mechanism to generate data and measure progress and the contribution of companies towards global sustainable development objectives.

It helps the companies to set goals and measure their own performance across various sustainable development parameters. In turn, this enables them to play a part in supporting the transition towards a low carbon, resource efficient, and inclusive green economy.

McKinsey describes a sustainability report as a document that contains a set of sustainability disclosures from an organization for a period of time, whether stand-alone document or a part of the annual report.

Sustainability reporting standards

At its basic level, a sustainability reporting standard refers to a set of specifications that cover the measurement and dissemination of sustainability disclosures.

The mandate for sustainability reporting could arise from a variety of places whether a regulator, government entity, communities, or even stock exchanges. In several instances, sustainability reporting can be a voluntary initiative.

However, unlike financial reporting that globally conforms to uniform standards, sustainability reporting can conform to a variety of different standards.

Since data lies at the heart of value-based sustainability reporting, companies need an easy-to-use sustainability and ESG solution that can reduce the time and efforts in collecting, validating and managing the data for reporting. Also, it must equip enterprises to implement industry best-practices.

For instance, companies must be able to collect the insight required to deepen supply chain collaboration, mitigate sustainability risks, and monitor the strategic use of energy and resources.  The right solution for sustainability and ESG reporting must encompass,

Information gathering

Various systems can contribute to the sustainability data, so connectors for major ERP systems such as SAP, Oracle etc. and third-party data sources will be important to the success of this solution.

Turnkey visualization

The availability of turnkey visualizations for leading standards such as GRI, Frequency SDG and CDP amongst others with the ability to also customize on the go.

Intelligence engine

In addition, an effective solution is one that allows you to address regulatory, corporate reputation, worker well-being, and process standardization without the prohibitive cost and specialized expertise required to implement more complex reporting solutions.

Benefits of effective value-based sustainability reporting

Compliance

Comply with corporate reporting requirements as well as the GRI, UN SDG, CGP and any other standards, and report them accurately.

Actionable insights

Drive initiatives including training programs, incident captures, and legal proceedings or take course correction measures when certain metrices are breached.

Real-time tracking

Companies can set alerts for breach of set standards or KPIs at real time, to reactive and proactive action enablement.

Aggregated information

Aggregate disparate data for a comprehensive view across Corporate & Social Sustainability, Environmental Sustainability & Employee Health & Safety – data ranging from data on human rights initiatives including parental leave, equal compensation, child labor incidents, and harassment, to greenhouse emissions, waste management, marketing, and labelling.

Collaboration

Real time collaboration across stakeholders is a cornerstone to success for multi-site, multi-entity, multi-country companies needing to report as a single enterprise.

This article has been written by Shuchi Nijhawan, Chief Sustainability Officer, EKA Software Solutions