The second in a series of reflections on CR and sustainability reporting. This time, I’m looking at how you can set your report apart from the herd by avoiding the five most common reporting traps . . .
If you report your company’s sustainability performance, do you baulk at the idea of writing the sustainability report? If you have an interest in a company or its product, do you relish the idea of reading the sustainability report?
When companies have impacts, responsibility, accountability and influence, there is an increasing need to tell people about it. As a result, corporate sustainability reporting has grown greatly in volume over the past 15 years. However, reporting as a discipline is in danger of dissolving into a silent pool of uncertainty.
As I see it, there are five main problems with most of today’s reports:
- They are too long.
- They fail to look forward and discuss issues that could affect the organisation in future.
- They do not tell a balanced story.
- They are not independently checked, and so are not credible.
- They are not set up to allow their effectiveness to be measured.
So, how can we make sure reports are read and acted on? Leaving aside design-related changes for now, here are five tips that address each of the issues above:
1. Be focused
There are various ways to filter out unnecessary report content. Perspectives from inside and outside the company will count. If it is not sufficiently important to stakeholders, leave it out. The way these editorial decisions are made should be tracked and reported. A good external adviser can help you with content prioritisation based on ‘materiality’.
2. Look forwards
A conventional sustainability report presents information for a set period in time such as a calendar year. However, the convention is changing. Sustainability issues are gradually being managed as part of core business. This involves forward-looking observations and judgements. Reporters need to put targets and commitments clearly in a ‘report-card’ section. As sustainability risks become managed in the same way as fiduciary, capital or currency risks, report practitioners must work with group risk managers when clarifying how the company is responding to sustainability risks. Future scenarios for the commercial environment of a company need to include sustainability issues. How this is done should be reported.
3. Be balanced
Despite years of practice, reporters are still grappling with telling the reader what happened plainly and simply. There is an immediate need in the latter stages of report production to ‘get it past Legal’ which means that all the tricky stuff gets cut out. So the potential learning for the organisation from the discussion of ‘sustainability and the business vision’ are excised at the point when it would be most valuable for senior management to reflect on. This results in readers judging that reporters as isolated from the real world. We all know that bad stuff happens – it’s ok to talk about it. The key is that the right issues are recognised, that they are being managed, that performance is tracked and someone is accountable for the outcome, good or bad.
4. Seek independent assurance
When done well, report assurance helps make reporting worth doing. First, be sure about the quality of the content. For the thousands of sustainability reports published, only a minority are checked out using a standardised assurance procedure. And when assurance is provided, it is often only for part of the report’s data and information, although sometimes this is done with good reason. Make sure that the assurance provider checks not just the accuracy of the content, but also its relevance to stakeholders, its materiality – in other words, not just that the content in the report is right, but also that it contains the right content.
5. Measure and manage impact
Most communications aim to lead to action such as an advertisement generating an enquiry. So what do you want readers to do as a result of reading your report? Most reports elicit no action. Or rather no action that is recorded by the reporter. Shouldn’t a report stimulate action by the stakeholders to whom it is targeted? Even with an array of social media devices online, they fail to create action on the part of the target audience. Reporters need to start asking themselves what it is they want their target readers to do. For example, when targeted at government contacts or present and future employees, the desired action can perhaps be defined more easily than when the report is aimed at a wide variety of stakeholders. The information needs and format will be different for an investor compared to a local community, supplier or employee. The one-size-fits-all era is finally over.
In the next reporting notes I post, I’ll look at the use of the Global Reporting Initiative (GRI) reporting guidelines, and the pitfalls of integrated reporting (company annual reports that include sustainability reporting).
To discuss these issues and more with your peers, book a place on one of our free reporting roundtables! Oct 13th London, Oct 21st Copenhagen. See www.twotomorrows.com/events