The dos and don'ts of CR reporting
Sustainability Report. Corporate Social Responsibility (or CSR) Report. Environmental, Social and Governance (or ESG) Report.
As sustainability practitioners, we know it’s a report that goes by many names. Today, however, one element is unchanging: Reports that disclose material information on a company’s sustainability progress are no longer "nice to do." They are quickly becoming a non-negotiable "must do" that help to not only inform a company’s CR strategy but also its investment decisions and business strategies.
The rules and trends in sustainability reporting continue to change rapidly, particularly among Fortune 500 companies. As we approach the beginning of a new reporting cycle, our Corporate Responsibility team took some time to reflect on the trends that are worth replicating, as well as the challenges companies still face.
What are companies doing right?
1. They’re going digital
In a world where mobile access is king, companies realize that a successful report — one which allows stakeholders to get the information they seek easily — should be delivered via many platforms. Some companies have moved to completely digital reports — online-only, interactive formats that allow for a truly engaging experience with sustainability content. This Goldman Sachs report is a great example.
Additionally, videos are a powerful digital tool for CR reports that not only bring ESG data to life, but also allow for a steady drumbeat of sustainability messages throughout the year. Smithfield is another great example of a company that includes videos throughout its report and also periodically releases videos on sustainability topics.
2. They break the digital rule
One exception to the digital rule is to create a fun, creative handout that reflects your corporate brand and summarizes significant top-line sustainability information. This is not a printed copy of a 100-page report, but instead a high quality and well-designed printed brochure or booklet containing high-level information that easily can be shared with all types of stakeholders (including a company’s sales team, employees and potential investors).
3. Their writing is succinct
Gone are the days of lengthy CR reports. With increased focus on materiality and limiting content to what is most important for stakeholders, companies strategically cut the amount of content they include in annual reports. There is a key distinction between "evergreen" content — what’s applicable year over year, such as a company’s approach to corporate responsibility — and annual updates and progress, both of which ideally are data-driven.
4. They prioritize storytelling
Strong CR reports are platforms to humanize brands. Companies that report well use their reports to tell a complete story — not only the past year’s CR accomplishments but how CR and sustainability are embedded into business initiatives and strategies. We see this through infographics, videos and the use of language that transforms complicated industry jargon into simple, everyday language.
What can companies improve?
1. Follow the rules
Although following a reporting framework is voluntary in most countries, reports that follow sustainability reporting guidelines are often more informative, more material to key business issues and better structured.
The Global Reporting Initiative (GRI) framework is the industry leader for CR reporting, and for good reason. While not perfect, its new framework helps companies prioritize their reporting around what’s material to their business. It also helps readers look for ESG data and compare that data across companies and industries. But there’s a problem: Top companies aren’t investing in the proper experts to follow the format of the framework and their reports suffer because of it. For example, there is no such thing as partial reporting in G4. Our team has seen this in the GRI index of a number of top corporations’ reports.
2. Embed your materiality analysis
Materiality needs to be "built in" and not "built on." We still see companies add a short blurb into their reports on their "thorough" materiality assessments, yet those reports are not at all focused on the issues identified through the assessment process.
Many companies are still reluctant to disclose findings of materiality analyses using visual plots or matrices due to a fear of risk and stakeholder reaction. This fear is unfounded: Transparency is key, and companies should let the world know what issues are material and what they are doing to address them. Honest and modest wins the day. Transparency builds confidence that corporate leadership understands its ESG risk and opportunities.
3. Quantified and measurable goals
Everyone loves seeing a company that has achieved a goal five years early. But if a company continues to find itself achieving or surpassing a goal soon after it is established, it’s time to reevaluate. Companies should get in the habit of establishing achievable yet challenging goals to help increase their credibility. On the flip side, when difficult goals are not achieved, it’s not uncommon for companies to gloss over reasons for these failures in their reporting. Instead, companies should be transparent about hardships and their attempts to rectify them.
So where does this get us? What are the most important things to do to improve CR reporting?
First and foremost, invest in the time and resources to do it right. Look to experts to ensure that your report correctly follows international standards. The last thing you want is to have a self-declared report that doesn’t comply with protocol. The best way to ensure your report is aligned with international standards is to undergo a service review (such as GRI’s Content Index service, or Materiality Disclosure service). Although it is an extensive process, you’ll be happy you did it once you get that stamp of approval.
Do your research. Staying on top of industry trends is critical. If you’re not ahead of the game, you always will be playing catch-up. It is also equally important to do research on what is most important to your stakeholders and to your business. By conducting a thorough materiality assessment, you not only create a roadmap to help prioritize your ESG topics, but you also have a strategic guide to your corporate responsibility report. The more you know, the better off you will be to develop and execute a successful CR strategy as a whole.
Finally, and perhaps most importantly, start addressing the real issues of the world. Begin by identifying areas where your company can use its expertise to make an impact, and from there decide how to best use your time and resources to make a difference.