The future of reporting: Goodbye, annual PDFs; hello, real-time feeds
Don't get too excited about the death of the yearly corporate sustainability report. Soon reporting will be always on, wide open and searchable, says the Global Reporting Initiative.
The days of the annual corporate sustainability report are numbered, as the future of reporting will involve real-time sustainability data exchanges enabled by digital technology, according to new research from the Global Reporting Initiative. All of this will be coupled with a new role for stakeholders, who will be empowered by almost real-time interactions with companies.
The report, "The Next Era of Corporate Disclosure" (PDF), is the culmination of the first year of GRI’s continuing Sustainability and Reporting 2025 project, which seeks to discover what the main issues will be in companies' agendas and public reports in the coming decade.
5 business challenges shape the near future
Business executives and experts foresee five key challenges dominating the future business and political landscape: global issues, sustainable development, environmental challenges, efficiency problems and challenges with governance and economic models.
Global issues include a spike in world population, climate change impacts and data technology development. Food and water security, wealth inequality, conflict management and security as well as human rights protection constitute the most pressing sustainable development problems.
Environmental challenges likely to affect the future of business include global and regional management of natural resources, ecosystem protection and waste and contamination management. Challenges with efficiency involve the production and distribution of goods and services, as well as new models and technologies for energy production and distribution.
Businesses also face serious challenges with society’s governance and economic models — the loss of trust and legitimacy in institutions and lack of creativity of political leaders is creating a new role for business and civil society leaders.
Likewise, there is a need to develop governance structures for society to deal with such challenges, and to develop a new generation of economic growth and development models.
While none of these challenges are new, there are new avenues for using data to make better, quicker decisions. Over the past decade, there has been a dramatic increase in the number of companies measuring sustainability performance, with thousands beginning to value monitoring their sustainability impacts. But digital technology promises to help organizations better manage what they measure. Big Data-powered networks across companies and suppliers, for example, will share sustainability data to manage risks and improve performance.
Sustainability data will be much easier to access and analyze, and will originate from many sources beyond the company itself.
"The information needed to tackle current and future sustainability challenges must clearly inform the user about how the organization sees the relationship between its real challenges and its strategy and operations," Michael Meehan, chief executive of GRI, told GreenBiz. "In order for this information to truly support decision-making processes within every organization, it must be more accessible, easier to analyze and available in real time."
Moving from annual reports to sustainability data exchange
Before you get too excited about never assembling another lumbering annual corporate sustainability report, realize this: In the future reporting or disclosing for shareholders and regulators will be digital and tagged, and done more frequently.
Consider that in 2014, the European Union began requiring certain companies to publicly report on environmental and social strategies, actions, policies and programs.
"Currently, most businesses only communicate about their sustainability efforts a few times a year and the main opportunity currently is when they publish their annual sustainability report, usually as a PDF," Meehan said.
"This is an important moment and sustainability reports contain a wealth of information which stakeholders can and should use to inform their decision making. We still believe that this type of report will continue to exist and will have an important role to play, particularly for regulators."
But this one-way communication will not be enough to inform stakeholders well, according to Meehan. The experts GRI spoke to envision a future where this gives way to "sustainability data exchange," which is open, shared, multi-channel and occurring almost in real-time. GRI expects sustainability data will be much easier to access and analyze, and will originate from many sources beyond the company.
For the first time, a company’s contributions to the world’s challenges will be clearer to see, alongside its strategic goals.
Sustainability data about products, for example, will be available in almost real-time for the general public to peruse on demand.
Stakeholders will be able to use search engines to consume sustainability information in a much more customized way, and powerful software will help companies and stakeholders find correlations between data and check for consistency.
Meanwhile, companies will have less control over information — performance information will be gathered from a variety of different sources, and not only from companies’ internal systems.
In other words: It will be an era of unprecedented transparency.
New focus on challenges and the supply chain
With digital technology shining light on most corporate activities, companies will be held accountable for their social and environmental impacts. At the same time, new regulations likely will require firms to disclose information on their overall impacts on society and the world’s natural resources, the report said.
Sustainability disclosures and related data will provide a clear overview of business efforts to fight climate change, eliminate contamination and waste, protect ecosystems and manage natural resources at the regional level.
The data also will expose contributions to the quality of life — including access to food and water, education, health services and civil rights — of individuals and communities in the business’ extended value chain and operations.
Digital technology also will reveal supply chain impacts — companies will disclose information on their partners as well as their joint impacts within the extended supply chain. And those companies currently moving toward circular supply chain models may stand to gain when digital technology levels the playing field of public perception.
In order for this information to truly support decision-making processes within every organization, it must be more accessible, easier to analyze and available in real time.
For the first time, a company’s contributions to the world’s challenges will be clearer to see, alongside its strategic goals. In this way, corporate sustainability will move from something many firms currently view as "nice to have" to becoming a core component of operations.
Information empowers stakeholders
In this vision stakeholders, including customers, investors and employees, will play a more active role in corporate sustainability matters, thanks to digital technology. With access to company performance information from multiple sources, these interactive and well-informed stakeholders will interpret sustainability data in a more comprehensive way, allowing them to evaluate company value creation more broadly and effectively.
"The process of choosing ‘what matters’ — gathering information from stakeholders, and undertaking a thorough risk assessment of sustainability impacts and performance — should always be robust," Meehan said. "Otherwise the company can lose focus and, consequently, disclose information that is not related to critical impacts that need to be managed."
"Technology and innovation can play a key role in how this information is collected, aggregated, communicated and used. This will reduce the transaction costs involved in the process of sharing sustainability data."
Many of these digital tools already are here. The MultiCapital Scorecard, GISR CORE program, GRI G4 Guidelines and CSR Hub are among those tools on the market that make it easier for customers, investors, regulators and others to understand a company’s sustainability efforts. These are websites, information resources and guidelines that can help companies stay on track with sustainability reporting, while also creating greater transparency for stakeholders.
As a result, businesses’ approaches to stakeholder relations will change, says GRI. New governance structures will need to enable companies to react faster and coherently, in a more interactive way, transforming the way they engage with stakeholders.