Keeping on top of sustainability reporting trends is not easy. The field of corporate sustainability reporting is maturing and evolving, making it important to keep up with the changing standards and expectations long after you complete this lesson in Sustainability 101. As you get more experience in this discipline, continue to watch what the leaders do. Keep up with issues on the horizon through the conversations on blogs, Twitter and LinkedIn. And, attend conferences to hear from the experts when you can.
At Emotive Brand, we strive to keep our finger on the pulse of the industry in order to help our clients put in place strategies that demonstrate leadership even as the standards evolve. For a peek into the future, the following is adapted from a longer blog post written by our colleague, Thom Elkjer.
Emotive Brand’s Sustainability Reporting Trends Outlook
We believe that in the next decade corporate sustainability reporting will become:
Hard data is already the standard, not the exception, for reporting leaders. Companies need to satisfy important stakeholders by adhering to the Greenhouse Gas Protocol and Global Reporting Initiative (GRI). Those that once avoided comparable numbers now compete to offer more of them. Software companies are writing programs for capturing global sustainability data, and more and more companies are offering assurance and consulting services for sustainability reporting. With this much momentum at the front of the parade, even conservative reporters will pick up the pace.
As sustainability reporting becomes both standardized across industries and increasingly aligned with financial reporting, comparability will be paramount. When companies report on the same categories of information in the same way, stakeholders (including investors) will be better able to analyze them for side-by-side comparisons. Companies with serious purchasing power will want their Tier 1 suppliers to provide them with comparable data on sustainability in order to compete for business. For these reasons, more companies are voluntarily filling out standardized surveys, such as for the Carbon Disclosure Project.
The number of activist groups seeking to have their topic covered in sustainability reports increases every year from diversity organizations to those focused on water, carbon or e-waste. There are more tools for measuring and reporting, such as the Global Water Tool from WBCSD. More organizations are offering awards, rankings and indexes – and it’s clear what it takes to score high: more disclosure, on more topics.
A Standard Audit / Assurance Project
Third-party assurance means credibility, and credibility is key in sustainability. Take GRI: you’re allowed to “self-declare” your grade, but you don’t get a “+” after the grade unless someone else validates it. So companies that want to demonstrate leadership have to assure their reporting – and the big audit/assurance providers know it. They’re adding people and processes, and their national associations (such as CICA in Canada and AICPA in the US) are defining standards for the work.
A Supply Chain Requirement
Since carbon data from suppliers is included in Scope 3 reporting, large companies are increasingly looking to their suppliers for help managing their own carbon footprint. Requests that large companies make of their suppliers for carbon and other sustainability data will continue to move down the food chain until many more companies are collecting and reporting their data. As this evolves with comparable, assured data, customers will not only be able to include sustainability factors in purchasing decisions, but also to raise performance expectations as a result of this competition. And sustainability reports will be the validated, standardized venue for doing the diligence.
Companies focused on getting ahead of their competition in sustainability will continue to be leaders and to raise the bar for their industries. Sustainability websites are already being promoted, along with products, in commercials and press releases. Assurance brands (such as JD Power for automobiles) are developing new sustainability marks for consumers. Professional associations are forming, new credentials programs are being tested, and corporations are creating new management positions for sustainability reporting.
In the past, companies put out their first sustainability report because of a PR disaster – or because a competitor won a sustainability award. It was reactionary. Going forward, sustainability reporting will be proactive, aimed at brand enhancement (or outright rebranding). Reporting will help companies make meaningful connections with key stakeholders and create new growth opportunities. Choosing which customers and audiences to win over, what information to use for that purpose, and how to change the company itself are becoming matters of strategic, C-suite importance. For more and more companies, sustainability strategies and overall business strategies will be one and the same.
Companies are beginning to look for ways to pair their annual reports and their sustainability reports. In most cases so far, the effect is underwhelming because the integration is only paper-thin – but this will continue to strengthen as companies do the underlying integration of strategy, operations and brand. You can bet that the Global 100 corporations are talking internally about integrated reporting. But they may not get there first – new laws in a number of U.S. states allow the formation of “benefit corporations”, which differ from other corporations in one brilliant respect: they can’t be sued by shareholders for failing to put profit above everything else. These companies won’t have to integrate multiple reports. They’ll just report, period.
As reporting matures and technology allows, organizations will continue to have more robust conversations with their stakeholders from online forms and surveys to conversations on social media. Companies that take the time to listen and respond to stakeholder interests will have the advantage of developing even more effective reporting. Even more importantly, beyond reporting, stakeholder conversations can inform and strengthen overall business strategy.
Powerful Enough to Make a Difference
Standardized financial reporting has vastly increased the number of people willing to own and trade corporate equities. It’s going to be the same with transparent and standardized sustainability reporting. The result will be a tremendous increase in social awareness of the quantifiable social and environmental impacts of corporations. This will give other business customers, as well as individual consumers, a way to make choices that reward responsible behavior. The beneficiary of this evolution will be…everyone.
Let us know if we missed any sustainability reporting trends. We’d love to add to the list.
Emotive Brand is a San Francisco branding agency with a strong reputation in sustainability reporting and building more meaningful brands.