Sustainability Reporting Roundtable: 9 Tips for Success

Sustainability Reporting Roundtable: 9 Tips for Success

Experts identify pathways to effective reporting, drawing on NBS’s Sustainability Reporting Playbook. 
NBS March 2, 2018
NBS convened a roundtable of sustainability reporting experts to identify pathways to effective reporting. The discussion built on NBS’s Sustainability Reporting Playbook

Experts offered overall tips as well as insights on three actions in the NBS Playbook’s Effective Reporting Framework: Compiling, Disseminating and Engaging, and Evaluating. 

Experts who participated in the roundtable:

General Tips for Reporting Professionals

Panelists encourage reporting staff to think about reporting as a process, not an end in itself. They also recommend considering stakeholders early and often.

1. Value the process, not just the final report

Don’t just focus on your report. The reporting process has additional value. Through reporting, companies can learn about their people and activities and improve how they engage with stakeholders, set priorities, assess performance, and manage risk. 

Taking the process seriously requires effort, said York. “A lot of [the value] is not just in what information you collect and report, but how you go about the processes and what you do after you reported that information… If you produce it in the marketing department and never look at it again, you don’t get the value.” 
Jodi York describes how viewing reporting as a process leads to additional value. 

2. Consider your stakeholders and goals up front 

Early on, identify who your most important stakeholders are, what they care about, and what they expect of your organization. These insights should influence your materiality assessment[1] and guide your reporting focus.

Companies often fail to target their reports to specific audiences, or overlook important groups entirely. 
“A lot of companies will simply engage with the people who are convenient to engage with,” said Wesley Gee. These might be groups providing the company with a “pat on the back,” or groups that are particularly noisy – “but noisy may not mean influential.” Companies need to be more thoughtful. For example, says Gee, “It’s only recently that a lot of companies have been willing to engage with investors, including pension funds, who are getting more and more sophisticated in how they evaluate issues.”

Employees should be another important audience for reporting, said Stephanie Robertson. “In an ideal world… employees will move out and be ambassadors of all of the amazing work that’s happening, that they are becoming passionate about or involved in themselves.” An example from the NBS Playbook: Maple Leaf Foods involves functional leads in sustainability reporting to make sure outputs are relevant to them. 

Key stakeholder groups will change over time. York urges business to ask: “Who is going to matter most to the business in five years? Where are we headed and are we taking them on this journey with us?”
Wesley Gee describes how companies should decide which stakeholders to focus on. 

Tips for Compiling Reporting Data

Compiling, the first stage in the NBS Playbook’s Effective Reporting Framework, involves gathering data, choosing what information to present, and deciding how to present it. 

Panelists made several recommendations for data compilation: navigate reporting frameworks, recognize imperfect data, and be transparent.
Figure 1. From Input to Output (NBS Sustainability Reporting Playbook)

3. Use materiality to navigate multiple reporting frameworks 

Companies are awash in sustainability reporting frameworks. “There’s a myriad…out there,” said Sally Crane. She sees companies choosing between CDP, Sustainability Accountability Standards Board (SASB) Standards, Global Reporting Initiative (GRI) Standards, and Sustainable Development Goals. “It can become overwhelming even internally to manage what you report, and when and to whom.”

Roundtable participants advise: focus on materiality — the stakeholders and priorities you’ve identified. Ask “who are your users but also … what are they using the information for,” said Sarah Keyes. For example, SASB speaks directly to an investor audience. The GRI is more broadly relevant. 

Looking to the future, York sees frameworks gradually clustering together. She and colleague Chris Dembek have identified more than 200 available frameworks, but the differences between them are diminishing. “We’re starting to see… maybe not convergence but… we’re starting to see a frame that fits around a lot of those frameworks.”
Wesley Gee and Sarah Keyes discuss how to choose among frameworks. 

Uptake of integrated reporting is uneven

Roundtable participants saw adoption of integrated reporting[2] (IR) differently. York has worked with IR efforts in Australia, and sees an integrated approach gaining traction. “Even companies that aren’t engaging in integrated reporting under that name are starting to look a lot more like integrated reports,” she said. 

Keyes sees a lack of awareness and understanding of integrated reporting in Canada. She described a recent CPA Canada focus group on IR, held with report users and preparers. Focus group participants were often unfamiliar with IR or saw it as an extra layer of effort, she recalled. In addition, the IR emphasis on long-term value creation can be different from senior managers’ traditional outlook, she said. “It’s really about bringing along those senior decision-makers to understand how looking at the six capitals [in IR] actually enables you to articulate your value creation story.”
Wesley Gee, Jodi York, Chris Dembek and Sarah Keyes identify opportunities and barriers of integrated reporting. 

4. Recognize that data quality can be challenging

Data in sustainability reports are rarely as reliable as data in financial reports. Sustainability reports often feature good stories and commitments, said Gee, but “I think we still have to call into question sometimes the quality of the data and the extent to which a third party is providing data verification or assurance.”

Financial reporting gains rigour from tight internal controls and processes and third party assurance, said Keyes. Sustainability reporting is less likely to have these elements, in part because it is newer territory than traditional financial reporting. That lack of internal controls and external assurance can make analysts, in particular, less confident in sustainability data.  

Wesley Gee and Sarah Keyes discuss why sustainability reporting data are often lower quality than financial reporting data.

5. Be open and authentic

Companies should be transparent about their sustainability activities, said roundtable participants. Too often, said Robertson, companies “become nervous about speaking to things that either haven’t been completed or aren’t perceived as being perfect.” But openness can lead to dialogue. “I think the average audience really appreciates being involved and engaged and getting information as it unfolds,” said Robertson.

Chris Dembek agreed. “That unfolding allows you to tell the story and keep the audience engaged,” he said. Stakeholders want “to hear the balance of what is happening and hear a genuine story rather than a polished and perfect picture from the marketing department.”

More transparency can make marketing, legal and other departments nervous, said Gee, because they’re stepping out of their comfort zones. Corporate communications and investor relations (IR) teams may be reluctant to share information that shows the company as imperfect, he said, “even if there is a great opportunity for them to show how they’ve managed and learned from a negative event. 
As examples of strong communication, Gee pointed to Maersk, which directly addressed “watchdog criticisms of our actions,”[3] and Mirvac, which discussed “strengths and weaknesses.”[4] 

Volkswagen represents a failure to communicate transparently, said Gee. The company could have addressed clear challenges in culture and governance, but instead its recent report vaguely refers to a “diesel crisis,” and includes an event timeline that starts from the date that VW was caught.[5] 

For companies to communicate transparently, said Gee, “sustainability groups need to work hand in hand with corporate comms, IR, and other important groups to make sure that, at an early stage, it’s clear what the objectives are.” Those internal conversations can clarify where the organization stands and what are “some of the challenges in the organization to be able to effectively address issues rather than just going through the PR filter.” 

Tips for Disseminating and Engagement 

Once you’ve collected the relevant information to report on your company’s sustainability activities, you have choices about how to share it. Dissemination is about making sure information reaches its audience. Engagement is about making sure their feedback reaches you. Panelists described how to use an expanding range of communication tools for both functions. 
Figure 2. From Output to Outcome (NBS Sustainability Reporting Playbook)

6. Match information format and channel to stakeholder needs

Companies are experimenting with many ways to share sustainability information, beyond the traditional annual PDF. Roundtable participants described companies using graphics, podcasts, videos, and social media. (See novel examples of sustainability reporting from Gee’s firm, The Works Design Communications.) 

Different approaches are useful if they let a company meet different stakeholders’ needs. York encourages companies to think in terms of information, format, and channel. The information won’t change, said York: “that’s just the truth of what your company is doing.” But companies have important choices about how to deliver that content. What’s the format: for example, report or blog post? What’s the channel or medium: for example, face-to-face communication, websites, printed media, or social media? Format and channel need to fit. ““Some organizations are trying to get into the social media game,” said York, “but they’re doing it by posting a link to the full 400-page PDF report…and that’s kind of not getting the point of having different channels.”
 
More analytical users, such as investors, still want traditional (i.e., print and PDF) reports so they can “do keyword searches to find the information they need and to have things easily accessible in a consolidated way,” said Gee. But younger audiences and customers are likely to find social media or video more appealing, said Crane. Companies should think about frequency of communication as well, said Crane. Investors may be satisfied with an annual report, but customers require weekly or monthly contact to “reinforce messages.”
Sally Crane describes how to tailor your information to different audiences. 

Tips for Evaluating Impact

What does success look like? Evaluators often look at outcomes, which are shorter-term effects, and impacts — the ultimate goal. 
 
In NBS’s Sustainability Reporting Playbook, the authors discuss how to evaluate what your company’s sustainability reporting achieved. What’s different because of your reporting? For example, were your stakeholders able to use your reporting in material ways? Did learning from a previous report influence your future reporting? 
 
In our roundtable, however, panelists focused on the effect of a company’s sustainability actions: your sustainability initiatives and targets. They described why measuring sustainability impact matters and how to do it effectively. 
Figure 3. From Outcome to Impact (and Input)

7. Stakeholders increasingly care about impact 

Stakeholders are asking tough questions, roundtable participants said. 

The Dow Jones Sustainability Index now requests social impact data from companies, said Robertson. In response, “a lot of [companies] are running scared because they don’t necessarily have the information in place to answer those questions in an easy way, let alone in a credible way.” 

Crane described a mining company that has dozens of benefit agreements with indigenous communities. Now, investors want to know about the quality of those agreements, not just whether agreements are in place. “It’s very hard to report the quality of such agreements in a traditional sustainability report,” said Crane. “How you evaluate your relationship is kind of an intangible thing that I think we’re often seeing challenges with.” 

8. Measurement options exist but are imperfect

Measuring impact is tricky. Social Return on Investment (SROI)[6] is promising but still highly subjective, says Crane. “You do get a nice figure at the end, [but] how much you can trust that figure remains to be seen.”

Crane sees companies producing clearer evaluations when their sustainability activities are focused. “Where we see companies measuring impact well, it tends to be where their focus is much narrower,” she said. “They have a small number of grants and a smaller focus in terms of the social issues they’re trying to address. When you’re trying to do a bit of everything, the message can get lost.” 

Robertson advises companies to think long term.  “One of the mistake companies make is they try to measure significant impact in a very short time frame,” she said. In areas such as community investment, change happens slowly. Some companies “are starting to realize there is still a story to tell even though the impact is in progress, even though it hasn’t necessarily been completed yet. You just tell that story a bit differently.”

9. Keep experimenting

Companies will continue to seek ways to achieve and measure impact. 

Crane points to the trend of companies seeking a more profound impact through partnerships. “Companies are recognizing the need to address issues as part of an ecosystem,” she said. “That ecosystem could be with a non-profit and the local government, for example. Or it could be with an academic institution or a competitor or another business in a complete different sector. And essentially when these organizations come together, the collective impact they can have might be a lot greater than they could ever achieve alone.”
Wesley Gee and Stephanie Robertson discuss how companies are measuring the impact of sustainability activities – and how they can improve. 
Sally Crane describes the value of targeted initiatives, Social Return on Investment (SROI), and collaboration. 

Footnotes

[1] Materiality refers to “topics and indicators that represent an organization’s significant economic,environmental and social impacts or that would substantively influence the ‘decisions of stakeholders.’” Source: Chartered Professional Accountants Canada. 2013. A starter’s guide to sustainability reporting, p. 10. Available at https://www.cpacanada.ca/en/business-and-accounting-resources/financial-and-non-financial-reporting/sustainability-environmental-and-social-reporting/publications/a-starters-guide-to-sustainability-reporting.

[2]”Integrated reporting means a holistic and integrated representation of the company’s performance in terms of its finance and its sustainability.” Institute of Directors Southern Africa. 2009. King Code of Governance for South Africa 2009, p.109. http://www.iodsa.co.za/?kingIII

[3] A.P. Moller – Maersk. 2017. Sustainability report 2016, p. 14. Available at https://www.maersk.com/business/sustainability/sustainability-reports-and-publications/reports

[4] Mirvac. 2017. Everything’s connected: Sustainability report 2016, p. 53. Available at http://2016.sustainabilityreport.mirvac.com/

[5] Volkswagen. 2017. Responsibility and change: 2016 sustainability report, p. 27. See http://sustainabilityreport2016.volkswagenag.com/strategy/diesel-crisis.html

[6]“Social Return on Investment (SROI) is a framework for measuring and accounting for [a] much broader concept of value; it seeks to reduce inequality and environmental degradation and improve wellbeing by incorporating social, environmental and economic costs and benefits.” The SROI Network. 2015. A guide to social return on investment. http://www.socialvalueuk.org/resource/a-guide-to-social-return-on-investment-2012/

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[1]”Integrated reporting means a holistic and integrated representation of the company’s performance in terms of its finance and its sustainability.” Institute of Directors Southern Africa. 2009. King Code of Governance for South Africa 2009, p.109. http://www.iodsa.co.za/?kingIII