How To Choose The Right Sustainability Reporting Framework

Increase in the concern of businesses towards the environment, society and governance has made it important for the companies to maintain the sustainability report.  There are different frameworks available for this reporting.

Before you prepare to understand what is the right framework for your company and how you should begin?

Let’s have a look at certain guidelines that can be helpful in choosing the right sustainability reporting framework.

Determine What You Need To Report

The very first things you must identify are the key points that need to be included in the report. You must analyse the operational activities of the company and then determine the impact on all the environmental, social and governance aspects.

• Hazardous waste, greenhouse gas emission, risk and opportunities, resource depletion, and energy efficiency are some of the environmental issues that can be evaluated.
• Issues related to social aspects may include occupational health and safety, human rights, working conditions, child labour, local communities, diversity, etc.
• In the Governance category, you may evaluate aspects like board independence, policies of the company, anti-corruption, and supply chain management.

There are some concerns that are always up on the priority list of the companies such as impact of climate change, the safety of workers, water and waste management, and lack of natural resources.

Apart from these major issues, employee relations, labour practices, political contribution, and talent management also holds importance in sustainability reporting of any company.

Identify Your Audience

You must know the audience before writing the sustainability report. The structure, information and language must be according to the audience. The message from the company must be communicated to a wide range of audience.

The reporting is done for people such as stakeholders, investors, general public, media, partners, distributors, suppliers, non-governmental organizations, etc. Whatever framework you choose, it must be according to the people you want to report.

Ensure Corporate Transparency

The sustainability reporting framework must be chosen by keeping the corporate transparency into consideration. To gain the trust of the internal and external stakeholders, it is essential for the companies to provide all the information related to operations with full transparency.

The best sustainability reporting framework is the one that makes it easy for the stakeholders to make their decisions.

Choose A Sustainability Reporting Framework

There are different frameworks that can be selected according to the reporting needs.

1. Sustainability Accounting Standards Board (SASB)

In 2011, this non-profit organization was founded. It has issued some sustainability accounting framework. The public corporations use their guidelines to disclose the material information in the through the report. This framework makes it easy for the investors to make their decisions. The corporations may follow this industry-specific framework to align with the reporting standards and requirements. Peer performance in the industry can be compared through this framework.

This framework is used to prepare a report for the investors. The reporting is done through SEC form 10-k, 20-F filings.

Information reported with this framework is:

• Environmental

Impact of corporate activities on the environment.

• Social Capital

It includes the protection of vulnerable groups, customer privacy, quality of the products, and affordability.

• Human Capital

It includes issues related to employee productivity.

• Business Model and Innovation

It addresses the sustainability issues that impacts business model and innovation.

• Leadership and Governance

It includes the issues that may conflict the interests of stakeholder groups.

2. CDP

This reporting framework is perfect for the companies that focus on issues related to forests, water, GHG emissions and supply chain. This framework is apt for communicating the right information to investors, buyers and other stakeholders. The reporting is done at CDP’s online reporting platform.

This framework enables you to include:

• Climate Change

Risks and opportunities related to carbon emission.

• Forests

It determines the usage of natural resources for the production in the company.

• Water Security

It explains the usage, management and stewardship of water resources.

• Supply Chain

It addresses the issues related with all the above factors in supply chain management.

3. Global Reporting Initiative

It was launched in 1997. Companies can find this framework helpful while reporting economic, environmental and social impacts. With this framework, the organizations have to file corporate sustainability report for a broad set of stakeholders.

The report may include:

• General Disclosures

The profile, governance, ethics and stakeholder engagement practices come under this disclosure.

• Economic

It includes financial performance, anti-corruption behaviour and procurement practices.

• Environment

Under this head, all the issues are related to biodiversity, water and effluents, environmental compliance is addressed.

• Social

It evaluates different aspects such as health and safety, non-discrimination, opportunities, child labour, etc.

4. Integrated Reporting

This framework helps companies to produce integrated reports. In this framework, the organizations can communicate the information to the investors through a stand-alone integrated report. It allows the measurement of a company’s performance based on six components (financial, human, manufacturing, intellectual, social and relationship).

Different aspects covered in this reporting framework are organizational overview, Governance structure, business model, risks and opportunities, strategy, performance, outlook and basis of presentation.

Also Read: International Integrated Reporting Council (IIRC)

5. Sustainable Development Goals

This framework was launched by the United States. This framework has set of 17 goals that are supposed to be achieved by 2030. Many global issues are included in this reporting framework. The goals are inter-dependent on each other so, the companies can analzse that and incur the efforts and focus according to that.

6. Task Force on Climate Related Financial Disclosures

This sustainability reporting framework is ideal for the financial sector. Financial risks that are related to climatic changes can be communicated to the investors through this reporting framework. This framework has 11 recommended disclosures. It is easy as compared to some other frameworks.

Must Read: International Accounting Standards Board (IASB)

Conclusion

Till now you must be clear about the steps you must follow before making a sustainability reporting framework. Different companies from various sectors choose different frameworks as per what they want to report and whom they want to report. Though there are many globally accepted reporting frameworks, the major ones are explained above.

Do your research well before preparing the report as it helps in the decision making of stakeholders and building a reputation.

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