Sustainability Reports have been on the rise for the past few decades, both for profit-based companies and non-profit ones. Though often viewed together, a Sustainability Report is not the same thing as an Annual Report. The latter outlines a company’s profile, the line of business, and its performance in terms of finance and business in a given calendar year.
It is through a Sustainability Report that a company or organization can take into account its impact on various issues regarding sustainability. By publishing such a report, a company can be more transparent about the risks and opportunities they encounter. This report also serves as a means to communicate a company’s sustainability performance and its impact. Broadly speaking, a company or organization can use this type of report as a way to inform all internal and external stakeholders of its economic, environmental and social performance.
Sustainability Report Standardization
In that case, what are the standards for creating these reports? It should be noted that all types of reports, whether Annual or Sustainability Reports, must be designed in such a way that they benefit all parties, including managers, executives, analysts, shareholders and all company stakeholders. Sustainability Reports themselves have been of common use by many companies around the world. As such, any endeavor to create such a report must be of a unified standard.
The Global Reporting Initiative (GRI) has a set of standards that companies use to prepare Sustainability Reports. GRI’s standards are often associated with other terms in a non-financial report, such as the “triple bottom line” report and Corporate Social Responsibility (CSR). This standard aims to integrate the objectives of various organizations and companies — whether large, small, private, or public — so that they can report on sustainability impact in a consistent and credible manner. This standard also seeks to boost an organization or company’s global competitiveness, transparency and accountability.
GRI’s standards help organizations and companies in understanding and disclosing operational impact in a way that meets the needs of multiple stakeholders. The use of its standards are of relevance to various parties, including investors, policymakers, capital markets and the general public.
These standards are designed as easy-to-use and modular tools, starting with its Universal Standards. Its list of standard topics covers material organizational topics, such as economic, environmental, or social. This standard ensures that Sustainability Reports can provide an inclusive picture of material topics, impacts, and how they are managed.
Functions of Sustainability Reports in Business
It is undeniable that building and maintaining trust in business is fundamental to achieving a sustainable economy and environment. Any decision made by a company will result in an impact that will be felt by various stakeholders, such as financial institutions, labor institutions, the general public, and can also impact public trust. These decisions made are based on not only financial statements but also an assessment of risks and opportunities in using the information for various current and future issues.
One of the functions of the Sustainability Report preparation process is to ensure that a company has considered its impact on sustainability issues and to encourage companies to be more transparent about any risks and opportunities they face. In addition, stakeholders also have a key role in identifying various risks and opportunities for the company, especially those of a non-financial nature.
At this point, with all that has just been written, it can truly be said that Sustainability Reports do indeed have a rather substantial role for a company and are no less important than the role of an Annual Report. By documenting the economic, environmental and social aspects of a company’s sustainability performance, a Sustainability Report can serve as a comprehensive guideline that can also be useful for building and maintaining trust in such a way that attracts investors. (ALV)