A sustainability report is not (yet) a legal requirement, but it gives a company a competitive edge. Here is our advice on how to write and communicate it as effectively as possible.
A sustainability report, also known as a social report, is a document through which a company accounts for its sustainability initiatives and performance (environmental, social and economic). In other words, it communicates its initiatives to protect the environment, the approach it takes towards its workers, its relationship with the local area and community… At present it is not a legal requirement, although it will become mandatory from 2017 for European public-interest companies with at least five hundred employees. Precisely because it is (for now) not a legal obligation, there are no binding requirements to comply with: each company can choose whichever approach it prefers. But how does one write a sustainability report? Here is our ten-point guide.
First of all, the topics that the social report will cover must be chosen; these must be relevant to the company and to all its key stakeholders. Stakeholders are simply all the individuals or organisations with whom the company comes into contact in one way or another: shareholders, employees, customers, suppliers, authorities, journalists, local communities and associations…
This process, which is anything but straightforward, is known as a materiality analysis and is a genuine internal and external consultation of one's stakeholders, to be conducted through interviews, surveys and focus groups.
Too many people still confuse sustainability with ecology. This pillar is certainly fundamental, but one must never forget that sustainability is a three-sided concept: environmental, social and governance. On one hand, a company might account for the energy sources it has chosen, its waste management and disposal policies, and its water footprint. The social aspect encompasses employees' working conditions, workplace safety, and any conflicts with the local community. The economic, or governance, category can include scandals related to corruption, legal disputes or tax havens, but also, for example, purchasing policies and the characteristics of the organisational model.
The key word of any sustainability report must always be the same: transparency. This means that, when discussing what has been done, one must be clear, honest and well-documented. Equally, it is necessary to address the results the company has failed to achieve, explaining the reasons why. In professional parlance, this principle is called "comply or explain".
Every company is based in a particular area, where it works side by side with other companies, associations and local communities. While it carries on its ordinary activities, the world around it keeps moving: new labour regulations are passed, world leaders debate the climate, local communities build infrastructure or elect a new mayor. In its sustainability report, the company must try not to be too self-referential, making an effort to speak about its own role in the reality in which it operates and to understand its place in this changing world.
As industry insiders know well, the financial statements of any company contain thousands upon thousands of figures, which can be verified, tested and compared. The sustainability report, even though it is not subject to the same legal constraints, must follow the same principle. For each of the objectives identified in the initial phase, it must find and report what are technically known as KPIs (key performance indicators), that is to say numerical indicators and measurable targets for the performance achieved over time. The most popular ones for the environmental dimension relate, for example, to CO2eq emissions, waste production and water footprint. Moving to the corporate governance side, one can report the number of patents filed during the year, production efficiency and customer satisfaction. The employee turnover rate and the number of training hours delivered, on the other hand, are examples of KPIs relating to social sustainability aspects.
The ideal sustainability report follows certain reporting guidelines, which make it credible and comparable with those of other companies. The most internationally renowned are those of the GRI – Global Reporting Initiative: the first, pioneering version was launched in the late 1990s and the most recent update dates back to October 2016. Among the 250 largest companies in the world, 93 per cent publish a sustainability report and 82 per cent of these rely on GRI standards, which over the years have become increasingly comprehensive and detailed.
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By law, listed companies must engage an auditing firm, which scrutinises their financial statements to ensure that all the data included are correct. Even when they are not listed, they are often "de facto" obliged to submit to auditors' scrutiny in order to guarantee their credibility with banks, public administrations and various interlocutors. So why not do the same with the sustainability report? There are specialist firms that can give the report this valuable "seal of assurance".
The social report is, as a rule, a summary document that is published once a year and accounts for past activities. Sustainability, however, is an evolving journey on which countless actors work every day. Precisely for this reason, it would be a shame to publish the social report and then leave it in a drawer for the following 365 days. A report that is updated periodically is undoubtedly a step ahead, because it is able to bear witness to the many milestones, large and small, achieved over time.
Low-impact buildings, waste recycling, gender equality, training courses, events run in collaboration with the local community. These are all dynamic, rich, evocative subjects: so why reduce them to a monotonous list of words and figures? A sustainability report is also a communication exercise, and so it must be clear, comprehensible, engaging and user-friendly. Fortunately, technology, combined with design and communication expertise, offers a wealth of tools: interactive platforms, mini-sites, infographics, presentations, videos.
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A sustainability report is first and foremost useful to the company itself, to understand what results it has achieved and what it should aim for in the following year. But if it never leaves the confines of the office, its impact stops there. Since the report is written with all stakeholders in mind, it is worth involving them directly, informing them and communicating what has been done for them, why, and with what concrete results. In this way, the sustainability report can become a genuine tool for engagement and participation.