MAKING SUSTAINABILITY REPORTING A BUSINESS STRATEGY
Sustainability is a business approach that seeks to build long-run competitiveness without unduly compromising short-term profitability and cash flows. In order words, sustainability is a value creation approach that takes cognizance of governance, the environment, the people, and the economy, in order to enhance business/organisation productivity and survival. It is an essential ingredient for an organisation’s long-term success and this is why it is a rewarding business strategy.
In as much as sustainability reporting has over the years gained grounds in several countries in Europe, Asia, and the Americas, Africa still lags behind in taking advantage of its huge benefits. Apart from South Africa, where sustainability reporting is standard practice, other African countries remain at the bottom of the reporting commitment. Nigeria which follows South Africa on the continent in sustainability reporting unfortunately accounted for only about two percent of reports from Africa in 2014 according to GRI Africa; Africa remains on the lowest rung of the sustainability reporting ladder. To some organisations, reporting is regarded as daunting and resource consuming however, the benefits of reporting far surpass the cost of not reporting.
Although sustainability has not been made mandatory in Nigeria as in Finland, France, Germany, and the United Kingdom, to mention a few countries, Nigerian companies who operate or desire to operate in international markets (especially in countries where mandatory) require sustainability reporting for successful operations. Moreover, beyond international operations, the long-term benefits of reporting if considered, weigh higher than the level of importance attached to it in the country.
Sustainability reporting amongst other benefits improves a company’s reputation, efficiency, and productivity; boosts investor’s confidence and increases investment potential; reduces costs, engages stakeholders, exposes potential business risks and opportunities; and help avoid environmental, social, and economic risks and dangers.
Besides sustainability reporting, there are other forms of corporate reporting standards that businesses and organizations employ as rewarding business strategies. Financial reports disclose the financial situation of an organization. The Equator Principles are used majorly by financial institutions to provide standards that ensure environmental and social risks are considered in projects. The International Finance Corporation Performance Standards are used by organisations to identify and manage environmental and social risks. The Integrated reporting which is a recent standard on the other hand incorporates all the financial, governance, and sustainability reports into one whole. Sustainability however reflects in any corporate reporting standard an organization chooses therefore, knowing how to craft a sustainability report is essential for every business.
Sustainability Reporting Guidelines
There are a number of reporting guidelines ranging from the GRI standards, the Organisation for Economic Co-operation and Development (OECD) Guidelines for multinational enterprises, the United Nations Global Compact, to the International Organisation for Standardization (ISO), the International Integrated Reporting Framework, amongst others. Reporting guidelines enable reliable, relevant, and standard information to be captured in a report.
One of the most widely used guide lines, the GRI guidelines has proven useful for every type of business. Used in over ninety (90) countries by over nine (9) thousand organisations, the initiative reports that of the 250 world largest corporations, 93% carry out sustainability reporting out of which 82% use the GRI guidelines.
The GRI Reporting Guidelines
The Global Reporting Initiative produces the GRI Reporting Guidelines to assist businesses, companies, organisations and even governments to understand and properly communicate the impacts of business on the environment, society, economy, and government. The present guideline in global use is the GRI G4, which is a revision of the earlier GRI G3 and G3.1 guidelines. Nevertheless, it is important to note that the newest revision, which is the new modular GRI Standards, set to be released towards the end of 2016. Presently in use, this standard focuses heavily on issues that are material to an organization as well as important for stakeholders (PwC UK). The standards are prepared with a guide and usually; there will be a need for a formal training on how to apply the standards appropriately. Below are few tips into the GRI-G4 Sustainability Reporting process:
Planning and Preparing the Report:
To prepare a sustainability report, there are certain elements that must be taken into consideration;
Choosing a reporting option (Core or Comprehensive): A core option is a sustainability report that contains only essential elements of a sustainability report; giving only background disclosures about economic, environmental, social, and governance performance and impact of an organisation’s activities. A comprehensive option however delves deeper into disclosures as it reports on all indicators. An organization’s first reporting decision is to choose which option best suits it although, no one option is superior to the other in quality or in benefit. After identifying the ‘in accordance’ option to apply, identify the general standard disclosures that are required for the chosen option.
Engage Stakeholders: An organisation’s stakeholder is any individual (or group of persons) or organization that has an interest in the organisation’s activities and/or has the power to influence them. It is important to engage various stakeholders in order to ascertain the material aspects of business impact to be reported. Engaging stakeholders involves identifying the key stakeholders, hearing different perspectives, thus, getting external impression. Stakeholders, especially the key ones should be selected via several means, to get opinion, suggestion and challenges. Stakeholders can be engaged by setting up community clusters and development boards; or via groups, individual, face to face, or virtual consultation activities.
Explain material aspects and boundaries: The core of every sustainability report is in ascertaining and describing the material aspects and boundaries. Materiality refers to a group of issues related to economic, environmental, and social impacts of activities that are significant or relevant and also influence the decision of stakeholders. Boundaries on the other hand are who, what, or where these activities impact on, be it on customers, employee, or even vendors. A reporting organization will thus need to determine what matters in its report and where it does. In determining what matters and where, a reporting organization has to identify relevant topics based on its impact, GRI sectors, and stakeholders’ involvement; prioritize what to analyze; validate material aspects and boundaries; and review.
Before collecting data, an organization needs to first determine and prepare a list of information to be disclosed, identify internal information gaps in order to determine what information to get and where, and them decode on how to proceed. In collecting data, make and use schedules, identify responsible persons, collect information in central place, and ensure communication is ongoing.
Writing and approval processes:
After collecting data to be presented in the report, they are presented via electronic/web or on paper or both. Then, report can be released and launched. Some of the principles that guide the report writing process are:
- Must reflect stakeholder’s input;
- Must present the organisation’s performance in the wider context of sustainability;
- Must reflect the organisation’s impact on social, economic, and environmental matters or aspects that reflect stakeholders’ decisions;
- Must be complete and;
- Of balanced, accurate, reliable, and clear quality.
In summary, sustainability reporting does not necessarily have to be daunting neither does it demand much resources, it only requires a step in the right direction.