Sustainability Reporting

What is sustainability reporting?

Sustainability reporting entails a company’s public disclosure of its economic, environmental, social, and governance (ESG) goals, along with any progress toward achieving them. This information gives relevant stakeholders, such as investors, employees, customers, and other public officials, comprehensive and transparent information about an organization’s sustainability efforts.

As part of sustainability reporting, many organizations use energy management software to report on and monitor their energy system usage across facilities. Organizations can use real-time energy usage data, energy data analytics, and sustainability reporting features and capabilities to make data-driven decisions that reduce energy usage and carbon emissions. 

Types of sustainability reporting frameworks

Sustainability reporting frameworks, also called ESG frameworks, provide a structured approach for identifying, assessing, and disclosing the sustainability practices of their operations. Variations exist, but these frameworks all share the purpose of providing transparency and comparability. Some well-known frameworks include:

• Global reporting framework initiative (GRI). The GRI framework presents a comprehensive set of guidelines for organizations to report on economic, environmental, social, and governance aspects. GRI has various standards and versions to meet the needs of different organizations, and it’s one of the most widely used frameworks globally. 
• Sustainability accounting standards board (SASB). The SASB standards are part of the International Financial Reporting Standards (IFRS) Foundation. They emphasize an introspective look at how sustainability factors into financial performance. The SASB is known for its creation of over 70 industry-specific reporting standards.
• Task force on climate-related financial disclosures (TCFD). The TCFD provides recommendations for disclosing climate-related financial information and encourages organizations to provide details about climate-related risks. This information helps investors understand the financial implications of climate change should they choose to support a business.
• Carbon disclosure project (CDP). Founded in 2000, the CDP provides guidance for businesses reporting on their risks related to climate change and environmental impacts, such as carbon emissions, water usage, and deforestation risks. The guidance CDP provides focuses heavily on climate, water, and forests.
• Dow Jones sustainability indices (DJSI). The DJSI helps evaluate the sustainability performance of companies based on a set of economic, environmental, and social criteria. Organizations can be awarded a status based on their score on a questionnaire. 

Essential elements of sustainability reporting

Sustainability reporting includes key elements of an organization’s ESG performance. Some of the essential aspects of sustainability reporting include the following.

• Profile of the organization and its approach to sustainability. The report should open with an organization overview, including its mission, values, locations, and other relevant information, to provide context into its operations. It should also explain the organization’s approach to sustainability. 

• Materiality assessment. This portion of the report explains the material issues and topics significant to the organization and its stakeholders. For example, greenhouse gas emissions are a material issue for many businesses. 

• Environmental disclosures. Organizations should provide environmental disclosures that include information about the impact of their operations on the environment. Energy consumption, water consumption, biodiversity impacts, waste management, and emissions fall into the environmental disclosure category. 

• Social disclosures. In addition to environmental impacts, organizations should show social disclosures or the impact of operations on people. This includes internal (employees) and external (vendors, clients, society) groups connected to the business in some way. Social indicators include labor practices, employee well-being, human rights, diversity and inclusion, and health and safety.

• Governance disclosures. Organizations should include governance disclosures. These disclosures specify the organization’s governance structure, policies, principles, and commitments to sustainability. Examples in these categories are company ownership, tax strategy, delegation of authority, and procurement.

• Initiatives and progress. Businesses can provide transparency into their short-term and long-term sustainability targets and initiatives designed to improve sustainability performance. It also serves as a promotional and brand-building exercise for the organization to market what truly matters to them.  

• Reporting scope and index. The scope gives a place for organizations to indicate what standards they followed and if the report complies with any standards. The index is included for disclosures so anyone can find and reference specific data within the report.

Benefits of sustainability reporting

Sustainability reporting offers numerous benefits to both the reporting organization and its key stakeholders, including:

• More transparency and accountability. Sustainability reporting provides an insightful and data-driven narrative around a company’s impact across environmental, social, and governance (ESG) categories. It sheds light on how the business affects these areas while holding the organization accountable for its sustainability goals. This level of transparency builds trust and credibility with stakeholders.  

• Increased risk management. Sustainability reporting allows organizations to shape their operations around sustainability risks they identify, such as climate change. Organizations can use their report data and information to foresee upcoming changes and plan for them effectively, mitigating risks and potential threats to long-term business success.
• New opportunities to optimize costs and save money. Through sustainability reporting, organizations reflect upon and examine their operations to find opportunities to cut costs and positively influence ESG factors. For example, businesses can reduce their resource consumption or cut back on physical office locations. 

Read about environmental, social, and governance (ESG) reporting and how it relates to sustainability reporting.