Why Sustainable Reporting Matters – Even If It’s Not Legally Required

Sustainable reporting, the practice of disclosing a company’s environmental, social, and governance (ESG) performance, is becoming increasingly common. While many businesses are driven to report by regulations, a growing number are voluntarily embracing sustainability reporting. But is it worth the time and money for companies that fall outside the current legislative requirements?   

The answer is a resounding yes. Here are the reasons why:

1. Enhanced Reputation and Brand Value:

• Transparency and Trust: Sustainable reporting demonstrates a commitment to transparency and accountability.This builds trust with stakeholders, including customers, investors, and employees.   
• Differentiator: In a competitive market, sustainability can set your company apart. Consumers increasingly choose brands that align with their values.   
• Attracting and Retaining Talent: A strong sustainability focus can make your company more attractive to top talent, especially younger generations who prioritise purpose-driven work.   

2. Risk Management and Resilience:

• Identifying Vulnerabilities: The reporting process helps uncover potential risks related to climate change, social issues, and governance practices. This in turn translates into financial risk and forecasting for a strong future. 
• Adapting to Change: By proactively addressing these risks, you can build resilience and better position your business for the future.

3. Improved Financial Performance:

• Long-Term Value: Research suggests that companies with strong ESG practices often outperform their peers financially in the long run.   
• Access to Capital: Investors increasingly seek out companies with sustainable business models. Reporting can make your company more attractive to capital markets.   

4. Operational Efficiency:

• Data-Driven Decisions: Sustainability reporting requires data collection and analysis. This can lead to insights that improve operational efficiency and reduce costs.   
• Innovation: The focus on sustainability can drive innovation and lead to new products or services that meet evolving market demands.   

5. Stakeholder Engagement:

• Open Dialogue: Reporting provides a platform for engaging with stakeholders on sustainability issues, fostering collaboration and understanding.   
• Informed Decision-Making: By sharing your sustainability journey, you empower stakeholders to make informed decisions about your company.   

While the initial investment in sustainable reporting may seem significant, the long-term benefits often outweigh the costs. If you’re unsure where to start, consider these steps:

• Assess Your Current State: Evaluate your company’s existing sustainability practices and identify areas for improvement.   
• Choose a Framework: Select a reporting framework like GRI, SASB, or the UN Global Compact to guide your efforts.   
• Set Clear Goals: Define specific, measurable, achievable, relevant, and time-bound (SMART) sustainability goals.   
• Collect Data: Gather data on your environmental, social, and governance performance.   
• Create Your Report: Develop a comprehensive report that communicates your progress and future plans.

Conclusions on sustainable reporting

Even if you’re not legally required to report, sustainable reporting is a strategic move that can benefit your business in numerous ways. `Once begun, it is important to keep monitoring your metrics each quarter or each year.  

By embracing transparency, managing risks, and aligning with stakeholder expectations, you can build a more resilient, competitive, and responsible company; one which develops loyal customers, retains great staff and leads the way in sustainable business.   

Sources and related content:

Further reading – Scope 4 What is it? Can I do it? Should I do it? How hard is it?

The move to mandatory reporting: Survey of Sustainability Reporting 2024 
kpmg.com
Sustainability & ESG Trends 2024 – Clifford Chance 
www.cliffordchance.com
Enhancing transparency and accountability: The importance of ESG reporting – GRESB 
www.gresb.com
PWC Report