So, what now for sustainability reporting?
As a CSR and Sustainability professional, reporting is one of the most significant issues to be addressed in this field.
More and more businesses are communicating their sustainability efforts and performance, whether as part of their annual reports, in stand-alone documents or online and through social media. In fact, 92% of the world’s largest 250 corporations now report on their sustainability performance.
This is hugely encouraging and thanks in no small part to the advancements and uptake of sustainability reporting standards, such as the Global Reporting Initiative (GRI) and the International Integrated Reporting Council (IIRC).
Investors too have developed numerous initiatives to advance and encourage corporate disclosure, including the Investor Network on Climate Risk (INCR), the International Corporate Governance Network (ICGN), the United Nations (UN)-supported Principles for Responsible Investment (PRI), the Corporate Sustainability Reporting Coalition (CSRC), and the Equator Principles. Indeed, many stock exchanges worldwide have listing requirements in place or have issued guidance, training or developed indices related to sustainability reporting. The Sustainable Stock Exchanges Initiative (SSEI) has been co-organised by the United Nations Conference on Trade and Development (UNCTAD), the United Nations Global Compact (UNGC), PRI, and the United Nations Environment Programme Finance Initiative (UNEP FI), to explore how exchanges can work together with investors, regulators and companies in order to enhance corporate transparency and performance on environmental social and corporate governance issues, and to encourage responsible, long-term approaches to investment.
However, despite all of this (and I am in no way disputing the value of any of it), the quality and ambition of non-financial reporting still varies greatly and I would argue, has plateaued. The key ingredient missing for me, is relevance. With the vast majority of reporting describing incremental improvements against issues and commitments at the company (or micro) level, it mostly lacks relevance in the grand scheme of things because it is rarely contextualised. In so doing, it fails to consider allocations that relate to a company’s ‘fair share’ of a particular capital or resource. And where it overshoots these, does a company know and does it understand how it affects the wellbeing of its stakeholders both now, and in the future? Yes, company reporting could be transformational and yes, it could play a part in transitioning us to a more sustainable economic system (which is surely what we all want and need), but only providing it is more relevant and ambitious in this way.
So it’s time for (transformational) change, people! And the good news is, there is a way forward which we believe represents the next big thing for sustainability and sustainability reporting: Reporting 3.0 – a new blueprint to shape the future of corporate sustainability
I came across the Reporting 3.0 movement over a year ago now, and was immediately excited at what it had to offer. And I became even more so after attending their 4th international conference earlier this year and seeing who was getting behind this. It is a collaborative platform that seeks to build on existing standards, frameworks and guidelines, and help spur the transition to a green, inclusive and open economy A.K.A. The Promised Land for sustainability where humans and businesses can thrive. In short, it is thinking big.
It was launched in 2012 to test the following premise and has been in development since then: that corporate disclosure plays a key role in influencing the trajectory of the global economy; and if the economic model is flawed then reporting (if fit for purpose) can play its part in resolving it. Beneath this theory is an assumption that the current economic system design, based on its current position on perpetual (compounded) economic growth on a bounded planet with infinite resources, is inherently unsustainable and so must be transformed.
It offers a blueprint (four, in fact) for business to consider wider impacts, based on a multicapital approach, on all organisational stakeholders (it actually refers to the latter as “rightsholders” reflecting a move away from the typically narrow definition of stakeholder which has become the norm). Crucially, it offers a pathway for companies to consider its impacts in wider context, incorporating concepts such as planetary boundaries and social thresholds – something we are starting to see with emissions and the growing support of business to adopt Science Based Targets.
So, if you want to embrace the change and be at the forefront of the next big thing, consider Reporting 3.0 – now entering its testing phase. You heard it here first.