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THE ROLE OF SUSTAINABILITY REPORTS

THE ROLE OF SUSTAINABILITY REPORTS

24.10.2016

Sustainability currently emerges as a commonly accepted obligation rather than a responsibility for organizations. Initially starting off as a part of corporate communication operations by companies, sustainable reporting must be seriously handled by reporting organizations in view of the information it includes and the potential benefits it brings to the organization. The history of reporting process starts with financial reporting. Although the annual reports in which companies report their financial indicators are the first examples of the process, the reporting of only the positive (or negative) developments in financial indicators are not sufficient for investors or stakeholders. Issues such as the increasing depletion and price of natural resources as well as the increasing importance of human rights in the business world caused companies to be more sensitive on such matters. In parallel, after the United Nations developed the notion of sustainable development, leading companies started to report their work and performance concerning sustainability starting from 1990s.  Basically including data on consumption of resources such as power and water as well as emissions, these reports also provide information on employee rights and social responsibility projects.

Sustainability reporting started through the individual efforts of companies and complies with various international standards and specific norms today. The most widely accepted standard in sustainability reporting around the world, the Global Reporting Initiative (GRI) is implemented through the up-to-date G4 methodology. GRI G4 reduces sustainability reporting down to economic, environmental and social dimensions, the three main pillars of sustainability.

Sustainability report is a reporting system that is accepted worldwide and has an extensive field of practice. According to the GRI reports database, 24,018 out of 34,726 reports published worldwide are GRI approved as of August 2016.  

Sustainability report is a most important communication channel that an organization has with its internal and external stakeholders. It should be considered a very valuable tool which a company can use to share its environmental performance and environmental activities, the opportunities it offers for employees and the social benefit it creates, in addition to sharing its financial performance. However, it should be remembered that sustainability reports are never tools for promotional activity. The goal of a sustainability report is to identify the priorities of the company under the main headings that matter to both itself and its stakeholders, report the work it carries out in the light of these priorities and in view of its key performance indicators (KPIs), and make such reporting available for readers in a way to allow comparison with previous reports.

A sustainability report is also a reporting tool that publicly shares the data demanded by the sustainability index, the performance standards of the lending international financial institutions, and other international organizations such as the UN Global Compact.

Any company deciding to prepare a sustainability report will need to establish a structure for the provision of environmental data (energy consumption, emissions, amount of savings, environmental benefits from company operations, etc.) and social data (educational and gender breakdown for employees, total hours of training they receive, settlement rate for customer complaints, benefits from corporate social responsibility projects, etc.). Companies and relevant company departments may consider this structure to be an additional workload but the collection of such data is crucial for the company to review and assess its own performance. Therefore, once a company decides to engage in sustainability reporting, it should also design and establish a holistic management system structure which defines processes relevant to the company’s operations, allows for communication among all processes, systematically provides data and ensures periodic data flow. Already implemented worldwide and also a growing trend among the leading domestic companies, such structures develop a methodology in which sustainability is managed within the company and address the requirements of international criteria and various reporting standards such as CDP, only if they are designed accordingly in advance. The company provides data for different processes and reports at one go and with minimal effort, thus improving efficiency of the process.

Sustainability reports have a different methodology as compared to other reports. In order for the report to bring the maximum benefit for both the company and the stakeholders, it is very important that the departments/employees to draft such reports attend training on sustainability reporting. This will ensure that the published output is prepared in line with the said methodology and will distinguish it from other sustainability reports in the market which are published "just for the sake of publishing".