Developing a robust and tailored sustainability reporting strategy
Greenwashing is a serious crime because it creates the illusion that more is being done to combat climate change than is the case. PHOTO | SHUTTERSTOCK
For organisations, sustainability reporting focuses on material non-financial performance and information, including standards covered under ESG [Environmental, Social and Governance].
It provides a comprehensive view of sustainability-related impacts, risks, and opportunities, allowing organisations to understand the value drivers across their business in the short, medium and long term. Having recognised the value of sustainability reporting, stakeholders are demanding sustainability reports, and regulators are examining them carefully.
Investors are also eager to get this information because they can assess the long-term competitiveness of an organisation through sustainability reports, gaining a better understanding of how non-financial matters impact the financial fortunes.
Therefore, developing a robust and tailored sustainability reporting strategy is necessary, and organisations can achieve strategic advantage through the following.
A starting point is to conduct a current state assessment that benchmarks current reporting and helps identify areas for improvement. Defining your sustainability purpose and aligning this across the organisation to inform strategy is crucial.
Engaging with internal and external stakeholders through workshops and surveys is essential to understanding their expectations. Following the stakeholder engagement, organisations should identify and prioritise stakeholder concerns, develop their materiality matrix, set KPIs and align this with the overall business strategy.
Next is to provide data requirements for the selected reporting framework and prepare reporting templates. Data processing could involve systems to simplify data collection and analysis.
Organisations should then develop and prepare their report blueprint, including disclosures on financial and non-financial value drivers. They should also include an assurance process for the information and data in the sustainability report using internal and independent external assurance providers as appropriate.
Applying these fundamental steps to an organisation's sustainability reporting strategy will enable extensive reporting on material ESG aspects and give investors information on growth opportunities and how the organisation manages risks.
It will also help to differentiate the organisation's brand in the marketplace, attract and retain talent, improve operational efficiency and provide access to capital. A sustainability reporting strategy will ensure organisations avoid adverse consequences from damage to reputation, such as loss of revenue, greenwashing claims and fines from regulators, loss of trust with their stakeholders and ultimately, an inability to attain their sustainable growth ambitions in the future.
Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.
