The sustainability reporting landscape has evolved in the last few years, particularly due to the demand from regulators in many jurisdictions for mandatory sustainability or non-financial reporting.
While this reporting obligation is meant to foster a sustainability culture and mindset across organisations, it is often approached with a strict compliance mindset.
This mindset usually places the objective of ensuring compliance with regulatory reporting regulations above all else as an end in itself.
This singular focus on compliance often results in boilerplate disclosures, an increased risk of greenwashing and a loss of trust with stakeholders and users of those reports.
In addition, such organisations have a hard time demonstrating the business case for sustainability due to their focus on the compliance burden, thereby giving the incomplete picture that sustainability is a cost centre to the organisation, excluding the business case around business growth opportunities and other pecuniary benefits.
Sustainability reporting is the outcome of the entire processes involved in embedding sustainability across an organisation to enable its overall strategy execution.
Reporting is the result of how an organisation has performed against its sustainability targets, which are linked to short-, medium-, and long-term value creation.
Therefore, while reporting is essential, it feeds off the sustainability efforts being implemented and driven within an organisation. In other words, if nothing is happening within an organisation from a sustainability perspective, there will be little or nothing to report.
This understanding of sustainability reporting as an outcome implies that it is also a journey. Taking this approach will enable organisations to prepare their sustainability reports deliberately, ensuring that they are tailored and give a good account of the organisation’s unique story detailing its successes and areas for development.
It also ensures consistency between the information contained within the financial statements and the sustainability report, reducing the risk of greenwashing, keeping the sustainability report relevant and building trust with stakeholders.
While we expect to see increased regulatory pronouncements, organisations must be deliberate with their sustainability reporting, ensuring it aligns with their implementation roadmap for sustainability, highlighting progress and areas for development.
The writer is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.
