The importance of building trust in your sustainability reporting
Monday April 10 2023
As organisations embrace and adopt ESG standards across their businesses and operations, they should put adequate effort preparing for the subsequent reporting aspects.
Reporting forms the basis of communicating with stakeholders and should be done transparently to build trust and enhance the organisation’s brand and reputation in the marketplace.
Trust is often described as the currency of business, which is evident in sustainability reporting. Considering how capital and financial markets frown at reporting misstatements on metrics like profit in the financial statements, organisations should approach sustainability reporting carefully.
It involves paying attention to every detail, such as the non-financial metrics and impacts that are measured and reported on, including sustainability KPIs and targets.
Organisations that fail to take this approach could damage their credibility in the market, leading to increased cost of funding, lack of funding, and lost competitive advantage. A few aspects to consider in sustainability reporting include the following.
Firstly, an organisation should select and apply an appropriate reporting framework for sustainability reporting.
For example, organisations report financial profit according to a framework using either IFRS or US-GAAP; sustainability reporting should be done with a framework to demonstrate accountability and transparency.
Applicable frameworks include GRI, TCFD, and SASB, to name a few. Imagine if organisations could report a profit amount without referencing rules or principles on how that profit was derived.
Secondly, organisations need to assure the information provided in sustainability reporting.
This assurance could involve a mix of internal and external audits, which will go a long way to increase the confidence of stakeholders in the information disclosed by an organisation in such reports.
Sustainability reporting covering the broader societal impact should be audited regardless of whether an organisation is private or public.
Imagine how difficult it would be to trade in an organisation’s securities or enter into transactions with an organisation if there was no independent assurance of its information.
Finally, an organisation should ensure that sustainability reporting targets and metrics are SMART (Specific, Measurable, Achievable, Relevant and Time-bound).
ESG, SDG, CER, GRI, FSC, LCA, WELL Read More
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