By Kirsten Taylor
Now that we have some high-level principles for sustainability reporting, it’s almost time to start collecting the data – once you have chosen your framework.
There are many ways in which companies can report their sustainability performance. Generally, there is no compulsory standard and a company can just come up with its own framework. Note we’re not talking about Climate-Related Disclosures here!
However, three sustainability reporting frameworks dominate corporate practice:
- Global Reporting Initiative (GRI) The GRI is a set of standards used by companies to report the topics that are material to their business, with many indicators you can pick and choose from.
- Environmental, Social and Governance (ESG) is the sustainable and ethical impacts of a company’s corporate financial interests
- Integrated Reporting (IR) goes further than financial capital to include the shared value a company creates for its stakeholders and also the value created for people and the planet.IR enables greater understanding of a company’s risks and opportunities.
Small companies can use several other frameworks to effectively assess your impact. Large companies can also incorporate these frameworks in their reporting, to further demonstrate they are serious about genuinely contributing to sustainable practices.
Sustainable Development Goals
The Sustainable Development Goals (SDGs) can be introduced into a business sustainability framework to take reporting beyond compliance. The SDGs (of which there are 17) are broad goals, developed by the United Nations in 2015 to help address the most pressing challenges that the world faces today.
What are the most popular goals?
What companies prioritise:
Source: GRI research on how 206 reporting companies were publicly disclosing information on the SDGs
What the public prioritises:
Source: World Economic Forum survey
Companies could consider how they might meaningfully contribute to public priorities. For example, for Goal 3, meaningful actions that could be incorporated into a sustainability strategy is good health and well being for employees and their communities. In addition, producing more sustainable and healthy products could be prioritised if a company is a manufacturer.
Your SDG reporting should demonstrate leadership commitment to the SDGs as part of the company’s long-term strategy. If you identify SDGs that your business can actively contribute to, show how you are doing so. Report the positive and negative impacts your company has on the SDGs you have identified.
Making the SDGs relevant
If you want to make the SDGs relevant to your company and make a real impact, start by developing a solid understanding of the SDGs within the company by having workshops involving all employees.
For example, SDG 12 could translate into the ability to produce more with less waste by investing in water and energy conservation and implementing efficient waste management. Gruende Atelier has more examples.
Avoiding SDG Bingo
In a 2021 SDG Status report, thinkstep-anz termed companies reframing their positive impacts under the SDG umbrella ‘SDG Bingo’, which should be avoided at all costs as this can come across as greenwashing, or a lack of accountability. To be meaningful, SDGs should be fully integrated into your business strategy and your reporting should reflect that. For example, Otis Oat milk’s sustainability strategy is effectively aligned to the SDGs.
B Corp certification
B Corps are hybrid organisations addressing unsustainable environmental and social issues through a mix of for-profit and social practices. B Corp certification is verified and awarded by B Lab, a non-profit organisation, and involves a company meeting the required high environmental and social standards they set out.
Certification is across five impact areas: Workers, community, customers, environment, and governance. For a business to gain B Corp certification, they require a minimum score of 80 out of 200 points across all five impact areas. Re-certification occurs every three years and 10% of certified B Corps are audited yearly on a random basis.
There are approximately 66 certified B Corp SMEs in Aotearoa New Zealand. When looking at how companies align social impact with the profits they generate, the B Corp model provides a common collective identity for internal and external validation, where the company is focused on societal impact rather than maximising profits.
Future-Fit Business
Future-Fit Business is a circular model which acknowledges that a systems approach, and not incremental change, is necessary for the required societal transformation.
Future-Fit is a strong sustainability model which shows how different elements depend on each other.
Adapted from Figure 3.3: Rethinking value creation through a systems lens. (Future-Fit Methodology guide, online). This version used courtesy of Catapult.
Business can only thrive in a strong society, which, in turn, can only thrive in a healthy natural environment. Business is based on a circular economy which is regenerative. Circular economies address the issues associated with unsustainable linear take, make, waste systems.
The Future-Fit benchmark provides a clear pathway connecting where a company is with where they need to be. It enables measuring company performance and collective progress on the systems changes needed to meet the 17 SDGs. Eight properties of a future fit society (shown below), called the system conditions, and defined as ‘environmentally restorative, socially just and economically inclusive’ translate into 23 break-even goals (which must all be considered and are aligned with the United Nations SDGs.)
The Future-Fit Break-Even Goals
Source: Future-Fit Business Benchmark Methodology Guide
Companies using Future-Fit Business reporting
Tourism Holdings Ltd is a NZX and ASX listed tourism business operating in many countries. In 2019 they were the first listed company to release a Future-Fit Integrated Report.
The Body Shop is a global manufacturer and retailer of naturally inspired, ethically produced beauty and cosmetics products. It was founded by Dame Anita Roddick, who believed that businesses have the power to do good. Implementing the Future-Fit Benchmark resulted in their commitment to be the world’s most ethical and sustainable global business.
Novo Nordisk, a global healthcare company, was a founding member company of the benchmark.
In our next article, we look at how to lift your sustainability reporting game.
Kirsten Taylor is our sustainability reporting specialist.