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A common belief in business today is that companies have a responsibility to their stakeholders and society to operate in a sustainable manner, and sustainability reporting helps companies provide information to the public on their sustainable efforts.
In the event a company’s practices are seen as harmful to the environment, the business could lose its right or license to operate in a particular country. Reporting on sustainable efforts helps ensure a company’s legitimate claim to conducting business, as well as helps the company identify areas for improvement.
An important facet of sustainable reporting is that it’s not a process made mandatory by the world’s governments. Reports published by corporations and businesses each year are done so under voluntary guidelines.
Standards Published by the Global Reporting Initiative
The Global Reporting Initiative (GRI) is the governing body responsible for much of the reporting in sustainability that occurs around the world, and the organization recently simplified its standards after groups around the world expressed concern over the complexity of the reporting standards. The standards were developed in the late 1990s and have seen updates and changes throughout the last two decades.
A recently launched initiative by the World Business Council for Sustainable Development has made tools available for businesses interested in creating and publishing reports on corporate sustainability through its Reporting Exchange. The resource offers information on the requirements of several countries around the world regarding mandatory regulations, voluntary standards, and listing requirements on the stock exchange.
Determining Whether Practices are Sustainable or Unsustainable
The newspaper The Guardian reports that sustainability reporting is a process used to identify practices that build value and are sustainable for the long term versus those that aren’t. Those practices will deal with the environmental impact that practice may have on the world outside the company’s control, as well as on the company’s own resources and access to those resources.
A business might ask whether a process used by the company creates a deficit of a natural resource, adds waste to the environment, or risks depleting a material essential to the manufacturing of a company’s products. For example, does the use of water in a manufacturing capacity occur at a rate that the local supply can recover or replenish before the company uses additional water?
Creating Official Sustainability Reports
Many business professionals take part in sustainable reporting each year. For example, the Association of International Certified Professional Accountants reports that accountants can play an active role in sustainable reports by helping to define the risks and rewards associated with a particular activity, as well as consulting on the development of new, sustainable strategies.
Virtually all billion-dollar corporations around the world publish official reports on sustainability efforts, from Coca-Cola, McDonald’s, and PepsiCo to Apple, Nokia, and Ikea. Large cities around the world also publish sustainability reports each year offering information on government efforts to improve the lives of residents with sustainable policies.
Corporate responsibility reporting often goes well beyond commentary on company practices that impact the environment positively or negatively. Reporting for large businesses often covers additional territory like human rights and corruption, particularly when a company operates in an area known for human rights violations or corruption within the local government. Sustainability reporting gives businesses the opportunity to examine their current practices and make changes when unsustainable practices are identified.