5 key elements to make your sustainability report a good one - SustainLab (2024)

For any business, the best way to become more conscious of sustainability impact and to really ensure that sustainability is incorporated into the business model, is through sustainability reporting.

Sustainability reporting is a way for companies to measure and track their sustainability data, to better understand their impact on society and the environment, and also to communicate that impact to their stakeholders and the public. In 2020, 96% of G250 companies (the world’s 250 largest companies by revenue) reported on their sustainability impact.

Companies undertake sustainability reporting for a myriad of reasons, including: legislative and regulatory pressures such as the upcoming Corporate Sustainability Reporting Directive (CSRD) in the EU, external pressures from stakeholders (such as investors or consumers), or to track, measure and improve impact and progress.

But, what makes a good sustainability report? Many companies are taking the chance to highlight their positive impact in their once-a-year sustainability report, connecting it to SDGs they’ve helped improve (sometimes running the risk of SDG-washing), conveniently under-reporting or even omitting their negative impact – but to what end? (Especially if they are obscuring and under-reporting their negative impacts?) We’d say as a general guideline, a good sustainability report is one that includes data on ALL your impact areas, especially your biggest one – and regardless of what direction it takes, it needs to be a report that is holistic, transparent, and complete.

The term ‘sustainability reporting’ was coined in the 1990s by Oak Ridge National Laboratory, which defined it as "a company's use of internal data and external benchmarks to assess progress towards environmental, social, and economic sustainability." It is most often used by large organizations, but is quickly becoming an important topic for small businesses too – for example, in the EU, the upcoming CSRD will increase the number of companies legally required to report their sustainability activities from the current 11,000 to 49,000.

An effective sustainability report can help investors, clients, and other stakeholders be more aware of a company's efforts to lessen its adverse effects on the environment, as well as reveal certain risks and opportunities.

Creating a report that brings a relevant, balanced and truthful narrative for stakeholders is no easy feat – what is important to one group may not make an impression to another.

Nothing can be worse than a sustainability report without aim or structure – good thing there are already sustainability reporting frameworks out there for businesses to make use of!

Another important tip for businesses to consider when creating a sustainability report: make sure to understand which standards and legislation applies to you and your business! There are certain expectations that every business needs to be mindful of them when executing sustainability in their operations. As more and more new policies and laws are being drafted and quickly coming into force, it can feel overwhelming trying to keep up with regulatory requirements and making sure you don’t end up with fines and penalties for being ignorant (which is why we’d say, it’s better to be proactive with your sustainability efforts and reporting rather than reactive…but moving on)

We cannot discuss reporting without emphasizing the value of transparency. The idea behind corporate sustainability reporting is to provide the business and its stakeholders a better view into the business’ impact and the progress and outcome of its sustainability efforts.

But no matter the wealth of information and data a company presents in its sustainability report, it doesn’t matter unless stakeholders can trust that the information presented is reliable and accurate – this is where transparency and traceability comes into play.

Ensuring transparency and traceability into your sustainability reporting processes will allow you to gain credibility and build trust with your stakeholders and the public, which is fundamental for any type of sustainable value creation.

Now that we’ve got all the basic information of what a sustainability report is and why it is important out of the way, it’s time to dive into the nitty-gritty!

We’ve curated five key elements you should include in your next sustainability report, to make it a good one. Including these key elements will ensure that you are providing a meaningful and relevant sustainability report that not only meets the legislative requirements and that of your stakeholders, but also helps you efficiently track, measure and improve your sustainability efforts to create real impact.

1. What is material for you?For any business, in order to come up with a relevant and successful sustainability strategy, it is important to first understand where impact lies – and we’re talking about both negative and positive impacts.

Similarly, before you dive into the rest of your report, it is crucial to provide information on what is material for your business – where do your impacts lie? What are the matters and focus areas that are most relevant for your company to address?

Beginning your sustainability report with what is material to your business not only shows that you understand your impact areas well, but also it successfully sets the scene for the rest of your report: it provides context for your strategy, your targets and the key performance indicators (KPIs) you will measure track, and lends more weight to your goals and progress.

2. What are your targets?The next key element to include in your report are your targets. Since you’ve already recognized your impact areas in the report’s initial section, outlining attainable targets and your motivation for these targets become considerably easier. Your targets should support the achievement of your larger goals (e.g. becoming carbon neutral by 2045).

3. What is your strategy over the short, medium and long term?Now that you’ve outlined your targets in your sustainability report, it’s time to set out a thorough plan on how you’ll meet them. This includes breaking down each target into its risks, possibilities, and the actionable steps necessary to achieve it, and then plotting them against the short, medium, and long term. In addition, keep in mind the specifics and insights that investors and other stakeholders will be looking for while developing your sustainability strategy.

4. Definitions and KPIsThere’s no use setting targets and coming up with a strategy if you don’t measure and track your progress. Therefore, one of the most crucial parts of implementing a sustainability strategy is being able to track your progress – and therefore knowing what to measure – so you can adjust your strategy as you go.

To measure your progress and success in reaching your targets, you need to set definitions and pick out the relevant KPIs to measure, in order to quantify and track your progress. Afterall, we like to say that what can’t be measured can’t be managed, and therefore can’t be improved.

Definitions are important to ensure consistency throughout your sustainability reports in the future, and they become particularly important, for example, in scope 3 emissions, since that may differ from organization to organization, and is not as straightforward as scope 1 and scope 2.

5. Performance measuring and benchmarkingToday, investors are increasingly requesting more information about a company's sustainability impact and performance on a regular basis, either directly or through the use of several sustainability benchmarks or indices.

There we have it! We’ve highlighted the 5 key elements you should include in your sustainability report to make it a good one. Don't forget that being able to justify your actions is just as vital as being able to articulate what you are doing.

All in all, we understand that sustainability reporting can be tricky given all the various legislative demands, pressures, and other considerations – it’s not easy having to ensure a good balance between being comprehensive of all essential components, while keeping it simple enough for all your stakeholders to understand and act on the information.

You might also face some sustainability reporting challenges along the way, but we’ve got you covered – what can help you fix and avoid these issues is a solid sustainability management platform – one just like ours!

Contact us or schedule a free demo with us to find out more about how our platform can give you better insight into your sustainability impact, solve your sustainability reporting challenges, and accelerate change within your organization!