How To Design Your Company's Sustainability Report
If you’ve spent any amount of time looking into sustainability reporting for your company, you’ve probably noticed the abundance of ESG metrics and KPIs that can be factored into the report’s design.
Should you focus on sustainability metrics like greenhouse gas emissions or water consumption? Or should corporate social responsibility metrics like employee engagement or product safety take precedence? There are certainly a lot to consider.
But don’t let that overwhelm you. In this article, Sandpaper will be sharing a useful tool that you can use to design a sustainability report that achieves your company objectives and appeals to key stakeholder groups.
What Are Sustainability Reporting Frameworks and Ratings?
Before we get to the tool, let’s first quickly review sustainability reporting frameworks and sustainability ratings:
Sustainability Reporting Frameworks
Sustainability reporting frameworks are guidelines for organizations to follow when creating a sustainability report. There are many popular frameworks out there, including:
- the Global Reporting Initiative (GRI)
- the Carbon Disclosure Project (CDP)
- the Climate Disclosure Standards Board (CDSB)
- the International Integrated Reporting Council (IIRC)
- the Sustainability Accounting Standards Board (SASB)
- the Taskforce on Climate Related Disclosures (TCFD)
- the UN Compact on Progress (CoP)
- the World Economic Forum International Business Council (WEF IBC)
Each of these frameworks has different guidelines and indicators that organizations can use to measure and report on their sustainability performance. They essentially act as rough templates that organizations can use to design their report.
A sustainability rating is an independent assessment of an organization’s sustainability performance on some metric according to a predetermined set of criteria—typically based on publicly-available information.
There are countless sustainability ratings systems in use around the world, but they can generally be broken down into four main categories:
- IO/IGO Ratings: These are science-based ratings that are compliant with targets issued by intergovernmental organizations (IGOs) or international organizations (IOs) (e.g., Science Based Targets).
- Climate Bond Ratings: These are ratings that assess an organization’s alignment with the goals of the Climate Bond Initiative and provide fixed income funding (e.g., Climate Bonds Initiative).
- ESG Ratings: These are ratings that assess an organization’s environmental, social, and governance performance as it relates to financial performance and investing (e.g., MSCI).
- Supplier Ratings: These are ratings that assess an organization’s performance as a supplier on some sustainability metric (e.g., EcoVadis).
These ratings can be useful for investors and other stakeholders who want to quickly understand an organization’s sustainability performance without having to read through an entire report. Additionally, they help facilitate comparisons between different organizations over time by standardizing the performance indicators that are used.
Note: Sustainability ratings should not be confused with sustainability certifications—which attest to an organization’s compliance with certain sustainability standards.
The Sustainability Reporting Matrix
With that background out of the way, it’s time to move onto a tool that you can use to clarify the process of designing a sustainability report—the sustainability reporting matrix.
The sustainability reporting matrix is fairly simple to understand. It has two axes:
- Audience: This is the target audience of a sustainability report.
- Scope: This is the scope of a sustainability report.
The target audience of a sustainability report can range from narrow (i.e., investors) to broad (e.g., multiple stakeholders). The scope of a sustainability report can also range from narrow (e.g., climate) to broad (e.g., climate, corporate social responsibility, and sustainable development).
Sustainability Reporting Frameworks Matrix
Sustainability Ratings Matrix
Every sustainability reporting framework and sustainability rating will fall somewhere on this matrix. We’ll start by showing you where on the matrix they fall before explaining how you can use this tool to design your sustainability report.
Using the Sustainability Reporting Matrix
Now that you understand where each sustainability reporting framework and rating system falls on the matrix, it’s time to learn how you can use this tool to design your sustainability report.
There are three steps in the process:
- Define your audience.
- Determine your scope.
- Select your frameworks and ratings.
1. Define your audience.
The first step is to define your audience—i.e., who you want to read your report. Depending on your company’s size, resources, and goals, you may want to target a narrow audience (e.g., investors) or a broad audience (e.g., multiple stakeholders).
If you’re not sure who your target audience is, consider asking yourself the following questions:
- Who are our most important stakeholders?
- What information do they need from us?
- How can we reach them?
- What’s the best way to communicate with them?
Once you’ve identified your target audience, you can move on to step two.
2. Determine your scope.
The second step is to determine your scope—i.e., what topics you want to cover in your report. The scope of a sustainability report can range from narrow (e.g., climate) to broad (e.g., climate, corporate social responsibility, and sustainable development).
There are a few factors to consider when determining the scope of your report:
- What are our sustainability priorities?
- What are our stakeholders interested in?
- What topics are we comfortable reporting on?
Once you’ve identified the topics you want to cover, you can move on to step three.
3. Select your frameworks and ratings.
The third and final step is to select the sustainability reporting frameworks and ratings that make sense for your company. As we mentioned earlier, there are many different options to choose from—so it’s important to take the time to select the ones that best fit your needs.
You can use the matrix to help by starting your search with frameworks and ratings that fall into boxes on the matrix that correspond with your target audience and goals. For example, if you want to create a report that is appeals to a broad audience while being narrow in scope, you might choose the CDP framework and Science Based Targets rating system.
When selecting frameworks and ratings, there are a few things to keep in mind:
- Does the framework or rating system cover the topics we want to report on?
- Is the framework or rating system relevant to our target audience?
- Can we comply with the requirements of the selected framework or rating system?
- Do we have the resources necessary to meet the requirements of the selected framework or rating system?
Designing Your Report Doesn’t Need To Be Complicated
Designing a sustainability report doesn’t have to be a daunting task.
By following the steps outlined in this article, you can create a report that’s tailored to your company’s specific needs and goals. And, by using the sustainability reporting matrix, you can make sure that your report covers all the bases.
About the Author
In the 10 years of service, Sandpaper has managed a stay ahead of its competition; by developing and adapting to changes in both the global and local corporate landscape in the United Arab Emirates.