How COVID-19 has impacted corporate sustainability and what this means for your business.
The COVID-19 pandemic has been the single most impactful public health crisis in recent memory. Every aspect of business operation has been affected. The overarching effect has been companies undergoing a collective rethinking of their responsibilities, in large part due to increased scrutiny from stakeholders. This rethinking process is often manifesting itself in sustainability and ESG reports. In this article, we’ll be looking at how COVID-19 has impacted corporate sustainability reporting and what that means for your business.
What Is a Sustainability Report?
First, let’s briefly go over what a sustainability report is. There isn’t a standardized definition or format worldwide, but a sustainability report will typically contain a review of the company’s compliance with various regulations and laws governing its business operations. For example, this might include reports on energy usage, carbon emissions, water usage, chemical usage, and recycling. A reporting entity may also discuss its financials to demonstrate that it is abiding by its stated environmental policies and goals even when doing so incurs costs that would not be necessary for the absence of these policies.
How Has Sustainability Reporting Been Impacted?
The COVID-19 pandemic has shifted stakeholders’ expectations for disclosures from abstract promises of “sustainability” to tangible reports that detail exactly what steps companies are taking in pursuit of these goals. COVID-19 has effectively changed corporate sustainability reporting from an opportunity to boost a company’s image and brand into something that is beginning to become a de facto (and in some cases de jure) requirement that must be met to avoid fines and reputational damage.
For example, this might include reports on energy usage, carbon emissions, water usage, chemical usage, and recycling. A reporting entity may also discuss its financials to demonstrate that it is abiding by its stated environmental policies and goals even when doing so incurs costs that would not be necessary for the absence of these policies.
A study by brand watch found that 75% of consumers look at a brand's COVID response
The pandemic has also brought a host of new concerns to the forefront of people’s minds. One notable example is the rise of health and safety concerns among both corporations and consumers. A study by brand watch found that 75% of consumers look at a brand’s COVID response when deciding whether or not to shop with them.
Changes in Consumer Preferences
Changes in consumer preferences like these have necessitated changes in how sustainability reports are constructed and structured. Now, direct mention of COVID-19’s impacts and the company’s responses to those impacts are expected. This change in expected content has been conceptualized by KMPG under a four-part framework:
• Respond • Relief • Recover • Resilience
Each part corresponds with a consideration that should guide sustainability reporting post-COVID-19.
As corporations attempt to navigate the COVID-19 pandemic and its aftermath, it’s crucially important that they keep stakeholders in the loop when it comes to describing how their operations have been impacted by the pandemic.
Corporations play a hugely important role in providing relief from the pandemic’s worst impacts – to their employees, customers, and the wider communities they operate within. They need to demonstrate that they are taking steps to reduce their negative impacts and increase their positive impacts.
Volatile markets and other business disruptions have been occurring at unprecedented rates since the COVID-19 pandemic struck. Corporations need to address their plans for recovery within their sustainability reports if they want to give stakeholders the peace of mind that business will continue as usual.
As we move forward into the new world this pandemic has opened our eyes to, corporations need to recognize that COVID-19 is not an isolated event. Other disruptive events – both similar and dissimilar – are sure to be on the horizon. Stakeholders need to be made aware of a corporation’s plan for the next disruptive event that comes around.
How To Use This Framework When Writing Sustainability Reports
An effective post-COVID sustainability strategy needs to tackle novel concerns and obstacles head-on. Using the framework is a great way to cover your bases and make sure that you’re addressing stakeholder concerns in a comprehensive way.
Determine Impact Areas
Though the COVID-19 pandemic has changed many aspects of corporate sustainability reporting, some things remain constant. Your impact areas should still include energy usage, carbon emissions, water usage, chemical usage, and recycling.
However, new impact areas need to be established. COVID-19 has brought countless impacts in the areas of materiality, risk management, and governance that your report needs to address.
Determine Key Performance Indicators (KPIs)
Identify what you want to achieve with your sustainability reporting. KPIs may include things like the percent reduction in emissions over the previous year. However, new, post-COVID impacts will necessitate new KPIs.
Establish Recovery Plans
Though everyone loves to read about plans, it’s important to demonstrate that these aren’t empty promises. Outline the ways in which your organization has begun to recover from the COVID-19 pandemic and how it will continue its recovery moving forward.
Establish a Post-COVID Sustainability Strategy
Your corporation must have a plan for sustainable operations post-COVID-19 – including business continuity, resilience, and adaptability. Demonstrate that you are ready for similar disruption in the future.
When things aren’t sustainable, they eventually have to stop”. @Anders Ankarlid
Present What You’ve Learned
One of the most important considerations when writing a sustainability report that addresses the concerns of stakeholder is presenting what the pandemic has taught you about your operations or business model. No corporation has weathered the pandemic without making mistakes. Attempting to hide these will not only impact the credibility of the report, but it will also miss a valuable opportunity to reflect on how you improved as an organization.
As COVID-19 continues to disrupt our way of life, it’s important for corporations to demonstrate their commitment to sustainability and a sustainable future. The framework provided in this article is one way you can make sure your sustainability reports are up to the task of addressing stakeholder concerns with respect to COVID-19.
About the Author
At Sandpaper We have been around long enough to realize the importance of good report writing, research, and design. A thoroughly planned and executed report builds loyalty and trust among stakeholders.
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.