All too often, sustainability reporting is driven by the report itself: pick a framework, check the criteria, and dig up the data. This is a poor approach – it only benefits the company in terms of compliance and, at best, sparks an interest in seeking and using sustainability data.
Instead, try this approach:
- Identify your company’s material sustainability/ESG impacts, risks, and opportunities
- Prioritize the long-term focus areas for sustainability
- Build a sustainability program around these priorities (including goals, metrics, responsibilities, and timelines)
- Report regularly on the results of the program and the future direction of your ESG work
Once you understand your material sustainability/ESG factors, you can select the framework that best fits your company.
Materiality Assessment: The Foundation of Sustainability Reporting
How do you identify your material sustainability impacts and risks? This can be done through a stakeholder-inclusive materiality assessment, for example via an online survey complemented by interviews. Involving external experts can also provide valuable additional insights and knowledge.
Once your material sustainability impacts or ESG factors are identified, you can build a compliant, business-aligned, and impactful sustainability program. At the same time, you can be confident that even as regulations tighten, you’re already on the right track.
What About the Sustainability Reporting Directive?
While regulations such as the Corporate Sustainability Reporting Directive (CSRD) set requirements for what and how companies report, the main principle remains the same: your company’s material sustainability impacts and risks should guide the setting of sustainability goals, metrics, and therefore the reporting itself. This is why the first step in starting sustainability reporting is a thorough materiality assessment conducted with careful stakeholder engagement.
Sustainability Is an Investment
Sustainability is an investment. But if the groundwork isn’t done properly, reporting becomes merely a compliance exercise and a cost, rather than a key long-term investment in your company’s success.
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