Firms around the world are increasingly treating sustainability reporting as a core business practice because it can provide advantages over competitors, according to a recent joint report by Ernst & Young and Boston College. Other motivations include transparency, risk management and stakeholder pressure, the report says.
Value of Sustainability Reporting offers insights on the benefits of sustainability reporting, assuring sustainability reports and the risks of not reporting. The study claims there is strong evidence that transparency offers a number of financial and social advantages that make sustainability reporting more than worth its costs.
“Most large global corporations see sustainability reporting as a routine business discipline,” said Katherine Smith, Executive Director, Boston College Center for Corporate Citizenship. “We see increasing interest among corporations and investors in sustainability reporting both as a way to ensure that environmental and social impacts are managed and as a way to assess the quality and commitment of management. Assured reports earn even more credibility.”
Half of the survey participants indicated sustainability reporting gives them a competitive advantage and some 68 percent said they issue a sustainability report.
Sustainability reporting has emerged as a common practice of 21st-century business with ESG company data scrolling down thousands of trading terminals — some 95 percent of the Global 250 issue sustainability reports. A focus on sustainability can help organizations manage their social and environmental impacts and improve operating efficiency and natural resource stewardship, and it remains a vital component of shareholder, employee and stakeholder relations.
With analysts, investors and other stakeholders paying attention to sustainability reporting, many companies are increasingly assuring their reports. Among the survey respondents whose companies issue reports, 35 percent of those companies have some level of assurance conducted on their sustainability reports.
Other key findings from the survey include:
- More than two-thirds of respondents indicate that their organizations employ the Global Reporting Initiative (GRI) framework in the preparation of their reports, which is also the most widely used framework globally.
- Respondents from organizations that issue a sustainability report most often identified data-related issues among their challenges in the reporting process.
A recent study by Cone Communications and Echo Global found that consumers now expect companies to be an active participant — if not a driving force — in solving the most pressing social and environmental issues. In other words, CSR is no longer option, but an operational imperative.