Although sustainability reporting in accordance with the GRI Framework (GRI) or another standard involves a substantial workload, a new report offers insights into why many companies are opting to do it.
- Competitive advantage
- Risk management
- Stakeholder pressure
Among the benefits of reporting, more than half of the survey respondents reported realizing business value as a result of their companies’ reporting efforts. New research suggests that the most transparent companies tend to have higher cash flows.
How are companies reporting?
While there are many ways a company can report its sustainability performance, more than two-thirds of survey respondents saying their organization employs the GRI or a GRI-referenced framework in the preparation of their report.
Moreover, with analysts, investors and other stakeholders paying attention to sustainability reporting, many companies are increasingly assuring their sustainability reports. Among those report-issuing companies in the survey, 35% have some level of assurance conducted on their sustainability reports. Of those reporting assurance, 55% have their full reports assured and 45% have some indicators assured.
Though assurance is not yet mandatory for sustainability reports, Ernst & Young says it is an important risk management exercise, particularly as there is eventually likely to be an increased demand for comparability and alignment across reports.
Why don’t companies report?
Survey respondents disclosed three primary challenges to sustainability reporting and the assurance process:
- Availability of data
- Accuracy or completeness of data
- Internal buy-in
Additionally, for large enterprises, sustainability may not be an entirely internal activity. Some organizations need to work with subsidiaries and suppliers, some of whom either may not be large enough to support robust reporting or may not yet have adopted the practice of sustainability reporting.
“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.”