The practice of sustainability development (SD) reporting is set to take an interesting turn.
Many companies have started voluntarily reporting on non-financial matters such as biodiversity, human rights and climate change as they feel the need to communicate their commitment to stakeholders and the community. SD Reporting might actually become – cool.
Aaron Dhir, an associate professor at Osgoode Hall Law School in Toronto says:
‘The reporting of material environmental, social and governance (ESG) information should be viewed as an integral part of a business' overall risk management strategy.' The corporate social responsibility specialist believes that disclosures as such encourage stakeholder dialogue and can provide a critical framework for identifying both risks and opportunities.
Currently, most SD reports are multi-purpose and discuss the company’s overall goals; rewards for shareholders and the efforts employees are taking to strive towards a better community. But, according to industry experts, some of these reports lack transparency and have not yet fully evolved to address questions such as operational challenges or the basic ‘why’ or ‘how’.
‘SD reporting has not reached maturity yet and for firms to prove their accountability and transparency through better disclosures might take shape within five years from now,’ says Janis Riven, a corporate governance expert and lecturer at Concordia University. That evolution may happen faster than Riven predicts, according to ‘Multiple messages,’ a study examining the current and future uses of SD reports by Acona, a UK consultancy firm that provides advice on sustainable development to large companies and some NGOs. According to the report’s authors, sustainability reports will be distributed through multiple documents in various languages and forms to cater to diverse audiences.
‘Digital communications and social media, customer messaging and advertising, employee communications and SD disclosures via dedicated single-issue schemes – all will increasingly be seen as part of the SD report so that writing the annual document will less and less constitute the company’s main communication on the topic,’ the report says. ‘In fact, the production of an SD report as a single document may well cease.’
The report, released in July, notes that such a shift in the way data that has a direct impact on a company’s reputation is shared could expose many flaws in the short term, but will inevitably lead to a long-term positive affect on a corporation’s reputation.
‘The development of the [sustainability] story will become as important as the facts themselves,’ the study says. ‘In the end therefore, compulsory integrated reporting will centre on those issues which affect shareholders; other stakeholders will be considered principally in the light of their effect on the business’ financial performance.’
