Generally the following 12 steps feature in processes for corporate sustainability reporting.
Identifying applicable requirements – Where legislation applies to all or some of the content that is to be included in a sustainability report, companies must identify, understand and comply with the relevant law. Similarly, they must identify, understand and comply with the requirements of others that request or require sustainability reports, including Stock Exchanges and NGOs.
External stakeholder engagement – Given the advantages and drivers of corporate sustainability reporting (discussed in FAQ 6), a company may start by considering the objectives of and audience for its sustainability reporting. Generally a sustainability report will communicate to its key stakeholders (including Governments and local authorities) their performance in relation to environmental, social and governance issues. Many companies therefore establish an on-going stakeholder engagement process in order to understand its stakeholders’ perspectives, to determine what is most material to stakeholders and to ensure that the sustainability information serves their needs as well as the company’s objectives for reporting.
Internal stakeholder engagement – Corporate sustainability reporting is a multi-disciplinary exercise that can cover a wide range of subject matter (see FAQ 3). It therefore requires input from a range of functions within a company including governance and risk departments, health and safety, finance, investor relations, customer relations and so on. Therefore, a company may set up an internal structure designed to bring together the relevant internal personnel who might not otherwise have occasion to work together.
Agreeing the reporting cycle – Like financial statements, sustainability reports are often prepared annually. However, in view of the different availability and type of information needed for sustainability reporting, the annual reporting cycle for which sustainability reports is prepared may be different from the financial reporting cycle. In order to manage the sustainability reporting process, a company needs to decide on the reporting cycle.
Reflecting strategy – Many companies recognise that sustainability considerations are increasingly central to the business and that they should be embedded into and aligned with the company’s overall strategy, decision-making and risk assessment processes.
Data collection – Once a company has decided on the type of information it will report in order to satisfy its obligations, reporting objectives, strategy and the needs of stakeholders, systems and processes are put in place to collect the data and information needed for reporting.
Boundary setting / scope of reporting – Decisions need to be made about the boundary / scope of information that will be collected, for example, whether and to what extent data from subsidiary companies and suppliers will be collected, and how far along the life cycle of a product information will be collected.
Materiality: deciding report content – Having identified the relevant requirements, engaged with stakeholders, established the sustainability strategy and its links with the business strategy and collected data, companies need to determine what to report. Often the decision on exactly what to report will be determined by identifying those matters that are most material. Materiality can be assessed in various ways. Generally material matters are the most significant for assessing a company’s sustainability performance. Stakeholder engagement - a process of gathering the views of those affected, or potentially affected - is therefore a vital part of determining the materiality of an issue.
Strategy and performance management – Plans for a company to become more sustainable are often long-term. A company may introduce performance-monitoring systems, set targets, strategies and key performance indicators towards achieving its sustainability-related goals. Disclosure of targets and performance against these is often a component of sustainability reports so that stakeholders can see the context of the results.
Deciding on measurement and reporting approaches and accounting policies – Different approaches towards the measurement and reporting of information exist. Except where a particular measurement or reporting approach is prescribed by regulation, companies may choose how to measure and report information. To maximise transparency, companies are often asked or choose to disclose the basis, policy or methodology used to collect, measure and prepare disclosures in their sustainability reports.
Communication – Increasingly, companies are innovating in order to determine the most effective channels for communicating sustainability information, whether through websites, printed literature, social media or web-based navigation tools.
Response channels – Many companies now invite their stakeholders to respond to the corporate sustainability report, to guide continuous improvement.