The globe is faced with a myriad of issues that risk tearing it down and pulling everyone under. The most notable challenge is that of global warming. This is the long-term heating of the earth as observed from 1850 because of human activities. The problem is caused by the excessive release of greenhouse gasses that are trapped in the atmosphere, resulting in the rapid increase in global temperatures.
This is only one of the problems. Others include rapid loss of biodiversity, pollution, human hunger, war, and social injustices. After trying other strategies and yielding little or no results, the world appears to have finally found the solution: sustainability reporting. How to be carbon neutral?
This post takes a closer look at sustainability reporting to demonstrate what it is. Further, it will highlight the main types of sustainability reporting.
What is Sustainability Reporting?
The idea of sustainability can be traced back to approximately 30 years ago in 1992 when the United Nations held the first-ever Conference on Environment and Development (UNICED). The main resolution of this meeting was that the environment cannot be looked at separately from development.
The concept of sustainability was further developed in subsequent conferences, especially the World Summit on Sustainable Development (WSSD) of 2002, and recently, the Paris Conference on Climate Change. So, what is sustainability reporting?
Sustainability reporting is the process of disclosing a company's environmental, social, and governance impacts from its operations. While the process of sustainability reporting is aimed at ultimately creating the reports for stakeholders, it is far deeper than that. It is a conscious process that starts with company evaluation and crafting strategies to achieve specific sustainability goals. Again, the reporting must be based on the principle of accuracy and continuity to ensure each sustainability reporting phase builds on the previous one (click here to know more about ESG report)..
Although the process of corporate sustainability reporting has been voluntary, the landscape is changing rather fast. Because of the benefits that come with sustainability reporting, governments and regulatory authorities are now working towards making it mandatory.
This is being done in a number of ways. For example, the UK and New Zealand administrations have indicated that TCFD reporting will be mandatory by 2023 and 2025, respectively. If that looks far, take a closer look, and you will realize that it is already happening.
In the EU, the passing of the Taxonomy regulation that targets to classify activities to help companies determine if they are sustainable is already in place. In Hong Kong, the Hong Kong Stock Exchange (HKEX) now requires all listed firms to provide annual sustainability reports. See – there is no way out, but the lovely thing is that you have a long list of benefits to enjoy from sustainability reporting (purpose of sustainability reporting).
Types of Sustainability Reporting
As we have already pointed out, the world is racing fast towards sustainability. As more parties agree that sustainability benefits are paramount for the success of both business and society, the next question is, “what are the main types of sustainability reporting?” We will highlight the main frameworks that you can adopt for your organization. Check closely and select the one that works best for your organization.
● Global Reporting Initiative (GRI) Reporting
GRI is a global and independent organization that is considered the pioneer in sustainability reporting (ESG reporting). It is one of the commonly used types of reporting because it works well for both small and large organizations. It is also easy to employ, and you can count on it to prepare a highly accurate, verifiable, and appealing report.
● The Sustainability Accounting Standards Board (SASB) Framework
This sustainability reporting model was developed in 2011 and is aimed at helping companies communicate their sustainability information to targeted investors. Note that SASB and GRI are merging to promote greater transparency. However, your company can still opt to use an individual framework, GRI or SASB, for sustainability reporting. Do you know how to calculate carbon emissions?
● The Task Force on Climate-related Financial Disclosures (TCFD)
TCFD was created in 2015 by the Financial Stability Board (FSB) with the goal of helping companies create consistent climate-related disclosures. Unlike GRI, which works on a wide range of organizations, TCFD is targeted at companies that predominantly handle financial-related interests, such as banks and insurance firms.
Other sustainability reporting options include the Carbon Disclosure Project (CDP) that targets addressing high levels of greenhouse gases and safeguarding forests. You might also want to consider the Streamlined Energy and Carbon Reporting (SERC) fronted by the UK government.
In this post, we have looked at the brief history of sustainability reporting and the key reporting frameworks, but you will need one more thing: reporting software (all about the best sustainability software).
A good sustainability reporting software can help you understand the process of sustainability reporting more effectively and ensure the data is correct and verifiable. You can even automate part of the data collection process.