What is sustainability reporting? Why sustainability reporting is important?

The UNEP describes Corporate Sustainability Reporting as a mechanism to measure business progress and its contribution to global sustainable development objectives. The reporting incorporates sustainability disclosures from an organization whether a stand-alone document or a part of the annual report.

There are several reasons why sustainability reporting is important, highlighting a few here:

• Improves performance: Businesses can utilize sustainability reporting to keep track of their economic, environmental, social, and governance performance. Close monitoring allows an enterprise to gain visibility into their implementation across key areas that help them set goals and develop strategies to improve their sustainability performance.
• Builds transparency: Typically considered “outside-oriented,” reporting on sustainability initiatives paves the way for systematic sharing of information between businesses and their stakeholders. The exchange promotes transparency and helps corporates increase their brand value while attracting more investment opportunities.
• Attracts talent: As per a Reuters’ survey, 65% of respondents are inclined to work for a company with strong environmental policies. Corporations that regularly report their sustainable initiatives build credibility which helps attract better job applicants.
• Draws investors: Several reputed investment firms such as BlackRock have made sustainability a crucial deciding factor. This development is an indication of the growing shift in the market where sustainability reporting will be crucial in shaping stakeholders’ opinions.

Besides these reasons, sustainability reporting is necessary when complying with regulatory standards across the world. Some of the widely used sustainability regulatory frameworks are:

• Global Reporting Initiative (GRI)
• International Organization for Standardization (ISO)
• Principles for Responsible Investments (PRI)
• Sustainable Development Goals (SDGs or UN SDGs)
• Sustainability Accounting Standards Board (SASB)
• Integrated Reporting (IR) Framework