What is a Corporate Sustainability Report?
A corporate sustainability report is a comprehensive document that companies publish to communicate their sustainability operations performance in economic, social, and governance (ESG). These reports provide insights into how a company’s operations contribute to sustainable development. They can cover a range of topics, including energy use, waste management, social equity, corporate governance, and ethical behavior.
In essence, a corporate sustainability report offers a transparent look at a company’s efforts to operate responsibly and documents their sustainability performance. It typically includes qualitative and quantitative data, providing stakeholders with a clear picture of the company’s sustainability performance and its commitment to improvement.
The Importance of Corporate Sustainability Reporting
Corporate sustainability reporting is not just a trend; it is a fundamental aspect of modern business practice for several reasons:
Transparency and Accountability
One of the main functions of publishing sustainability reports is to help companies demonstrate their commitment to transparency. This openness builds trust with stakeholders, including customers, employees, investors, and the broader community. It shows that the company is acting sustainably in good faith and is holding itself accountable for its actions while actively working to mitigate negative environmental or social impacts.
Risk Management
Sustainability reports help identify and manage risks related to environmental and social issues. For instance, climate change poses significant risks to many industries. Morningstar Sustainalytics reports that corporate assets in the United States are particularly susceptible to climate change risks, even in a scenario where the global average temperature rise is limited to 2 degrees Celsius. By tracking and reporting on these risks, companies can develop strategies to mitigate them, ensuring long-term viability.
Enhanced Reputation
A strong commitment to sustainability can enhance a company’s reputation. Consumers today are more likely to support businesses that prioritize ethical practices and environmental stewardship. PwC’s 2024 Voice of the Consumer Survey reports consumers are willing to spend 9.7% more, on average, for sustainably produced or sourced goods. A robust reporting process can differentiate a company from its competitors, attracting more customers and loyal employees.
Investor Confidence
Investors are increasingly considering environmental, social, and governance (ESG) factors when making investment decisions. A Bloomberg Intelligence survey indicated 85% of investors believe ESG investments lead to better financial returns and more resilient portfolios. Sustainability reports provide the necessary data for these assessments, helping attract socially conscious investors and access to sustainable finance.
Regulatory Compliance
Many regions are introducing regulations that require companies to disclose their sustainability performance. For example, the Corporate Sustainability Reporting Directive (CSRD) requires EU businesses—including qualifying EU subsidiaries of non-EU companies—to disclose their environmental and social impacts, and how their environmental, social and governance (ESG) actions affect their business. It is estimated 50,000 companies will likely have to comply with this reporting initiative. Proactive sustainability reporting ensures compliance with these regulations and can help prepare companies for future legislative changes.
Tools for Creating Corporate Sustainability Reports
Creating an effective sustainability report requires the right tools and frameworks. There are a handful of resources to help companies develop and publish standardized and compliant corporate sustainability reports. These include:
Global Reporting Initiative (GRI): The GRI Standards are the most widely used framework for sustainability reporting. They provide comprehensive guidelines for reporting on economic, environmental, and social impacts.
Sustainability Accounting Standards Board (SASB): SASB standards are industry-specific and help companies disclose financially material sustainability information to investors.
Carbon Disclosure Project (CDP): CDP provides a platform for companies to disclose their environmental impacts, particularly in relation to climate change, water security, and deforestation.
Integrated Reporting (IR): The International Integrated Reporting Framework focuses on how companies create value over time, integrating financial and sustainability information.
Gain the Right Skills with the Global Certificate in Corporate Sustainability
Corporate sustainability reporting is an essential practice for businesses to enhance transparency and manage risks to build a positive reputation and attract investors. Gaining these skills is essential for sustainability professionals seeking to make a difference for organizations looking to navigate through the age of sustainability.
Vanderbilt University Owen Graduate School of Management and the University of British Columbia Sauder School of Business have partnered to offer the Global Certificate in Corporate Sustainability, a program is designed to equip participants with the skills and knowledge to embrace corporate sustainability effectively.