Making sustainability reporting a part of the business process
Guest Post by: Yogendra Chaudhry, EP
Director, Sustainability Consulting
Ketek Group Inc.
The term ‘sustainability’ is a big umbrella that encompasses a wide range of topics related to social issues, labour, the environment, health and safety, ethics, quality control, the marketplace and customers, and much more. Since sustainability involves so many different activities, professions and business sectors, there is no single, shared definition for the term.
How can practitioners report on sustainability when it is this challenging to define?
In the following article, certified Environmental Professional (EP) Yogendra Chaudhry offers key tips on best practices for sustainability reporting.
How do you define sustainability?
The term ‘sustainability’ is a big umbrella that encompasses a wide range of topics related to social issues, labor, the environment, health and safety, ethics, quality, the market place and customers, and much more. Since sustainability involves so many different activities, professions and business sectors, there is no single, shared definition for the term.
Many people can relate to the idea of sustainability, developing their own indicators to measure and improve their business results. Traditionally, in the context of sustainability reporting, people typically link sustainability with environmental, social and economic performance.
How have industry trends affected your work?
In the globalized world, the market is evolving fast. There are not only new opportunities; there is a new set of risks and challenges too. For corporations, the perceptions of risk are not simply determined by individual company characteristics – they are also bound up with social and cultural contexts.
In the past, tangible assets were main content of risk management. Today, intangible assets (e.g. brand and reputation) make up to 80% of a company’s value, so these assets are key components of risk management. Not only are global business operations scrutinized by NGOs that are well organized, media savvy, and as active as shareholders, the stakeholders are also holding corporations to a high international standard.
Our role as sustainability professionals (consultant, trainers, advisors or auditors) is as challenging as it can be in this highly dynamic situation. There are numerous opportunities for us, but you cannot lead the market if you are not staying updated. We must spend adequate time on our own professional development. Things like sustainability reporting and corporate responsibility may have been voluntary initiatives for companies in the past. Today, these are fast becoming inter-governmental instruments, multi-stakeholder initiatives, and even local regulations.
Do you anticipate any changes or new trends in the near future for sustainability reporting? If so, which of these trends do you think will have the greatest impact on business?
New trends in sustainability reporting? Yes! I remember seeing one of the earliest sustainability reports a few years ago from a leading multinational telecom company that was 341 pages. Now the reports are much simpler and provide more information than I could find in that 341 page report.
Traditionally, reporting organizations have used the Global Reporting Initiative (GRI) Guidelines as a reporting framework. On May 22, 2013, the Global Reporting Initiative released the much anticipated GRI G4 Guidelines for Sustainability Reporting. These new Guidelines will pose a challenge for many companies that have used sustainability reporting as a tool for PR exercise.
‘Materiality,’ ‘Stakeholder,’ and ‘Governance’ are some of the center-stage items now. Whether you follow GRI-G4 or not, the trend is now going beyond the ‘box-ticking’ approach. The readers are now looking for a ‘system’ oriented approach to sustainability management and reporting ,rather than just reporting on your performance on ‘some’ indictors picked from ‘some’ reporting guidelines.
And yes, “Integrated Reporting” is another new development. International Integrated Reporting Council (IIRC) released the International Integrated Reporting Framework on December 9th, 2013. Many organizations will find it of interest for integrated reporting.
What is the most important thing to keep in mind when preparing a sustainability report?
One thing that we always recommend to reporting organizations is that a sustainability report is not the end of process. In the larger picture of sustainability management and reporting, a report is just a small part of your deliverable. It is the process that is important. The success of your sustainability program will depend on how well your system can identify material issues, engage with stakeholders and address sustainability risks. And, the reporting process is a tool that provides us the opportunity to realize all of the above.
I recommend these four things:
- Focus on a system-based approach
- Focus where risks and opportunities for value are high
- Know that it is not possible to address 100% of your stakeholders in one report
- Train your employees, including the senior management
What policy or procedures do you think should be improved to help sustainability reporting?
I would like to quote a statement I read some time ago that mentioned, “Sustainability is a business approach to achieve long-term value for shareholders and broader stakeholders through sustainable environmental, social and governance practices.”
Organizations should appreciate the idea that sustainability reporting is more than just words declaring a business’s commitment to building a better society. To be effective, it is more useful to think of it as a way of doing business. It might be helpful to think of ‘sustainability’ NOT as a separate initiative or an add-on activity (which can easily be dropped if a company faces a financial problem), but rather as a process, a way of doing business that is integral to the business. Sustainability reporting is both a strategic and operational imperative.
What are some of the biggest opportunities and challenges that you’ve encountered in your work?
I have been fortunate to have opportunities to work on sustainability issues globally, everywhere from Asia, Europe, Africa, and North America.
In my current role with Ketek Group, I often work in different geographies, with different industry sectors, and most importantly, with different professionals, including the industry, regulators, students and the NGOs.
The biggest challenge I find is keeping oneself updated with all the developments around. There is so much happening and your customers expect you to know everything.
Why is the EP designation important to you?
In simple terms, the Environmental Professional certification provides me with professional recognition and pride. Going through the process of EP certification not only helped me to gain the professional credentials, it also helped me evaluate my own credentials and abilities.