Following on from the previous article, why is sustainability report important? How can sustainability report help strengthen and further develop your business strategy? Follow the guide!

Background of sustainability report

From the 1990s to the early 2000s, many of the world’s largest companies exposed environmental destruction and corporate governance scandals, and society began to demand corporate social responsibility. This situation has eroded stakeholders’ trust and prompted a drive to obtain uncorrupt company information to pursue broader transparency. 

As a result, the need for reports disclosing corporate social responsibility, such as CSR reports and sustainability reports, has emerged.

In other words, briefly explaining why it is important, it is to fulfil corporate social responsibility. Organisations must report on how they think about efforts toward sustainable development and the progress of their steps the future (Disclosure of process). 

Also, it is important to explain the impact on society and how society will be affected (Accountability).

Investing time and resources in this sustainability report will enable any company to address sustainability issues, as environmental and social concerns will affect future business and stakeholder relations.

Let’s look at what specific perspectives are important and benefit from each of a company’s internal and external aspects.

Internal benefits of sustainability reports

Risk and opportunity

Companies need a comprehensive review of their current situation, identifying barriers and bottlenecks to sustainability issues. 

The issues include the value chain from raw material procurement to sales and waste, employee satisfaction, global and local supplier relationships (supply chain management) and marketing. 

What are the risks and opportunities facing each of these phases? What are the implications for the business, including reduction of operating costs, optimisation of the value chain and CO2 emissions in each stage?

Being able to anticipate and organise changes in the external environment of the business increases the organisation’s resilience and enables it to operate more efficiently.

Integrated financial and non-financial information

As mentioned in our previous Insights, reporting integrated financial and non-financial information will be further required in the future. As stated in the IIRC framework, if an organisation thinks in integrated thinking about financial and non-financial aspects, it will be able to understand even intangible assets, which are one of the factors that increase the value of a company, and link them to the achievement of its goals.

It is not easy to practise integrated thinking within an organisation; however, it is not easy to imagine gaining the trust of investors and other stakeholders by visualising the integration process.

Engagement of employees

In recent years, workers have wished to work for organisations that share the same values as they do. For example, how environmentally conscious is the company, and does it have a policy and strategy for this? They are also interested in social and ethical initiatives, such as whether the company has a management system for human rights issues.

For around 60% of companies focused on value creation, sustainability is a significant element embedded in their corporate culture and employee engagement. Embedding and reporting on these elements can motivate employees, improve employee retention and loyalty, and improve organisational performance and value.

External benefits of sustainability reports

Better reputation

As one of the external benefits, it advances (or is expected to advance) the company’s integrity and brand reputation. 

You should check the company’s management and operations for environmental and social improprieties, and its promotion and declaration of sustainability should lead to a positive reputation from all stakeholders in the future. Such evaluations show stakeholders’ trust, which leads to an overall increase in the company’s value.

Stakeholder engagement

Also, as mentioned in previous insight, this leads to the above evaluation of the importance investors attach to sustainability reports and use them as a basis for investment decisions. Above all, we can say that the background to recent significant societal changes is increased scrutiny from all stakeholders.

The sustainability challenges must be identified and addressed, and you must prove them in reality to have a good relationship with all stakeholders.

Sustainability reports are thus a means of strengthening long-term strategies for corporate social responsibility and maintaining dialogue and relationships with all stakeholders.

Accenture surveyed around 1,230 CEOs, and nearly 80% said that sustainability is a way of gaining an advantage in the global marketplace. 

Nowadays, achieving corporate sustainability and value enhancement would be challenging without a sustainability report.

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