Sustainability Reporting – what to expect in 2016

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Rob Pearson Rob Pearson
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2015 was a busy year for corporate sustainability. So what impact will this have on sustainability reporting in 2016?

2015 was a busy year for corporate sustainability. From an international governance perspective, the two most significant developments were COP21 in Paris towards the end of the year and the announcement of the Sustainable Development Goals (SDGs) in September. Notable local examples of extreme weather events, such as flooding, captured the public imagination.  In the Southern hemisphere, concerns about environmental pollution in China and the impact of forest fires in Indonesia were widely covered in the media.  Global stock markets were volatile, impacted by the declining oil price and a drop in demand for minerals.   Meanwhile, more boardroom scandals fuelled a continuing decline in public trust in business. So what impact will this have on sustainability reporting in 2016? 

Unsurprisingly, post the COP21 agreements there will be increasing pressure for companies to report on their climate impacts with corporate carbon targets that are aligned to Intended Nationally Determined Contributions agreed in Paris. This will be a challenge, particularly for the multinationals whose operations span different countries, each with their own individual targets. Earlier this decade, we saw many companies set reduction targets.  2015 and 2020 were often chosen as the milestone dates to meet company targets.   We should expect to see meaningful commentary in reports this year that explains progress against these goals, particularly if they have been met already and no longer provide a challenge, or equally, if they are likely to be missed.

The SDG’s (or Global Goals) are a 17-point plan to end poverty, halt climate change and fight injustice and inequality, building on the previous Millennium Development Goals. Given the timing of the launch and the fact most corporate sustainability reports are now already well underway, it would be unrealistic to expect a great deal of detail in the next round, but I expect to see a good explanation of the process companies intend to adopt in response to the SDGs.  In the better reports, there will be clear evidence of how a company has identified which SDG’s apply to its business and how it plans to implement its improvement plan and measure changes in impact. The best reports should be able to articulate clearly how the SDGs are helping to bring the many strands of their sustainability strategy together.  Aligned with the direction GRI G4 has taken reporting, we should see much clearer accounts of sustainability impacts throughout the value chain starting to emerge. If the most significant impacts of a company’s activities are downstream, associated with product use for example, the sustainability report should reflect this, backed up with data, where appropriate.  For companies in some sectors this change will represent a step change in the scope of their reporting. We expect 2016 to be another good year to be a report designer, the demand for infographics in sustainability reports to explain complex supply chains will no doubt rise!

Following the VW emission scandal, readers will expect to see evidence of clear governance and accountability for sustainability impacts. If these are not already in place yet, or not robust enough, the sustainability report should be a catalyst to make the changes required to solidify governance arrangements. Again, the GRI G4 guidelines set out clear governance indicators as a guide.  Those reporters moving from a GRI 3.1 ‘A’ report to G4 ‘comprehensive’ will find additional disclosures are required around governance.

A criticism I have of many sustainability reports is they somehow manage to not talk about a company’s sustainability impacts in a wider context. Surely the point of sustainability communications is to explain how a company is contributing to global sustainability issues and megatrends? With COP21 taking us towards national carbon targets and the SDG’s proving a platform to ‘join up’ various global challenges there is a great opportunity this year to see sustainability reports really getting to grips with this challenge

Reporting 2016