What to include in a sustainability report
A sustainability report is a comprehensive document that outlines an organisation’s environmental, social, and governance (ESG) performance. It is generally written for a one-year period and complements an annual report or other governance reports.
A sustainability report includes information about a company’s projects and initiatives to operate as a responsible corporate citizen.
So, what to include in a sustainability report? There are some standard inclusions that set a foundation for the report. Best practice is to follow the draft IFRS Sustainability Disclosure Standard. However, this can involve significant resources and may be out of reach for a smaller organisation.
A great sustainability report should include the basics. This is an introduction from the chair or chief executive officer, a description of the sustainability approach or framework, then the details of their environmental, climate, social and governance efforts. For each area, include targets and progress, as well as performance trends over time against industry benchmarks.
Key elements of a sustainability report
Sustainability reports often use a consistent format.
It starts with an introduction with background details about a company or organisation and its approach to sustainability. The mission, purpose and values are explained and linked to the focus areas for sustainability.
The introduction will likely include a foreword from the chair, the chief executive officer or the chief sustainability officer, offering insights from the year and setting the overall context and direction for sustainability in the company.
Many organisations choose to include a graphic with their highlights. This provides easy-to-read snapshots. The table below from the 2021 Mirvac sustainability report gives an example of such a table, in this case, setting out the stakeholder value creation.
Many organisations choose to include a graphic with their highlights. This provides read-to-read snapshots. The table below from the 2021 Mirvac sustainability report gives an example of such a table, in this case, setting out the stakeholder value creation.
Setting the sustainability approach
The content of a sustainability report is set by the relative importance of different issues to an organisation.
For some companies, there is a greater emphasis on the local environment over climate initiatives, for example, while others might focus on community impacts and benefits.
This focus is often determined by a materiality assessment. This sets out the issues that are most important to stakeholders and the company’s business operations.
Once these issues are identified, then the key impacts are aligned with the 17 United Nations Sustainable Development Goals.
Australian company Coles Group has merged these two into a single infographic that sets out the parameters of their sustainability report.
Environmental reporting in a sustainability report
A significant portion of the sustainability report will be dedicated to outlining environmental performance.
This will often report on the company’s energy use, greenhouse gas emissions, water use, waste generation and management, and other environmental impacts. Nature-based conservation and local environmental efforts are listed in this section as well.
The overarching strategic approach to climate will also be detailed in this section.
Many major companies will devote resources to their initiatives to achieve decarbonisation, with many Australian companies committed to net zero targets.
In developing the sustainability report, most organisations include climate targets, forecasts and initiatives.
Scenario planning is also included, demonstrating a risk-mitigation approach to climate change. Best practice is to align the reporting in line with the Task Force on Climate-Related Disclosures.
Metrics often include scope 1, 2 and 3 emissions, use of renewable energy, decarbonised transport options, fuel use and others.
Demonstrating social performance
A sustainability report will set out the organisation’s commitments, practices and outcomes on employees and their local stakeholders, human rights, community engagement, diversity and inclusion, and industrial relations.
Within this section is often information about workplace health and safety, including wellbeing and safety from harassment.
Targets and progress on gender diversity is included here, as is information about the company culture and programs.
This breakout box from Lendlease’s 2022 report highlights their initiatives effectively.
Governance reporting in a sustainability report
Sustainability reports often detail the company’s governance practices, including board diversity, executive compensation, and risk management.
Within this section there may be information about the company directors’ experience and skills, any committees in place to support the board, as well as policies and oversight practices.
Many organisations set goals for transparency and stakeholder engagement, and report against those targets in the report.
Cyber security frameworks are emerging as a key area for effective governance. Compliance with the requirements of the Modern Slavery Act may also be part of this reporting.
JB Hi-Fi outlines its performance against its ethical sourcing policy in its 2022 sustainability report.
Preparing your sustainability report
Overall, a sustainability report should provide a comprehensive and transparent account of the company’s sustainability performance and commitments.
Sustainability and ESG frameworks are rapidly becoming key non-financial performance indicators for companies.
Find out more about sustainability reports here.
