As governments around the world sign up for challenging environmental commitments, so transparency in sustainability reporting continues to increase in importance.
With the negative effects of global climate change and an increasing awareness of inequality amongst this generation of consumers, sustainability has become one of the most important issues facing humanity today.
Like the financial information included in an annual report, sustainability reporting provides an opportunity for businesses to communicate their performance over the previous reporting period, from an environmental, social and governance (ESG) perspective.
ENVIRONMENTAL – An organisation’s impact on the environment, including carbon emissions, waste, pollution, and broader environmental issues, such as biodiversity.
SOCIAL AWARENESS – The impacts on employees and local societies, including wellbeing, equality and human rights.
GOVERNANCE – Accountability for decisions that affect the long-term sustainability of the organisation, usually at the director level.
Presenting this data compels businesses to measure their environmental impact and examine their management structure, community relations and ethos towards staff. This then provides them with useful insights from which they can set specific, measurable, attainable, relevant and time-based (SMART) goals, thus allowing them to improve their environmental and societal impacts in the future.
This data can then additionally provide transparency and accountability between a company and its external stakeholders, improving communication and engendering loyalty and trust.
While currently, most sustainability reporting is voluntary, in the future, inevitably, it will become a legal requirement.
Most recently, the UK has set out new Sustainability Disclosure Requirements (SDR) as part of its Green Finance Strategy, advancing its ambition to be the first country in the world to make the Task Force on Climate-related Financial Disclosures’ (TCFD) aligned disclosures fully mandatory across the economy, with most measures planned to be in force by 2023.
Meanwhile, the EU has updated its Corporate Sustainability Reporting Directive, making the introduction of mandatory sustainability reporting standards a requirement for all large and listed EU companies.
Therefore it is advisable for businesses of all sizes to understand their responsibilities now, to avoid being caught out in the future.
This is not, however, a new ideal. It’s a change that large organisations have been aware of for a long time. So much so, that over the past 30 years, the number of companies publishing sustainability reports has increased from 12 per cent in 1993 to 80 per cent in 2020. Those companies who are not disclosing, or even monitoring, their environmental, economic and social impacts are missing out on important insights and the opportunity to provide long-term value to their customers and stakeholders.
For companies who wish to publish their first sustainability report or those who want to improve their current offering, this guide provides useful design tips that will help you present your data in a clear, concise and engaging way.
Because the two terms, CSR and ESG, are similar, they’re often used interchangeably. Indeed, ESG was formed from CSR ideals, but there are differences between the two. While CSR reporting provides an opportunity to highlight positive steps taken to improve employee working conditions or enhance the locality in which your business operates, ESG provides quantifiable data that more effectively measures the impacts of these efforts.
For example, CSR efforts could include programmes such as employee volunteering schemes, awareness days, or recycling policies. While altruistic in themselves, their impact can too often be negligible outside of the positive PR they generate. Often mentioned in passing in an annual report to highlight a company’s sense of community, they don’t have measurable data to back up these claims. This means that, at best, companies struggle to prove the worth of these enterprises. At worst, it could represent deliberate greenwashing of an organisation’s products or activities.
ESG reporting takes this a step further. Because they’re data-led, ESG policies integrate fully into business planning, providing measurable results, which are easily comparable year on year. As investors and consumers become more demanding of companies and their approach to sustainability, this reporting is a valuable tool, which provides actionable insights and results.
.embed-container { position: relative; padding-bottom: 56.25%; height: 0; overflow: hidden; max-width: 100%; } .embed-container iframe, .embed-container object, .embed-container embed { position: absolute; top: 0; left: 0; width: 100%; height: 100%; }Sustainability reporting is not currently mandatory for most companies in the UK.
However, in October 2021, the government announced new Sustainability Disclosure Requirements (SDR) for businesses and asset managers, setting out a roadmap for all businesses to disclose their environmental impact in the future.
Currently, all UK quoted companies are required to report on their greenhouse gas emissions as part of their annual Directors’ Report. They must also report on their global energy use, under the terms of the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018. And, in December 2020, the Financial Conduct Authority (FCA) issued a new Listing Rule, stating that premium listed companies are required to include a statement in their annual financial report which sets out whether their disclosures are consistent with the recommendations of the TCFD, or else explain why they have not done so.
“
In October 2021, the UK government announced new Sustainability Disclosure Requirements for businesses and asset managers.
Under the new directives, large UK businesses, investment products and pension schemes will have to disclose their environmental impact.
To avoid ‘greenwashing’, any claims will need to be clearly justified, with disclosures linked to a global reporting framework to be developed by the International Sustainability Standards Board (ISSB).
It is expected that they will introduce mandatory disclosure requirements in Annual Reports for the most economically significant companies between 2023-24, with this being mandatory for all reporting companies by 2025.
Earlier in 2021, the EU announced its own CSRD, a package of measures that introduced more detailed reporting requirements according to mandatory EU sustainability reporting standards.
Under the measures, which build on the existing Non-Financial Reporting Directive (NFRD), all Listed companies and those who satisfy two of the following:
will need to report to the first set of Sustainability Reporting Standards for the 2023 financial year. This will include additional requirements on double materiality, information relating to intangibles and reporting in line with Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy Regulation.
Sustainability reporting can seem an impossible task for many organisations. So much so, it can often be hard to know where to start.
By breaking the process down into five steps, it can look a little less daunting.
Because there are no official standardised requirements for sustainability reporting, several frameworks have emerged. The most popular of these are the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB).
Each has slightly different areas of focus, be that in purpose, audience or methodology. By considering your audience, risks that directly affect your business, and the ease of data collection required to satisfy each framework, you should be able to choose one or two that represent your individual goals.
Under the UK’s Sustainability Disclosure Requirements, listed issuers, asset managers and asset owners will need to align their disclosures with TCFD recommendations.
How to measure sustainability
ESG reports can be presented in many ways. These can be printed or digital, or a combination of the two. Some of the most popular mediums include a printed report, an online PDF, a dedicated microsite, a summary report or a project-specific report.
Because they’re not currently required by law, there are no universal requirements for what information to include in a sustainability report. However, these documents often follow similar formats, with these elements often featured:
CSR and ESG reports are, by their nature, information-heavy documents. For this reason alone, taking time to think about the document’s design is essential. How you choose to communicate this information will determine whether you create a document people want to read, or one that gets discarded by all but the most hardened stakeholders.
To ensure your report looks as good as the information it contains, we recommend taking time to think about the small details.
The colours, the typeface and the imagery you use all make a big difference. From the layout of the page to the graphical representation of the data, each element of your document requires thought and careful planning.
By taking the time to consider your audience, and the information they’ll be interested in, you can determine what style is preferable for them. In some cases, it may even be worth creating different styles of report for your different stakeholders.
As with all great design, the key is to let the content speak for itself. By presenting the information in a clear and concise manner, including a good blend of statistics and storytelling wrapped up in a well-thought-out layout, you’ll end up with a report template which is effective, year after year.
Are you looking to publish your first sustainability report, or improve the design of your current offering?
Download our guide to sustainability report design and learn:
✅ The most popular reporting frameworks and how to use them
✅ The five key steps to successful sustainability reporting
✅ Our top tips for excellent report design
If you want to partner with an external agency, JDJ has over 10 years of experience designing reports for financial, educational, professional and technology companies in the UK and the US. Knowledgeable about the major sustainability reporting frameworks and with a proven track record of producing reports which inspire investors, consumers and internal stakeholders alike, we’d love to help on your sustainability reporting journey.
Share
Sign up to our monthly newsletter to receive your guide to thought leadership design.
Sign up to our monthly newsletter to receive your guide to annual report design.
Sign up to our monthly newsletter to receive your guide to sustainability report design.
