21 April 2022

What is
sustainability
reporting and
why is it
important?

In summary...


Due to 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.



As governments around the world sign up for challenging environmental commitments, so transparency in reporting continues to increase in importance.

Does my businesses need to produce a sustainability report?

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.

What is sustainability reporting?

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.

We already report on our Corporate Social Responsibility (CSR). Is this the same as ESG reporting?

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.

What do businesses include in a sustainability 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:

  • A statement from the CEO
  • A graphical representation of the company’s structure and business model
  • Some contexts behind the chosen sustainability goals – e.g. market and industry trends
  • An impact assessment
  • The main stakeholders and their issues
  • A record of performance over time, including KPIs and metrics
  • Positive stories of sustainability

Is sustainability reporting mandatory in the UK?

Sustainability reporting is not currently mandatory for 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.

"Trust in how companies communicate their sustainability performance has increased to a record 51% this year [2020]" - GlobeScan and GRI

UK Sustainability Disclosure Requirements

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.

EU Corporate Sustainability Reporting Directive (CSRD) Requirements

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:

  • Over 250 employees
  • Over €40M turnover
  • Over €20M total assets

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.


Partner with JDJ for your sustainability 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.

CONTACT US

Related Posts

Design

What to look for
when proofing an
annual report
(or other business
document)

Read article

Company News

2021: A year
in design

Read article

Design

How to measure
the impact of
thought
leadership

Read article

Company News

Brands we’ve
worked with who
are changing
the world

Read article

Design

The psychology
of colour in
branding

Read article

Design

Can graphic
designers
do web design?

Read article

Design

Why are brands
going retro with
their logos?

Read article

Design

How to
choose a
brand typeface

Read article

Design

Women in
art &
design

Read article

Design

Promoting
your annual
report for
maximum
engagement

Read article

Design

Annual report
design tips

Read article

Design

The JDJ Creative
annual report
design process

Read article

Design

Choosing the
right channel for
your annual
report

Read article

Design

Planning your
annual report

Read article

Design

The ultimate
guide to annual
report design

Read article

Design

Creativity Vs
Automation

Read article

Design

Corporate review
design: Reimagined

Read article

Company News

Radiance
colour book

Read article

Design

Making sense:
Touch

Read article

Get in touch

We’re always keen to hear from like-minded people with passion and purpose,
so let’s see if together we can bring your vision to life.