Reporting & communications

Overview

Now more than ever, people have high expectations that companies deliver on environmental, social, and governance fronts. This underscores the importance of consistent, frequent, and meaningful communications to authentically share your sustainability story. Effective communication is a core element of building a successful sustainability program. It’s the lifeline to buy-in from senior management, an engaged workforce, and a trusting relationship with stakeholders.

Talking about sustainability happens throughout this work – from getting buy-in to reporting, and everywhere in between. Sustainability is a collaborative effort that requires techniques for communicating with people who have many different perspectives and agendas. Some communications should be informal and casual; others will be very formal and subject to review and approval. Communications skills tailored to sustainability programming can help avoid missteps.

Sustainability reporting

While sustainability reporting can be a very resource intensive process, it doesn’t have to be. Even if your organization doesn’t publish a formal sustainability report, it can still be a worthwhile endeavor to produce website content or a public document highlighting sustainability policies and performance.

For decades, companies have provided financial reporting for the benefit of investors and creditors. Standards have developed for financial reporting to promote transparency, accuracy, reliability, and comparability. Sustainability reporting is the new kid on the block for business reporting and is on the rise.

This is in large part because sustainability best practices have been shown to be the most effective way for companies to:

Manage non-financial risks related to environmental, social, and governance matters, and
Avoid significant financial consequences of a failure to manage these matters well

As a result, an increasing number of stakeholders are requesting information from organizations about their efforts to use sustainability best practices as a component of business management activities.

A good, formal sustainability report should clearly align with the organization’s strategic goals and address the following:

Why sustainability matters to the organization
What aspects of sustainability are most important to its future, for what reasons, and how the aspects were determined
What the organization wants to accomplish in the short and long term (goals)
What actions are being taken to accomplish goals
What progress has been made so far (both good and bad)

The demand for transparency has evolved beyond providing a swath of information to focusing only on what matters most for the business and its key stakeholders. The emphasis is on greater quality of information versus quantity. While it may be tempting to report on every project being done or every piece of information being requested, this is not realistic or helpful. Over-reporting can confuse audiences, making it difficult to find and analyze what is most significant for the reporting organization. It will also drain resources from the sustainability team.

There are many reasons to talk and write about your company’s sustainability performance. Whatever the context of the disclosure, there are three key concepts to follow when deciding what information to collect and whether to disclose it:

The credibility and utility of a disclosure depends on the quality of the data that supports each subject area.
Solid quantitative data is highest-value data.
It does not make business sense to have the cost of obtaining data exceed the value of the disclosure condition or circumstances the data proves or supports.

As you collect available sustainability information, you can begin to evaluate it against these three guidelines.

How does sustainability reporting and communications help businesses?

Whether your organization chooses to disclose purely sustainability information or opts for integrated sustainability and financial reporting, there are a variety of benefits. Sustainability reporting and communication brings focus and accountability to sustainability performance. It promotes and enhances:

Brand and reputation
Employee attraction and retention
Improved performance and commitment
A refined sustainability vision or strategy
Increased consumer loyalty
Improved long-term risk management
Increased long-term profitability
Improved access to capital

In sustainability reporting and communications, being transparent, responsive, and focused on what matters builds trust with your key internal and external stakeholders. It also aligns the organization around areas in need of improvement and improves management of sustainability issues. The result? An effective and efficient approach to deciding what to track, when to measure, and how to tell the story of your company’s journey toward a more sustainable future.

Resources

The Reporting ExchangeTools & Know-how

Getting started

With calls for greater transparency becoming the new normal, companies face increasing pressure from investors, regulators, customers, and other stakeholders for disclosures about sustainability performance.

Reporting requires time and resources. If your company is getting flooded with questionnaires and information requests, you may have to consider which ones are most important and how many resources you can devote to reporting. You may also want to look at what other companies in your industry are reporting on and to whom. This will help you decide from a competitive and best practices perspective whether and to what degree to disclose sustainability information.

To manage requests, you will need a strategy for staying current on reporting trends and deciding what and how to respond. To formulate this strategy:

Clearly understand your reporting purpose, audience(s) and scope (what issues)
Determine what is most important to key stakeholders and how they prefer to consume information
Develop a systematic reporting process to save you time and money as your sustainability program gains traction and grows

This strategy will enable you to report to stakeholders who matters the most and be more transparent, disclosing both positive and negative results as you work to improve.

What and where

The following questions will help get at what and where to report:

What is your company required to disclose, whether by law, regulation, or market forces?
What is the right balance of information to avoid criticism and stay competitive?
How best to generate, collect, and verify data to ensure accuracy, completeness, and fit within the budget
Is help needed to identify gaps in disclosure and enhance credibility through independent, third party verification?
What are the best vehicles or channels for getting the right information to the right people?

A key success factor is getting the right balance of information and ensuring your company doesn’t over or under share. As a general rule, organizations should put their resources into collecting and disclosing information about the most significant or “material” issues to the company and its key stakeholders. The depth of disclosure will depend on how important a particular audience is, what they care about, and the level of detail that they expect or are entitled to. An issue assessment and a materiality assessment will inform these decisions.

Being transparent is a careful balancing act. An honest dialogue with stakeholders about both successes and challenges shows that your company is trustworthy and thoughtful. It also exposes areas in which progress is needed or where your company is vulnerable. Communicating sustainability information can generate support among stakeholders for your improvement efforts. But these areas can also lead to liability or instruct your competitors about how to take advantage. The transparency decisions relate to what specific information you should include in public disclosures. When releasing any sensitive information, you should make decisions with business and legal considerations in mind.

Advantages of disclosure

Many companies have the impression that reporting means cost with no real benefits. This is not the case. Businesses that take a thoughtful, proactive approach to transparent disclosure about significant issues prior to regulation or overwhelming market pressure can reap many rewards, including:

Increased credibility, accountability, and reputation
Stronger relationships with key stakeholders
Strategic leadership, stronger governance, and long-term thinking
Reduced risks, new business opportunities, and competitive differentiation
Increased ability to attract and retain talent

A strategic approach to disclosure can help your company meet emerging challenges, foster innovation, and advance new business processes, products, and services.

Resources

Seven Tips To The Perfect Materiality Analysis

Developing content

After collecting sustainability data, identifying audiences, and deciding what’s most important for each audience, content development can begin.

Who should be involved?

Engaging others in the organization in the content development process will ensure that reports are consistent with organizational guidelines for disclosure, branding, and any other relevant policies. Be sure to involve necessary internal stakeholders and subject matter experts early and get the necessary approvals for all content prior to publishing.

Here are some guidelines to follow:

Have internal subject matter experts provide content directly or review content for each area
Determine who will review the content to ensure it meets applicable legal requirements
Identify any style or formatting approvals from marketing
Determine what approvals you need from any customer-facing areas of the business
Ascertain if there are other areas where the same information may have been previously reported and needs updating

This approach helps develop internal controls that support and facilitate approvals.

Communications channels and formats

Different communication channels call for different approaches to conveying information. The presentation of sustainability performance information will likely be different in each of the following channels:

Marketing materials: contain more information about the benefit to the customer;
Website pages: hosts general information about sustainability that is relevant to all stakeholders;
Stakeholder’s information request response: answers specific questions;
Sustainability report: detailed information covering a specific period of time (usually every year or every few years) that is relevant to all stakeholders, comparable between reports, and covers significant sustainability issues for key stakeholders;
Annual financial report: includes financial data related to sustainability, reported in the manner applicable financial standards require, as well as information required to meet legal and regulatory requirements; and
Reports to satisfy legal and regulatory requirements: includes only the information that the reporting authority requires in accordance with its guidance.

Information might appear in one, some, or all channels. It is likely information will appear in various forms and formats in different presentation vehicles. For information addressing a single issue, there can be differences in the content’s breadth, depth, and level of detail. But in all cases, despite these variations, the meaning of the information conveyed should be consistent across all channels.

Match content to the primary channel audience

Many organizations use different channels to reach different audiences. Develop the content, format, and tone of your disclosure to meet the needs of the primary audience for each channel. The goal should be to make the information easy to find. Limit the content detail as appropriate for each particular vehicle. For example, a shareholder or potential investor might look at an organization’s website and annual financial report. He or she would not expect to find a breadth of information on the website, but expect more detail in the financial report on how sustainability activities affect financial condition.

Frameworks and standards

Reporting frameworks and standards have been developed to bring consistency and efficiency to sustainability reporting. Once selected, a framework or standard becomes the guidepost for developing content. It is important to understand the purpose of the chosen framework or standard and follow its requirements and recommendations closely. Looking at other reports that have been created using the same standard or framework can be very helpful.

The reporting process

Regardless of the format, framework, or standard selected to develop reporting content, you will need a process for managing the regular flow of sustainability information to each of the channels you use. You should document this process in your SMS so that everyone involved understands where, how, and when you disclose sustainability information.

In general, the process will include the following 10 basic steps:

Step 1: Identify all relevant data and other information, including related assumptions and qualifications.

Step 2: Determine which channels you will use and which information is significant for each channel based on who the primary audience is for a channel.

Step 3: Review, identify, and catalogue where information already exists so that you can make updates or add new disclosures for comparability.

Step 4: Determine who needs to be involved in content development and final disclosure decisions.

Step 5: Determine the approvals you need for what data and other information to include your publication and establish budget and timeline for each disclosure project.

Step 6: Gather, review, and analyze relevant data, identifying gaps and trends.

Step 7: Draft the content for each channel, focusing on structure, emphasis, and tone.

Step 8: Confirm that the information, as written, conforms to the general principles that guide sustainability reporting.

Step 9: Get approvals and verification, as needed, and publish.

Step 10: Solicit and respond to feedback.

By following and documenting these steps, you will be creating a solid process and internal controls for sustainability-related disclosure decisions. You should also gain insight into which communications channels and styles of communications work best for the different types of information you disclose. This process is a vital part of managing your sustainability program and its public representation.

Reporting principles

Despite the differences in sustainability reporting standards, some basic principles underlie them all. These common principles form the foundation for all formal sustainability reporting, regardless of the purpose, format, or target audience. As you develop sustainability content for a sustainability report, financial report, or integrated report, consider these principles.

Inclusiveness: The information presented should be based on your company’s understanding of and response to the expectations, needs, and concerns of a defined audience. Be clear about whose views you have considered in deciding what to present. Is the information significant to all stakeholders? Just investors? A particular customer?
Materiality: The report is comprehensive and balanced in its understanding and prioritization of sustainability issues. It is the product of a comprehensive and ongoing process that identifies and addresses the company’s most significant sustainability issues for each defined audience.
Completeness: The report includes significant economic, environmental, and social impacts, and enables the audience to assess your company’s performance.
Consistency: Use the same terminology to label initiatives (e.g., “sustainability,” “corporate responsibility,” “corporate social responsibility”) across all communications channels. Having consistent communications ensures clarity and also helps to align sustainability to your corporate identity. Be sure to share the same narrative in your sustainability report as you share in shareholder communications.
Repetition: After choosing a message that resonates with key stakeholders, tell your sustainability story across multiple platforms – through print, social media, and company website. But choose one medium (paper or electronic) and one central location to communicate the full set of information about sustainability efforts. You can link from there to other sustainability-related communications efforts.
Sustainability Context: Frame your company’s performance in a broader sustainability context whenever possible. The audience should have a sense of whether your contributions are proportional to the sustainability issues and problems you are addressing. The context should be defined at the appropriate level (sector, local, regional, or global) for a business of your size.

Public company reporting

In the US, public companies are subject to the reporting rules and regulations of the Securities and Exchange Commission (SEC). Some of these rules apply to sustainability-related information. Public companies whose stock is traded on one or more of the world’s stock exchanges often have additional, unique sustainability reporting requirements imposed by an exchange.

SEC reporting

The SEC requires all public companies to file an annual report, known as a 10-K, containing a detailed description of a company’s business and financial information. Companies must describe known trends, events, and risks that are reasonably likely to have a material impact on their financial condition or operating performance.

For SEC reporting purposes, information is considered material if there is “a substantial likelihood” that a “reasonable investor” when making an investment decision would view the information as “significantly alter[ing] the ‘total mix’ of information made available.” This definition is based on a Supreme Court decision, TSC Indus. v. Northway, Inc., 426 U.S. 438, 449 (1976).

The SEC has recognized that non-financial issues and risks, such as the impacts of climate change, may pose material risks to some companies. As a result, the SEC issued a Guidance Regarding Disclosure Related to Climate Change. As examples of non-financial issues related to climate change, the Guidance advises public companies to consider and report on any material issues and impacts arising from:

climate change related legislation and regulation
international agreements relating to climate change (e.g., the Paris Agreement)
legal, technological, political, and scientific developments regarding climate change, particularly indirect impacts such as changes in customer demand for products that may increase or decrease carbon emissions
the physical effects of climate change on business (e.g., severe weather, sea level rise, water availability)

The climate change guidance is based on existing, not new, SEC requirements. It is guidance on how to apply those requirements to important and emerging impacts of climate change on businesses. That does not mean that climate change is the only sustainability issue that rises to the level of public company reporting scrutiny.

In addition to assessing climate change impacts, public companies must assess impacts from other sustainability issues, just as they would any other company-related matters, to determine whether there is anything material to report on.

Key sustainability issues should be incorporated into existing company audit and controls mechanisms like any other issue with significant risk or opportunity being reviewed for possible inclusion in SEC reporting. Those with expert knowledge about key sustainability issues should guide and educate company managers and legal counsel who will decide whether the information related to those issues is material, decision-useful information that investors are entitled to have under the SEC’s general reporting requirements.

SASB’s sustainability reporting standards guide public companies

The Sustainability Accounting Standards Board (SASB) was created to help companies define which sustainability issues rise to the level of materiality that mandate reporting in SEC filings. SASB has developed a set of sustainability accounting standards for 79 specific industries in 10 sectors.

The standards call out the sustainability disclosure topics that are reasonably likely at an industry level to be material for SEC reporting, and to have material impacts on a company’s financial condition or operating performance. They are designed to highlight those sustainability issues that affect an entire industry; they may or may not be significant for every company in the industry.

The industry-based disclosure topics represent a good starting point for companies as they review relevant sustainability issues.

SASB also has an Implementation Guide to help public companies identify which sustainability topics are most likely to be material to investors, and to enhance their reporting processes for more effective reporting. The Guide’s “Five Factor Test” helps companies identify topics and issues that may present material risks or impacts to a company’s financial condition or operations. The factors include direct financial impacts and risks related to a company’s performance, and drivers, trends, and opportunities that could indirectly impact financial performance. Many of these concepts are incorporated into the framework of the Issue Assessments as well.

Stock Exchange initiatives

The world’s stock exchanges have also taken action to address and integrate important sustainability issues into their reporting structures:

The World Federation of Exchanges (WFE) launched two initiatives in 2014:
- Sustainability Working Group chaired by NASDAQ and made up of 25 stock exchanges. In late 2015, the group issued its Model Exchange Guidance and Recommendations on sustainability.
- The WFE Guidance & Recommendations identifies 34 key material sustainability performance indicators, including energy consumption, water management, CEO pay ratio, gender diversity, human rights, child and forced labor, temporary worker rate, corruption and anti-bribery, and tax transparency, in addition to other corporate policies.

The Sustainable Stock Exchanges Initiative (SSE) has published a number of helpful documents since its inception, including:

Reporting assurance

Sustainability reporting is often a complex process of collecting information from a variety of sources. The probability of errors like unsubstantiated claims, omission of vital information, data gaps, and inaccurate figures is a real concern.

Reporting assurance provides an independent measure of credibility. From the reporting company’s perspective, having a sustainability report reviewed and assessed by an independent third party can:

Increases accuracy, completeness, and reliability of the disclosed information
Increases recognition, trust, and credibility of the company
Provides increased transparency to suppliers, customers, and others in the value chain
Reduces risks associated with errors and omissions
Improves internal reporting and management systems
Improves communications with stakeholders

Reporting assurance is often performed by accounting firms (with experience in conducting assurance reviews of reported financial) or by consulting firms (with expertise in the substantive areas of disclosure in most sustainability reports).

Assurance standards

As with sustainability reporting, the external assurance process continues to evolve. No single standard for conducting an external assurance process has yet emerged. The GRI Standards specifically allow a “variety of approaches” for external assurance.

In practice, two standards have come to dominate:

The International Standard on Assurance Engagement (ISAE3000), developed by the International Auditing and Assurance Standards Board (IAASB). The ISAE3000 is a generic assurance standard that focuses on data collection and management processes and data quality. It is used by many accounting firms to provide assurance for integrated financial and sustainability reports.
The AA1000 Assurance Standard (AA1000AS), was developed by AccountAbility in response to stakeholder concerns about the narrow focus of the ISAE3000 standard. The AA1000AS is a standard for assessing whether a report is compliant with the AccountAbility’s Reporting Principles of materiality, completeness, and responsiveness.

Neither the GRI nor any other reporting framework currently requires assurance. And it is unlikely that assurance will become mandatory in the foreseeable future. That said, any assurance process is expected to adhere to certain common principles. The best example is from the GRI, which identifies six key qualities of an effective external assurance process. The assurance process for a GRI report must:

be conducted by an entity external to the organization, competent in both the subject matter and assurance practices;
be implemented in a manner that is systematic, documented, evidence based, and characterized by defined procedures;
assess whether the report provides a reasonable and balanced presentation of performance;
be performed by an entity able to reach and publish an independent and impartial conclusion on the report;
assess the extent to which the report preparer has applied the GRI Reporting Framework (including the Reporting Principles) in the course of reaching its conclusions; and
result in an opinion or set of conclusions that is publicly available in written form, and a statement from the assurance provider on their relationship to the report preparer.

A practical, iterative approach to assurance

The chief source of inaccurate information is the information collection process. Information is gathered from many sources throughout a company – from emails to phone calls and notes of meetings – often in a race against a ticking deadline for filing or publishing a report. Report assurance is a way of identifying trouble spots and making improvements to the process of data collection.

While assurance of an entire sustainability report is possible, it is often more practical to start with key aspects of a report. In fact, GRI encourages assurance for a reporter’s most material indicators, rather than the entire report. Approaching the process from this perspective encourages iterative expansion of the report contents subject to assurance.

Companies often begin with efforts such as internal review, or a self-audit, for the most material aspects of the sustainability report. They utilize existing company audit systems to verify and examine the documentation and execution of the processes used to collect the report data. This allows the company to make sure the data collection processes for these most material aspects are fully documented and followed before they turn them over to an independent third party for assurance. It lays a foundation for moving forward in confidence that the most important parts of the report are objectively credible. And it paves the way for eventual external assurance of the entire report.

Reporting assurance is growing

A 2014 report by GRI found that among the world’s largest companies, nearly half (45%) issue sustainability reports with external assurance (as of 2013), compared to just 38% in 2011. In the US, externally assured reports have been increasing steadily. In 2011, 10% of reports generated by US companies were externally assured; by 2013, this number had grown to 16%. As GRI noted in its 2014 report, “external assurance is a growing trend in the US. This trend is both expected and welcome.”

All indications are that this growth will continue. The increasing demand for reliable information is driving this growth trend. For example:

Stakeholders, particularly investors, require accurate information on which to base decisions. External assurance means that the information is comprehensive, credible, and comparable.
The move toward integrated reporting is also driving the push for higher quality data.
Reporting frameworks provide encouragement and reward. Both the GRI and the CDP encourage respondents to provide external assurance and give additional recognition to the companies that do.

Marketing & reporting content

Disclosure decisions

Because sustainability encompasses so many issues and business functions, disclosure decisions and information flows are often centralized to ensure consistency and transparency, while protecting competitive advantage and confidential or sensitive information. To avoid bottlenecks, companies that adopt a centralized system create robust processes to provide quick approvals for routine disclosures and properly funnel more complex disclosures, such as responses to customer requests or legal filings, for appropriate management-level approvals. Centralized, yet streamlined, decision-making enables the sustainability team to better allocate and manage reporting and marketing resources. The objective is to facilitate consistent, efficient, and effective communications with stakeholders to advance business relationships and reputation, without putting the organization at risk.

Audience focus

Know your audience! It’s a foundational concept in effective communications. You’ve identified the individuals whose support you will need. Now you need to understand each decision maker’s job responsibilities, interests, and concerns, and how those connect and align with sustainability. Why?

If you tailor your communications to address the needs of your audience, you will have greater success at motivating them to help you.

What’s In It For Me (WIIFM)?

When people don’t understand how their job function or their role in an organization connects to sustainability they often tune out. In business, everyone is focused on succeeding at work. If you understand someone’s job and job perspective, you can figure out what aspects of sustainability will help that person succeed at work.

Even those who have a personal interest in sustainability topics may not get behind your sustainability program without understanding how it will advance business objectives. From a business perspective, it’s not selfish to want to know, “What’s In It For Me?” It’s more about competing for the most precious resources: time and money. Being able to connect sustainability initiatives to good business is critical. Sustainability is about helping people within the organization manage risks better and create value.

When you answer the WIIFM question, you generate genuine commitment to getting sustainability work done. Helping people understand why they should care about sustainability requires preparation, asking smart questions, and being a good listener. When you take time to listen to a person’s business focus and explain how that relates to sustainability work, your potential for achieving a sustainability “ah ha” moment goes way up. Developing targeted information will give your audience compelling reasons to say yes to you. A thoughtful plan for engaging key decision-makers is critical to your success.

Information feedback loops

Information feedback loops (IFLs) provide vital information about how sustainability activity or inaction is viewed by stakeholders. Without that information, a company operates at a serious disadvantage and cannot fully understand how it is influencing its stakeholders – whether positively or negatively.

Getting good feedback is not always easy. It requires focused effort to determine who your key stakeholders are, define and open effective channels of communications, and build trust that efforts to provide feedback is worthwhile and valued.

Examples of Internal Information Feedback Loops and their benefits

All organizations have two “operating systems” that are often referred to as command and control system and adaptive, or hierarchical and networked. Each of these systems requires and provides different flows of information to operate. The success of a sustainability program often depends on knowing when to use each system and being able to effectively tap into and use the information channels associated with each system.

IFLs at the adaptive operating system level are great for pilot projects, using communications about trial and error to vet the best solutions for problems. In this kind of networked IFL, groups are closely connected and communicate across silos. They benefit from the experiences of others and work towards better solutions. Creating internal networks among employees who might otherwise not know of or be able to connect allows people to see what others are doing. It is an effective way to cull cross-functional organizational intelligence. It enables mid-level managers to get things right before proposing larger scale commitments that require significant resources.

IFLs at the command and control operating system level are most effective at scaling and efficiently executing programs. These hierarchical networks are more risk adverse and require program validation before being set in motion. Once buy-in is established, get out of the way! But also understand that if problems arise, a project can be halted just as quickly.

Examples of External IFLs and their benefits

It is also important for stakeholders outside the organization to provide input. The opinions and feedback given by external stakeholders have value. They provide insight from various perspectives and can help improve a sustainability program. To develop external IFLs, identify key external stakeholders and understand their needs and expectations. The type of external communication will depend on the stakeholder, but there are two main forms of communication – general public outreach and directed individual contact.

For some stakeholders, providing general ways to contact the organization (e.g., grievance hotlines, brochures with a company contact or suggestion boxes) gives them a specific place to communicate with the company. For other stakeholders, more intimate and personal IFLs should be set up, such as one-on-one meetings or direct contact that provides an opportunity for two-way conversations. This can include inviting stakeholders to participate in a materiality assessment survey or goal setting meetings or setting up periodic touch-base conversations.

Regardless of how the sustainability program utilizes external IFLs, it is critical that all stakeholders feel heard. Whether someone takes the time to call a grievance hotline or participate in a survey, the organization needs to make sure the stakeholder’s opinion is respected and heard, whether or not leadership agrees. This can be done by sending responses to calls and emails, and by acknowledging and thanking any stakeholder who participates in the sustainability program.

Why invest in building information feedback loops?

IFLs need time and resources to get established and stay maintained. Once set up, IFLs repay that investment through the benefits and advantages they provide.

Organizational efficiency and productivity improve because employees share best practices and receive prompt feedback. Employees are able to leverage each other’s knowledge and connect to and collaborate with colleagues outside an employee’s immediate work group. Connected employees are able to build relationships and trust with one another and the organization. This empowers employees and increases their organizational loyalty.

Trustworthy relationships are not only built internally among employees, but with external stakeholders. The two-way communication channel created by IFLs allows for stakeholders to receive information, analyze it, and respond with their opinions in an effective manner. Stakeholder trust increases since information is coming directly from the organization, with a clear way to respond.

With open channels of communication, organizations are able to receive feedback from a diverse crowd. This brings together disparate views and ideas and increases the likelihood of finding the best solutions. Better solutions can create competitive advantage.

How to create effective IFLs

IFLs are used to build the network of advocates and communicators a sustainability team needs to succeed. When creating and utilizing IFLs, be sure to welcome and encourage ideas so that stakeholders feel welcome to share their thoughts and ideas. But also take the time to educate and shape requests for feedback. Time spent framing sustainability concepts and issues, and clearly defining the parameters of communications, will go a long way toward ensuring feedback is and remains relevant and useful.

For internal IFLs, sustainability teams need to establish strong connections with business experts, sustainability champions, and decision makers or influencers. Identify and incorporate key individuals that are subject matter experts in areas of operations that have the greatest implications for sustainability work. Seek these people out and ask for input and advice; ask for commitments to keep sustainability managers in the loop about business decisions that affect the sustainability program and goals. Include these key employees in the Knowledge Base, then define the ways to communicate with and tap into the Knowledge Base.

Find sustainability champions and create ways for them to self-identify and engage. Connect them to the Knowledge Base network through issue assessment and project identification work and use those work-based IFLs to identify and build connections to people who have leverage within the organization. Build and use all of these internal IFLs to get buy-in for the business case for sustainability and help identify key leverage points within the organization for developing broader stakeholder engagement and feedback.

Existing communication channels to connect with external stakeholders may range from basic one-way processes to complex two-way frameworks. The ability to connect may vary from a highly restricted approval process to open access. After identifying the key external stakeholders whose feedback is important to the sustainability program and the desired means of communicating with them, the sustainability team will need evaluate and work to reframe any existing communications limitations. Having good IFLs with a solid internal stakeholder network is often foundational to overcoming these types of limitations on direct communications with external stakeholders.

Feedback loops are an instrumental tool for managers to stay abreast of information and viewpoints both within and outside the organization. In short, don’t wait until reporting season to gather information. To be effective, create and activate IFLs for regular and ongoing two-way communications with stakeholders.

Seeking stakeholder input

External engagement

Many organizations do not start with direct engagement with external stakeholders on sustainability issues. Instead, they get feedback from employees who connect on the job with key external stakeholders. This method of gathering external stakeholder views has a dual benefit. It provides an opportunity to educate internal representatives about sustainability. And it is a safe way to test the water for external stakeholder views on sustainability issues.

This is a good start. It prepares employees for direct conversations. And it reveals issues that stakeholders care enough about to have mentioned with little or no prompting. But sometimes employees say they are not hearing anything about sustainability from their external stakeholders. Beware that a lack of expressed concerns by external stakeholders to their business contacts may only indicate that the right questions have not yet been asked. It does not mean external stakeholders do not care about sustainability issues related to your organization or industry.

There are other ways to conserve resources on stakeholder engagement. You can begin by incorporating questions about sustainability issues into existing communication channels. Are you already doing customer surveys or one-on-one meetings with investors, suppliers, and other stakeholders? Just add a few questions or a short discussion about the stakeholder’s views on sustainability issues. Focus on the sustainability issues where you have the greatest impacts and risks to further conserve time and resources. Take the time to highlight how each key sustainability issue relates to your organization or industry. This will focus the question or discussion and generate higher quality feedback.

When you narrow your list of important sustainability issues and get better at discussing how those issues relate to your business, you can expand your engagement activities. For example, once you have identified projects in key areas, reach out to knowledgeable stakeholders to tap into their experience in those areas. Look for and seek advice from stakeholders with expertise in areas where you have yet to venture. Share your experiences with stakeholders who might benefit. These types of outreach will make your program more collaborative. You will ease into more engaging and fruitful two-way communications. Building relationships with stakeholders in this way often creates an environment where innovation and new partnerships can thrive.

As a sustainability program matures, engagement on sustainability issues between a company and its stakeholders usually get easier. If you are committed to continuous improvement, these conversations will deepen and produce greater benefits for all.

Internal engagement

It can be challenging to get internal stakeholders to focus on a broad array of sustainability issues. This is particularly true with busy company executives and senior managers. Yet those are the people who are key to the success of sustainability initiatives.

Often there is a disconnect because of a lack of knowledge about sustainability issues. Greater resistance from managers makes solid sustainability education even more essential. But how do you fix that? A good place to start is with the Issue Selection education. This lays a foundation for bringing people into the issue assessment process. Develop internal sustainability experts. They will be able to help others connect their work to sustainability issues. Create a story about how key sustainability issues relate to your business. By doing so you’ll have a better chance of getting support from internal players for the long term.

Start with sustainability issues that are most obvious for your company. As you build support for work in those areas, branch out to conversations about the next tier of impacts and possible risks. Ask about the internal stakeholder’s work or role, and explore whether there are connections to sustainability issues based on your knowledge of an issue. Don’t worry about perfection. Sustainability is a journey. You cannot do all the work in one year. You have time to improve knowledge of sustainability issues and understanding of organizational impacts and risks.

Materiality assessment

Defining the materiality of sustainability issues is an important component of building an effective program. A materiality assessment helps your organization identify and focus on issues that really matter to everyone with a significant ability to influence the success of the business. It helps avoid getting distracted by issues that don’t rise to the top during the assessment process. When doing a materiality assessment, you want to gather input on the fullest range of sustainability issues possible and gradually narrow the focus by looking at what matters to stakeholders, as compared to what management thinks is most important.

Here are the key benefits of conducting a materiality assessment:

Focus – directs where to spend time and limited resources
Credibility – provides a rationale for strategy; is becoming the global standard for reporting
Efficiency – reduces wasted time/resources
Transparency – builds relationships and trust with stakeholders
Risk Management – identifies and prioritizes problem areas, including many of which the organization was not previously aware

A materiality assessment can and should inform strategy development and reporting.

It provides insight from stakeholders about the importance of the relevant sustainability issues you have identified. This perspective helps you have broader insights into the most important issues for stakeholders. Reporting and strategy development both benefit from stakeholder involvement and one materiality assessment can be used for both purposes. Keep in mind that reporting and strategy are not the same. Deciding what issues to focus on in your strategy (forward-looking) is very different from deciding what to disclose in your sustainability report (backward-looking). For that reason, the topics prioritized and the stakeholders contacted may be different.

Timing for a materiality assessment

Materiality assessments often vary in scope depending on where a company is in its sustainability journey. Most companies start with a limited process and work up to a fuller process over time.

When you are just beginning to understand and test the process, you should consider doing an assessment annually. The time in between assessments should be used to build pathways for better and broader engagement. It should also be used to expand knowledge of sustainability issues and how they might affect your organization.

As companies become more adept at doing materiality assessments, many shift to doing them every two to three years. The level and breadth of insight and perspective gained in the assessment supports deep understanding. Meaningful work can be laid out for a longer period of time. For companies at this stage in their sustainability journey, stakeholder communications continue through the interim period and a watchful attention is present so that emerging issues still surface.

Resources

Reporting trends

According to a 2015 study from the Governance and Accountability Institute, the percentage of S&P 500 Index companies reporting on ESG performance increased 61% between 2011-2014; 81% of these companies now report on sustainability performance. The graph below shows the growth in sustainability reporting over time.

While sustainability reporting has expanded dramatically over few decades, it is still in the early stages of sorting out what constitutes best practices. Several frameworks have evolved and attempt to bring order and standardization to sustainability reporting.The most common is the Global Reporting Initiative (GRI).

Efforts are also underway to integrate sustainability reporting with financial reporting. The prime mover in this area is the International Integrated Reporting Council (IIRC). The IIRC has developed an Integrated Reporting tool to align allocation of capital with sustainable behaviors.

The European Parliament passed a law in 2014 that requires all publicly traded companies with more than 500 employees to include sustainability factors as part of their annual financial reporting process. The law is ushering in a new era of business transparency and accountability. Because the law incorporates supply chain reporting, many U.S. companies will have to provide some reporting to do business in Europe.

This increasing stakeholder demand for sustainability information is not limited to large companies. In fact, many large companies are demanding sustainability information from their suppliers. They can often better manage their impacts and risks by requiring change within their supply chain. These types of realizations are causing more and more key stakeholders – employees, investors, partners, and customers – to expect businesses of all sizes to report on economic, social, and environmental sustainability.

Reporting frameworks

A variety of organizations assist sustainability efforts with reporting frameworks, standards, and guidelines. These systems promote consistency in the reporting processes. Some of these frameworks and standards focus on a specific target audience, such as investors. Others focus on particular subject areas, such as environmental impacts.

Here is an overview of the most widely recognized reporting systems.

GRI Standards

The GRI Standards framework is the globally recognized “gold standard” for sustainability reporting. When investors pressure companies to report, they most often request reporting using the GRI framework.
The Standards cover all sustainability topics. They include both general reporting guidelines for all companies, and industry-specific guidance.
In their sustainability reports, companies include an index of the Standards disclosures, with information showing which ones they are reporting on. They then link the index to the places in the sustainability report where the reported information is located. This allows companies to organize their sustainability report any way that makes sense for the company, while still making it quick and easy for the reader to find Standards-related content using the index links.
The reporting structure enables year over year analysis and easy comparison of reports from different companies.
The GRI reporting framework promotes collection and analysis of key stakeholder views on relevant sustainability issues to determine what is important to report on.

UNGC’s Communication on Progress (COP)

Launched in 2000, the United Nations Global Compact (UNGC) is the largest corporate sustainability initiative in the world, with over 12,000 signatories based in 170 countries. The signatory organizations represent nearly every sector and size.
UNGC signatories are required to produce an annual Communication on Progress (COP) to report their progress on embedding sustainability into their business strategy and operations.
The minimum requirements for an annual COP are:

A statement by the chief executive expressing continued support for the UNGC and renewing the participant organization’s ongoing commitment to the initiative.
A description of actions the company has taken or plans to take to implement the Ten Principles in each of the four areas covered in the compact: human rights, labor, environment, and anti-corruption.
A measurement of outcomes during the reporting period.

IIRC’s Integrated Reporting Framework

The Integrated Reporting Framework is on the leading edge of the reporting industry. It supports the growing interest in integrating financial and non-financial reporting.
The framework includes guidance for how publicly traded companies can integrate sustainability into their annual reports so that the public can understand the value of sustainability initiatives and can effectively compare one company to another.
Under this framework, the investor’s perspective on a wide range of stakeholder issues is at the heart of determining what is important to include in an integrated report.

CDP’s Disclosure Questionnaire Framework

Through a variety of questionnaires, CDP collects information from the world’s largest companies about their risks, opportunities, and performance relating to climate change, supply chain, water management, and forest-risk impacts.
The collected information is disclosed and available for use by investors, purchasers, governmental bodies, and the public. CDP acts as a middleman, facilitating the reporting process and hosting report disclosures for companies that provide information.

Frameworks working together

Many companies find it challenging to choose and navigate across reporting frameworks and guidelines. In an effort to identify commonalities among frameworks, many of the world’s most prominent organizations in sustainability reporting are working to help companies understand where the various frameworks and standards intersect. This initiative, known as The Corporate Reporting Dialogue, promotes greater coherence, consistency, and comparability among corporate reporting frameworks, standards, and related requirements.

The Corporate Reporting Dialogue aims to:

Communicate about the direction, content, and ongoing development of reporting frameworks, standards, and related requirements.
Identify practical means by which frameworks, standards, and related requirements can be aligned and rationalized.
Share information and express a common voice on areas of mutual interest, where possible, to engage key regulators.

The Corporate Reporting Dialogue has issued a guidance document to help organizations focus on what drives sustainability value creation and performance.

Resources

The Reporting Exchange

Transparency

People are paying more attention to sustainability in deciding what to buy, where to work, and how to invest. As a result, they are seeking more information about sustainability efforts on product labels, websites, and via social media. For example, customers are increasingly demanding greater transparency about the origin of product components and ingredients. They are also sharing more information with each other through social media.

These market pressures influence companies to be more open and transparent about their social and environmental impacts. A growing number of organizations are “getting the message” and have started giving stakeholders the information they want.

What’s driving the push for greater transparency?

Consumers:

96% have a more positive view of companies who engage in CSR
A majority believe business has a responsibility to society
71% influence each other via social media and word of mouth

Employees:

A majority want to work for employers who make the world a better place
Younger generations in particular want their companies to be good corporate citizens

Investors:

929% increase between 1995-2014 in the U.S. sustainable and responsible investing (SRI) market
SRI accounts for about 18% of total assets under management in the US
Growth in the number of money managers incorporating consideration of ESG issues
Increasing number of sustainability-related shareholder resolutions in the US

Reporting:

68% of the largest 100 companies are now reporting through GRI
47.7% average annual growth in customers using Bloomberg ESG data

What does this means for business?

Being transparent requires a decision about what information to include and what to leave out. There is such a thing as too much information. The focus should be on communicating sustainability data that is most relevant to the core operations and objectives of the business.

You should always evaluate the level of transparency your company is ready for. This is about deciding what information to disclose publicly, not whether or not to speak the truth or be misleading. If you can’t or are not ready to meet the criteria of reliability, accuracy, and completeness, you should not be talking or writing about the subject at all. If the information relates to potential legal liability or company trade secrets, disclosure of any sort should be a management and legal decision.

It’s not always easy communicating sustainability performance to stakeholders. If you disclose too little, you may be accused of not doing enough. If you disclose too much, or worse, stretch the truth, you may be criticized of greenwashing. In today’s digital environment, companies unable to provide trustworthy, accurate information about sustainability claims face a swift and potentially brutal, reputation-damaging backlash. That said, it’s important to understand how transparency can be a benefit, rather than a burden, for your company.

Transparency adds credibility to your sustainability program. It helps your organization move beyond compliance and towards a more value-creating approach. It fosters trust and accountability. It helps you meet and exceed customer expectations. It puts you one step ahead of less sustainable competitors. It reassures company stakeholders that publicly disclosed data is reliable and based on a full consideration of sustainability risks and opportunities. In short, it provides stakeholders with open and accurate information about whether and how your company is walking the talk.

Messaging

Clear, frequent, and meaningful communication is crucial to build support for sustainability among stakeholders.

These days, people are bombarded with loads of information. Only consistent and emotionally resonant messages are able to break through the clutter. Everything else generally goes in one ear and out the other.

Effective communication involves persuasion and motivation. The first step to getting peoples’ attention is to connect sustainability to things they care about.

Messaging for employees should provide a clear idea of what sustainability is, why it’s important, how it will impact them, and what they can do to get involved. Messaging for external stakeholders should focus on what the organization is doing to become sustainable and the progress it has made to achieve sustainability goals.

Transparency and credibility are crucial aspects of sustainability messaging. In our media environment, companies are held to a higher standard and more scrutinized than ever before. The last thing you want is to be accused of greenwashing. To avoid this, make sure you can back-up your sustainability claims.

Sharing your sustainability story

When you engage your audience in a genuine dialogue around sustainability it can spark a contagious call to action. Well-crafted messages and an inspiring vision give people the language to share your sustainability story – both within and beyond the company.

Tips for sustainability messaging:

Understand the audience
Frame your message wisely
Be specific and keep it simple
Create memorable taglines, slogans and logos
Use symbols, heroes, and stories
Keep it fresh and have fun
Be interactive and inclusive
Highlight successes
Be honest, transparent, and authentic

Communications channels

Digital technology and social media have transformed the communications landscape. There are now many communication channels through which to reach stakeholders – and for stakeholders to talk to and about a company.

What was once a one-way, narrow dissemination of information through newsletters, press releases, and the like is now more often a dynamic two-way, transparent process of dialogue and engagement between a company and its stakeholders.

For external communications, consider the following channels:

Company website
Blogs
Webinars and Videos
Press releases
Newsletters
Reports
Public documents for compliance
Face-to-face meetings

For internal communications, consider these channels:

Company intranet and microsites
Email
Presentations
Training Programs
Face-to-face meetings

You can probably think of more! The expansion of communication channels brings with it positives and negatives:

Communications via social media (e.g., Facebook, Twitter, Pinterist, Google+) provide a quick and easy way to segment audience and share goals, experiences, and success stories.
Stories that once might have withered and died in a one-day print media news cycle, can go viral in a matter of hours over the Internet.
Companies can start out on a particular channel, but can no longer control where content ends up.
Communications can quickly cross-pollinate and propagate across multiple channels.

Because of digital technology and social media, external stakeholders have much greater influence over and access to communications from and about a company. This makes it more important now than ever to make sure communications are well informed, accurate, and consistent regardless of the initial channel you choose. Whether you want to be transparent or not, transparency is often a market outcome of modern-day communications.

All channel choices matter

The channel often defines the scope and tone of the communication. It should not cause you to vary your standards for the accuracy, validity, and credibility of the sustainability information you communicate.

Content should be appropriate for and tailored to the channel. When selecting a channel, you will want to think about the purpose of the communication. You will also need to think about your audience and what is the best way to reach them. Do you want to inform customers about a new product or service? Engage with stakeholders about a new initiative? Get feedback from employees? Your objective should help determine whether you communicate with your intended audience via tweets, a sustainability report, email, or other medium. It will also guide the type and amount of information.

There is such a thing as too much information. This underscores the importance of carefully selecting the appropriate information for a particular communication channel.

Be sure to always confirm the accuracy, validity, and credibility of the sustainability claims you make. Otherwise you are at risk of being accused of greenwashing. This means you must carefully consider ALL content. Don’t make the mistake of assuming that because the information is on your website that it’s in a “safe zone”. Any marketing claim about the environmental attributes of products or services are subject to FTC Green Guides principles.

The bottom line: fact check the validity of your sustainability claims before communicating to stakeholders through any communication channels.

Throughout Sustrana education, you’ll find information about communications with various stakeholders. It’s important for you to explore these areas before developing content and choosing a communication channel.