Sustainability Reporting Process - Small and Medium Enterprises
Sustainability Reporting Process - Small and Medium Enterprises
All organisations, together with their customers, suppliers and other stakeholders, can have both positive or negative impacts on the environment, economy, their people and the greater community, including impacting individual human rights.
A sustainability report provides an opportunity for an organisation to transparently share how it integrates sustainable development into it’s business strategy, and the progress currently being made in improving different elements of the business, including accountability to all stakeholders.
While there may be external pressure from investors and the community to prepare and publish a sustainability report, the greatest beneficiary of the report will be the organisation as it continues to identify areas for financial improvement and value creation. Both risks and opportunities identified as part of this process may be the basis of the future growth of the organisation.
The continual improvement assists in building an improved organisational culture, where everyone is working towards shared goals.
So, where to start? The following steps may provide some direction:
Step 1 Get the Go Ahead
The Board and senior management must be behind the organisations’ sustainability program - if not, they will not value the time and financial resources required to generate a meaningful outcome.
Ideally, a senior manager will sit on the committee and the committee will report either directly to the Board, or to one of the Board committees (for example, Audit, Finance and Risk Committee).
Step 2 Build Your Team
No one person has all of the sustainability answers for your organisation – you need to build a team of interested individuals to guide the organisation’s sustainability journey.
Apart from management and employees, who are the key stakeholders who are impacted by the activities of the organization – employees, customers, suppliers, the community? Building a multi-stakeholder sustainability committee, with internal and external stakeholders, may provide a more diverse view of the impact issues, as well as suggestions for opportunities to resolve them.
Step 3 Identify the Organisation’s most Important Impacts
Impacts are simply the effect an organisation has on the economy, environment and people/society, and identifies the most important sustainability areas a business needs to focus on. Impacts can be positive or negative, short term or long term, intended or unintended and reversible or irreversible.
Impacts may be inter-related – improvements in one area may be at the expense of another without careful planning and consideration.
There may be a significant number of areas that the organisation needs to focus on to improve it's overall sustainability, but the committee may initially choose to select 5 – 10 of the most important areas where they can make some meaningful change, with additional impacts added over time as improvements are made to previously identified impacts.
Step 4 Determine the Current State of Play
In relation to the material impact topics chosen, what is the company’s current position? What data do you already hold, or can be easily collected and collated, so that it can be used as a base line to measure future success (including supplier data such as usage of electricity, fuel, waste removal etc)?
This may be the time that you seek a software solution to enable simple reporting of initial and future results.
Are there already processes and programs in place that are assisting in mitigating negative impacts, or improving positive impacts? Can these be further developed and enhanced?
Step 5 Identify the Organisation’s Material Impact Gaps
What significant impacts need new programs to assist the organization to achieve it’s sustainability goals? Any program for improvement should aim to prevent and mitigate negative impacts currently being created, and work towards generating a neutral or positive outcome.
For example, if reduction in workplace injuries is identified as a significant impact, re-education for every existing employee and contractor about safe work practices for the industry, and additional training within the induction module for new employees and contractors, could be some initial steps taken to improve this impact.
Similarly, if concerns about the safety of employee, client and supplier personal information held by the organisation is a significant impact, it may be that additional cyber training, and limitations on unauthorised access, that may reduce the chance of a negative event.
The committee should regularly report their initiatives for change and the results they aim to achieve, so that the whole organisation is on board to assist in meeting the identified sustainability objectives.
Step 6 Implement and Measure Impacts
For each existing program, and for new programs that are to be developed, cement the baseline data results and measure the organisation’s improvements over time.
Timely project planning and implementation is the first step in achieving a changed outcome.
Collecting accurate and relevant data will support all public and private statements made in relation to the organsiation achieving it’s sustainability objectives, and ideally the data will be attached to the resulting sustainability report to ensure transparency.
Step 7 Prepare your Sustainability Report
Build on previous reports, discussing both the organisations’ successes and the material topics that are still a work in progress, and be clear and honest about the results achieved at each balance date.
Disclosing supporting data will assist in answering stakeholder questions and show improvements made over time.
An organisation needs to consider the needs of all readers of their sustainability reports, and the formatting, including use of pictures, tables and limiting reams of text, may improve a readers understanding of the results being presented.
It may also be valuable to review sustainability reports prepared by other organisations in the same or similar industries, to identify the ease of use/readability, as well as the key impacts identified that may be relevant to your organisation in the future.
Step 8 Continue the Process and Progress Further
Sustainability improvement is a continual process – the is no perfect, sustainable organization and constant improvements in technology and work practices provide opportunities for leading businesses make further improvements that will be added to their bottom line.
Each new annual sustainability report prepared should be an improvement on the last, based on the additional experience of the committee, the impact of programs designed and implemented, and improvements in the organisational culture over time.
There may be new opportunities to collect data that is not current being collected, whether via specific sustainability software, or from external sources. As an organisation grows and evolves, there will be new impacts that need to be considered and (if negative) mitigated or avoided.
Following these steps will enable an organisation to commence their sustainability journey, resulting in their annual sustainability report.
Reports should be aligned with financial years for ease of comparison, and for future integration into the organisations’ Annual Report to stakeholders.
An organisation may need to incur some additional costs as part of their sustainability journey, with the view to these being recouped from the overall improvements in the organisations’ performance over time. It could be very beneficial for an organisation to engage an experienced consultant, for not only the preparation of the final report, but for guiding the committee and providing examples of what other organisation’s have implemented - leveraging off other’s experience.
16 January 2023
