A Mindset for Sustainability – Five Accounting Principles for Successful Reporting

Reporting on your environmental impact and sustainability initiatives can be a daunting exercise when you are a large and global enterprise. In effect, the greater your economic reach, the larger your governance portfolio, and subsequently the more pronounced – and more complicated – your impact on the environment and society.  

However, despite the intrinsic workload that comes with creating a sustainability report, a consolidated disclosure of organizational impact has in the past 30 years boiled down to a near scientific process. Not surprisingly, this has also correlated with an increased uptake of sustainability reporting frameworks and guidelines throughout global markets. 

Once relatively straightforward narratives, the business sustainability and social accountability reporting processes of the early 1980s have charted a steady and thorough path of development and improvement: Corporate Social Responsibility (CSR) is now a well-integrated business strategy taught in prominent MBA programs; greenhouse gas (GHG) accounting is the de facto validation tool used for maintaining the urgent 1.5C pathway; and, since 2019, triple bottom line (TBL) reporting as a consensus-based business model has eclipsed financial-only reporting at over 93% of the largest 250 companies in the world.   

In the last 30 years, if relevance and comprehensiveness has been the goalpost for success, the Global Reporting Initiative (GRI)’s Sustainability Reporting Standard has outpaced all other reporting frameworks. The GRI Standard was launched in 2000 with the goal to standardize sustainability reporting for organizations globally. Several revisions later, the Standard continues to gain popularity, having ironed out many technical concerns with the diligence of annual steering committees and stakeholder workshops. Moreover, it is inherently compatible with other reporting tools such as the Greenhouse Gas Protocol and the ISO standards. The resulting synergy works to enhance content credibility and accuracy. 

However, despite the increased prevalence of CSR strategies and sustainability accounting in companies worldwide, organizations are increasingly learning that any attempt towards disclosure that is relevant, transparent, and contextual, can be a journey that starts out with an ambitious outlook but can end up delivering mediocrity when gauged for its sustainability across the TBL. 

When it comes to reporting best practices, the following five principles are based on a decades-worth of dialogue and research on good CSR reporting methodologies, and can enable organizations to not only stay on the sustainability pathway but also, as a direct consequence, leverage the important business case for sustainable development. For all intents, this is what sustainability reporting is really all about: 

  1. Integrate Organizational Values with your Sustainability Report, and Vice Versa: The exponential uptake of sustainability reporting across organizations (big and small) is an evaluation of the value of accounting and the business case for sustainability. Corporations and organizations recognize the benefit of this exercise, but too often the goal of building a massive or even comprehensive report preempts the opportunity to recalibrate organizational values based on ideas and lessons learned. While closely following a reporting framework or guideline, it can be simplistically easy for entities to turn their sustainability reporting exercise into a checklist of tasks and to-do lists. And this process naturally culminates when publication and marketing take over as priority tasks within the project.
    When done right, it is the perspectives generated through the reporting process that can translate into new sustainability strategies and performance indicators for integration into an existing business model. It goes without saying that organizations and companies must make sustainability accounting and reporting an integral part of their working model/business agenda. This article is premised on the assumption all entities report on their TBL/CSR efforts annually.
  2. An Engagement Plan Builds Core Strength: Team members work hard to bring a sustainability report to fruition. However, every report is the culmination of an extensive outreach exercise that draws on several mediums of exchange including emails, phone calls, as well as small and large-scale stakeholder meetings and conferences. Many encounters are made with important stakeholders throughout the reporting process. A practical, thought-out communication/engagement plan can make the difference between well-articulated expectations, increased trust, and stakeholder accountability on the one hand, and the absence of direction and cohesion on the other side, when there is no plan. This is not very different from the risk-reduction approach prescribed by most project management platforms.
    From the outset, an engagement plan maps the vision and criteria for stakeholder communication efforts, and then focuses on the mechanisms that will be used to engage with identified and prioritized stakeholders. When the plan is well formulated, the reporting team can immediately flag any inequity in stakeholder contribution before the engagement process even begins. The subsequent correction can potentially avert future tension and enable teams to stay on track. 
  3. Stakeholder Diversity Can Take a Report from Good to Great: This is not as much about quantity over quality as it is about not missing out on expertise and the richness of perspective that comes with a wider spectrum of voices. A diverse internal stakeholder committee can generate valuable feedback that can break invisible barriers to organizational improvement. Moreover, inclusivity can earn the vital commitment needed from staff members to genuinely raise the bar of responsibility and environmental stewardship.
    Additionally, it is also advisable not to rush through the materiality exercises that form the basis of many reports. Good facilitation skills, which encourage discussion, are essential for gaining depth of knowledge and for tapping into ideas and solutions that can greatly contribute to an organization’s ethos, even though these ideas may not make it into the report itself. 
  4. Outlaw Discretionary Disclosures: A perceived bias in a sustainability report can raze down credibility and trust like a forest-fire can wipe out ecosystems that have taken years to establish. Biases that readers typically recognize come in the form of blatant omissions, such as not reporting on environmental and social culprits in the organization’s supply chain, or not revealing a company’s economic value. While entities would prefer not to damage their reputation, or want to protect themselves from market scrutiny, research shows that the benefits of transparency in defining and discussing trends and strategic responses, largely, outweigh the risks.
    Following the criteria of open reporting on its TBL often leverages company reputation, motivates employees and investors, and signals to the market the intent and competitiveness in redirecting goals and targets for better corporate/organizational processes.
    The damage that can result from discretionary disclosure in one criterion often cannot be compensated with more information provided towards other sustainability criteria. A prominent way to prevent this from happening ties in with the first principle: organizations must readily adopt environment and social management systems/guidelines to enhance their social and environmental responsibility. The ISO Standards provide useful tools that can be adopted to achieve that goal.  
  5. Keep Your Report Alive till the Next Edition: Once a report is completed, the core reporting team – and the organization – can either rest on their laurels, or can keep the buzz alive by continuing the conversation through strategic meetings and storytelling activities. At tech-giant Intel Corporation, after the release of their sustainability report, employees who have worked on the project periodically upload background stories on the company blog, which are also then promoted on social media.
    Providing an accessible platform where employees and stakeholders share their stories keeps the momentum for dialogue going, and ensures implementation of sustainability initiatives while carving out the structure for the next, and more improved, sustainability report.

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This article is written by Tara Tariq, Business Development Officer, Emirates Green Building Council