Entering the SmartReport era

(This post was first published in Triple Pundit. For information on how Framework LLC can support your transition to GRI G4, please see our related services.)

As sustainability reporting has gone from vanguard to mainstay over the past decade, sustainability professionals have struggled with the question of who actually wades through the reams of data that comprise a typical report—especially one developed to the highest GRI Application Levels.

The most feared of the possible answers? That a handful of specialist readers—perhaps mostly sustainability consultants—might be the only dedicated consumers of this information. The specter of investing months of work only to reach such a narrow readership can be dispiriting to Chief Sustainability Officers and sustainability teams and add to the challenges of advocating for budgets and resources.

Now, it’s clear that while limited, the primary audience for sustainability reporting can also be an influential one that includes ratings and rankings organizations, aggregators of data for investors, and NGOs deciding what stance to take on companies and industries. However, there’s no question that we can do better in extending the reach of sustainability communications and capitalizing on the investment they represent.

Fortunately, the latest evolution of standards in the reporting field can be leveraged on both of these fronts.

With the advent of the GRI G4 guidelines and their emphasis on developing reports that contain only information that truly matters to a company and its stakeholders, a new opportunity is emerging to experiment with concise, targeted, and meaningful disclosure: in a word, smart reporting.

Smart reporting zeroes in on those few issues that matter most. Rather than trudging through endless and rote narratives to fulfill the requirements of GRI G3 disclosures on management approach (DMAs) and dutifully checking off indicators from each GRI category (whether meaningful or not), G4 frees companies to envision a new approach to disclosure.

Central to smart reporting is the new ability to succinctly identify “material” issues and then limit disclosure to only those issues and related indicators while remaining in compliance with GRI guidelines. Rather than broad coverage of everything under the sun, companies can instead devote valuable page space to deeper, more thoughtful, and more relevant disclosure. More concise and targeted disclosure lends itself to expanding readership and garnering greater attention from key stakeholders.

Smart reporting may seem like a laudable and desirable goal in and of itself. But wait: smart reporting is not—repeat, not—the actual prize. What’s truly at stake with materiality-based disclosure is the opportunity to transition into a way of operating that fully embeds and integrates sustainability considerations into the business. Every day. Every decision.

We’ve seen it in action. With nearly a decade’s worth of research, development, and implementation under our belts, my colleagues at Framework LLC and I have witnessed firsthand how a focus on materiality can become the bridge connecting sustainability to strategic planning and risk management within the corporate structure.

In fact, the process of conducting a materiality analysis has consistently been one of the most successful ways we’ve helped shift attention to sustainability as a business imperative rather than a “nice to have.” A materiality matrix showing issues such as “competitiveness”, “business continuity”, and “talent management” quickly catches the eye of senior management as being critically relevant to core business operations and company-wide objectives and priorities.

And that’s the point.

Sustainability is not separate from business strategy. Business strategy inherently encompasses issues and topics that may come up as material, such as resource availability, employee skills development, governance and remuneration, and supply chain viability, to name a few. These issues not only have financial impacts, but also encompass environmental, social, and economic repercussions.

Making that connection—bridging that disconnect—may well be the most important outcome of adopting this new approach to reporting. Leveraging this moment of transition in GRI standards to reinvent your reporting, strengthen management consensus, and energize your team? Now, that’s smart.

For more information, please contact Aleksandra Dobkowski-Joy.

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