< Back to Blog Listings

The Business Value of Sustainability Reporting

green charts - blog

When it comes to sustainability disclosures, it’s understandable that businesses can be skeptical as to what the benefits are. Around the world, it’s a challenge to explain the value in increasing transparency on sustainability issues to senior leaders.

Companies are being asked to evaluate and report on a vast array of sustainability topics. Yet when reporting is focused on a few, truly relevant issues, it can create vital data that helps companies perform better. Not only can they quantify their contribution to sustainable development and the impact on environmental or social factors — but ultimately, it can improve their financial bottom line.

From my own experience of more than 20 years working in the private sector, I can tell you that transparency works. The old saying “you manage what you measure” is true.

By carefully selecting the topics that are the most meaningful for your company and its stakeholders, establishing goals and key performance indicators, and regularly reporting on progress, you create a natural incentive to improve.

GRI provides the world’s most widely used and widely trusted sustainability reporting framework. One of the key attributes making the GRI Standards stand out is the scope and relevance of the impacts they cover. With more than 30 topic-specific standards and a framework that helps companies select the most important sustainability issues, GRI can help any organization, in any sector — anywhere in the world.

The first step of selecting the critical sustainability issues for your company is engaging with your stakeholders. Through robust stakeholder engagement, you can create a list of issues that become the focus of your programs and reporting. This materiality analysis helps you measure and manage the most important issues.

Most companies understand the improved recognition and reputation that comes with being more transparent. What is less known is that the benefits extend far beyond reputation. Sustainability disclosure can also help companies perform better in the marketplace through improved customer relationships and operational efficiencies.

When you look at the largest companies in the world, reporting on environmental, social, and governance topics is now the norm. In fact, 93 percent of the largest 250 firms by revenue report on sustainability results. Significantly, three quarters of them use the GRI framework as the basis for their disclosures. These companies have obviously concluded there is business value in sustainability reporting. And many of them are starting to expect the same from their suppliers.

In addition to the demands of customers — both businesses and consumers — investors are seeing the value in sustainability disclosure. The latest data shows more than 30 trillion US dollars are now invested using sustainability criteria — a staggering number that is greater than the entire US economy and has grown by 25 percent over the last two years. Another recent study concluded that more than 80 percent of mainstream investors now rely upon sustainability disclosures to make decisions. This means that those companies that take sustainability seriously can gain a competitive advantage by attracting and retaining investment capital.

Perhaps less apparent is the significant value of being a good corporate citizen in attracting and retaining employees. Companies are in a war for talent, and as new generations enter the workplace, they are increasingly aware of the company’s sustainability track record. Research has found that young job seekers will forgo a percentage of their salary to work for a sustainability leader.

By focusing on measuring what matters, setting goals, and reporting on progress, businesses can discover new ways to lighten their footprint and take care of their bottom line. The question any forward-thinking company should be asking is: Can I really afford to be left behind?

Tim Mohin is CEO of GRI, an independent international organization that has pioneered sustainability reporting since 1997.