Large companies have been reporting on their sustainability efforts for the last decade, and it’s a practice that has become as important as financial reporting for these businesses.
Where multinationals lead the way in compliance, SMEs tend to follow. While sustainability reporting isn’t mandatory for SMEs (yet), it’s becoming more commonplace as investors and commercial partners seek out a level of transparency and ESG compliance from the SMEs they work with.
So if you’re an SME, and you’ve never done a sustainability report, now’s the time to start. All well and good to say it, but the big question is ‘how?’ What goes into your sustainability report? How do you even begin?
The overarching purpose of a sustainability report
The purpose of your sustainability report is to communicate your commitment to responsible practices. You’re speaking to your business contacts, your investors, your customers and your employees.
You might find that your sustainability report is a helpful tool to inspire change within your organisation and motivate your employees to continue working towards your sustainability goals.
Is there a set precedent?
There is no set formula to writing one of these reports. We share some ideas on ‘best practice’ here, but you can use your creativity to pull it together. Share a message from your CEO, or stories from your employees. You can use graphs, infographics, testimonials and photographs to make it interesting and appealing.
For inspiration, have a look at sustainability reports from some of the local businesses in your area. They are usually published on the website.
What should you include?
You should write about what the business is doing to protect the environment, promote social welfare, and comply with good governance practices. Those are the three broad categories that your readers will expect to see, but you can address them under any headings that suit your business.
You might decide to discuss issues like the following:
- Wellbeing and engagement
- Inclusivity in the workplace
- Environmental sustainability
- Employment and human rights
- Collaboration with the community
Within each of those categories, set out measurable objectives and ambitions for the short, medium and long term. Tell your reader about your Key Performance Indicators (KPIs) for each objective and share the progress you’ve made towards those goals.
For example, your wellness KPIs could include: absence through sickness, turnover of people, training hours per person, people survey overall satisfaction scores, and volunteering days taken.
The Global Reporting Initiative (GRI) gives an idea of 34 standards against which you can report. These standards were developed to create a robust reporting framework and is as close to a precedent as you can get. Additionally, the Task Force on Climate-Related Financial Disclosures gives recommended disclosures around four themes: governance, strategy, risk management, and metrics and targets.
Include as much data as possible
Collating the data you need is the part that will probably take the most time. These figures need to be accurate and correct, and you might not yet have a robust way of tracking the figures you need.
But once you have identified which metrics you want to track, you can put the mechanics in place for future reports.
The sort of data you might want to include are:
- Carbon emissions
- Water usage
- Charitable donations
- Volunteer hours
- Employee committees
The style and tone of a good sustainability report
A good sustainability report will be honest and transparent. Don’t be afraid to say if you haven’t hit a target. You can tell your reader that you have ambitious targets, which you’re working towards incrementally. If you haven’t yet hit a target, that’s not a problem. Just say what action the business is taking and how you hope to improve next year.
Use clear and concise language that doesn’t inflate your efforts, or confuse your reader.
To make it interesting, use graphics, testimonials and photographs. And give different points of view. Include input from employees, directors, clients, suppliers, and local communities if you can.
The first sustainability report may take a bit of time to get right. But once you have a template, you can update it every year.
If you’d like any help or advice on your sustainability report, please get in touch with us at SME Comply.