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United Nations Environment Programme
  • Introduction - ES
  • Overview - ES
  • Areas for Improvement - ES
  • Topics and Indicators
  • Policy Review
  • Materiality and Sector Guidelines
  • Data
  • Dissemination and Communication

Introduction

There has been an increase in internal and external pressure on companies to improve their sustainability performance, and sustainability reporting has now evolved from an iterative process into a strategic tool to support decision-making processes. Reasons for this include pressing environmental and social challenges and a rising interest in sustainability reporting, not only from governments, but also from investors and stock exchanges, resulting in regulatory instruments and incentives for reporting. This pattern is likely to continue, as company monitoring will, at the national and global levels, be a key component in tracking the progress of the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs), particularly SDG target 12.6 and its respective indicator, 12.6.1, on corporate sustainability reporting.

National governments and stakeholders have a range of crucial actions to carry out in order to improve the quality of sustainability reporting and to encourage more companies to report. Possible actions include:

  • Building national understanding of the benefits of sustainability reporting.
  • Creating policies or guidance to encourage and enable sustainability reporting, particularly amongst small and medium enterprises.
  • Supporting the consolidation of data extracted from corporate sustainability reports to enhance the measurement of sustainability performance at the national level.
  • Making use of this disclosed sustainability information to support decision-making processes.

This publication aims to support national governments and relevant stakeholders in delivering these outcomes.

 

 

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Introduction

 

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This chapter introduces a basic definition of corporate sustainability reporting. It presents the set of drivers for companies to produce sustainability reports and touches on the main benefits and status quo of sustainability reporting while making the link with the global sustainability agenda and the Sustainable Development Goals. 

The chapter is divided into the following sections:

  • Definition of sustainability reporting
  • Main drivers for sustainability reporting
  • Benefits of sustainability reporting to governments
  • Context of sustainability reporting
  • Key reporting frameworks
  • Other relevant initiatives

 Various case studies are included in the chapter that connect to the the topics listed above.

 

 

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Overview (p. 13-30)

The report Raising the Bar – Advancing Environmental Disclosure in Sustainability Reporting reviewed the status of sustainability reporting internationally and identified issues in two categories: quantity of companies reporting and quality of reports. The key quality-related issues identified are:

  1. A non-comprehensive compliance approach leading to companies failing to report their most material impacts.
  2. The lack of context regarding the environmental or social setting of the company’s operations and impact.
  3. The variation in approach to third-party verification (assurance), which is often done on a voluntary basis and therefore does not have the same credibility as a mandatory approach.
  4. The inconsistency in reporting, even among companies using the same framework or guidelines.

A summary of the major areas requiring improvement in relation to these four issues is provided in this section.

Materiality, which refers to what topics should be included in a sustainability report, is a well-established issue; detailed guidance on the context and how to undertake a materiality assessment is included here. A separate guidance note aimed at providing context for policymakers is available in the section on Materiality and Sector Guidelines (B.2.) 

Context refers to the requirement to link performance to relevant benchmarks or targets. This is a rapidly evolving area, and this section aims to provide details on status and aims to anticipate which of the current systems is likely to be the most widely used.

The issues of assurance, whether the report has been verified by an independent review, and the issue of inconsistent reporting (and the challenges of the multiple frameworks and guidelines) are also discussed in this section.

 

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Areas for Improvement (p. 31-42)

Sustainability reporting is a rapidly evolving discipline, and there is a growing understanding of how and what to measure in order to demonstrate holistic sustainability benefits. As sustainability reporting is trying to assess the complete performance of a company, this necessitates a broad spectrum of analysis and monitoring.

The organizations discussed in in this chapter provide different levels and styles of guidance regarding what should be included in a sustainability report:

  • The OECD guidelines cover the topics to include in a report and provide general guidance on the approach to take, but without specific requirements or indicators.
  • The United Nations Global Compact provides 10 high-level principles without specific requirements.
  • The Global Reporting Initiative has a comprehensive list of specific topics that can be reported on, as well as general disclosures.
  • The International Integrated Reporting Council outlines the general content of an integrated report without giving specific topics that need to be reported on.
  • The Sustainability Accounting Standards Board provides high-level categories that specific sectors should report on.
  • The AccountAbility Institute guidelines provide reporting principles and not specific topics to report on.

    As the discipline has grown, there has been an increase in the number of indicators being measured and reported on, which has made difficult a consensus over exactly what to measure and how to report and harmonize this.

    While there is variation between the specific reporting requirements of each approach, broad agreement can be found. In that sense, the aim of this section is to outline the current approaches on corporate sustainability reporting in key areas and the degree of consensus.
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Topics and Indicators (p. 43-51)

This section provides specific guidance to policymakers and other interested stakeholders on approaches and options to strengthen the policy framework to enhance sustainability reporting practices. Information contained in this section builds on the experience of pioneering governments in reviewing their policy frameworks and creating an enabling regulatory environment for sustainability reporting through both new regulation and improving existing policy. The section covers the following:

  1. A high-level overview of current methodologies, national policies, sector guidelines and tools for policy analysis and development.
  2. Case studies and experiences.
  3. An overview outlining key first steps to developing policies that encourage effective sustainability reporting.

Three main sources of information have been identified in this area:

  • The Carrots and Sticks suite of documents and database. The dedicated site and associated reports provide a comprehensive overview of sustainability reporting instruments worldwide, where ‘reporting instruments’ include any instrument, mandatory or voluntary, that requires or encourages organizations to report on their sustainability performance.
  • The Reporting Exchange platform released by the World Business Council for Sustainable Development which includes reporting on specific information found on the Carrots and Sticks platform but also includes information on wider sustainability policies (for example building standards, pollution control policies and permitting requirements) and a country summary of the policy framework.
  • The United Nations Environment Programme’s publication ‘Evaluating National Policies on Corporate Sustainability Reporting’(henceforth referred to as ‘Evaluating National Policies’) which provides a framework for evaluating national policies on corporate sustainability reporting and takes an in-depth look at five countries with advanced national policies on the subject.
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Policy Review 

This section provides guidance on how stakeholders can encourage and support companies of all sizes to improve their sustainability reporting, specifically by ensuring that the companies cover all material topics – the full scope of their impact. It builds on the introduction to materiality in the section Areas for Improvements (A  2.1) which defined the concept, outlined its importance and described a generic process for undertaking a materiality assessment.

To enable government actors, policymakers and key stakeholders to understand the importance of materiality this section includes the following:

  1. An overview of the sustainability reporting process to put materiality in context.
  2. A detailed review of the two main approaches to addressing materiality; undertaking a materiality assessment or following sector-specific guidelines.

At the end, summary guidance is provided for government actors and stakeholders on how to ensure that materiality is effectively addressed by companies of all sizes.

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Materiality and Sector Guidelines

Accurate and meaningful sustainability reporting requires the use of quantitative and qualitative data in many areas. The section 'Introduction' (A 3) outlines the role of indicators in monitoring sustainability performance including the following:

  1. The key characteristics of effective key performance indicators.
  2. The role of absolute and relative indicators.
  3. Existing indicator frameworks.
  4. Core indicators for sustainability reporting.

This section provides a closer look at the role of data in sustainability reporting. It includes the following:

  1. An overview of data; what it is, its importance for governments and how it can most effectively be used.
  2. Examples of effective data management systems at different scales.
  3. An overview of how government actors can support the effective use of data in sustainability reporting.
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Data

The objective of corporate sustainability reporting policies or initiatives is to ultimately improve the environmental and social performance of companies. Reporting will only lead to improved performance where it is part of a comprehensive sustainability strategy (see section Overview A 1.2.4) and if the sustainability performance report is both publicly available and actively assessed by civil society and the general population. This section provides a detailed look at the role that government actors and stakeholders can play in supporting the dissemination and wider communication of sustainability reports and information. The section includes:

  1. An introduction to the strategies for supporting the dissemination of sustainability information.
  2. Examples of strategies and initiatives used to disseminate sustainability information.
  3. An outline of the first steps government actors can take in supporting the dissemination of sustainability information.

Where the sustainability reports contain information on the SDGs, these dissemination strategies can also be used to disseminate this information. See the section Data (B 3.2) for further information on how corporate sustainability reporting can contribute to national-level reporting on the SDGs.

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Dissemination and Communication

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