What is the Definition of a CSR or Sustainability Report for the Business?

A CSR, corporate social responsibility or sustainability report is a periodical (usually annual) report published by companies with the goal of sharing their corporate social responsibility actions and results.

The report synthesizes and makes public the information organizations decide to communicate regarding their commitments and actions in social and environmental areas. By doing so, organizations let stakeholders (i.e., all parties interested in their activities) aware of how they are integrating the
principles of sustainable development into their everyday operations.

What is the Purpose of a CSR Report?

The main intention of a CSR or sustainability report is to improve the transparency of organizations’ activities. The goal is twofold:

On one hand, CSR reports aim to enable companies to measure the impact of their activities on the environment, on society and on the economy (the famous triple-bottom-line). In this way, companies can get accurate and insightful data which will help them improve their processes and have a more positive impact in society and in the world.

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On the other hand, a CSR or sustainability report also allows companies to externally communicate with their stakeholders what are their goals regarding sustainable development and CSR. This allows stakeholders such as employees, investors, media, NGOs, among other interested parties, to get to know better what are the short, medium and long-term goals of companies and make more informed decisions. These decisions can spread from investing in a business, buying its products, writing positive (or negative) reviews, protesting in the streets against the intentions or actions of an organization…

According to the Global Reporting Initiative, a CSR report can be defined as:

“A sustainability report is a report published by a company or organization about the economic, environmental and social impacts caused by its everyday activities. A sustainability report also presents the organization’s values and governance model, and demonstrates the link between its strategy and its commitment to a sustainable global economy.”

The Internal Organizational Benefits of a Sustainability Report

Internally speaking, CSR reports are important because they allow companies to estimate the impact their operations have on the environment, society, and the economy. Through the (supposedly) detailed and meaningful data collected (or simply gathered) for the sustainability report, companies have a chance to improve their operations and to reduce operational costs. Not only do they become better prepared to optimize and reduce their energy consumption; as a result of reviewing their waste cycles product innovation strategies or circular economy opportunities can be found.

At the same time, collecting this data requires joint efforts from different departments. As a result of the hype that’s created, employees often end up becoming more conscious the company is focusing on CSR and sustainability, which leaves them proud – increasing employee retention and decreasing turnover (and its costs). It’s good news for employer branding.

The External Organizational Benefits of a Sustainability Report

When it comes to external benefits, a CSR and sustainability report can help companies engage better with their interested parties. By letting their stakeholders know about the organization’s short, medium and long-term project decisions, companies can be better understood which may have positive financial outputs.

For instance, a sustainability report helps stakeholders become aware of whether a company is positively contributing to minimizing the negative impacts of an environmental hazard or that it is only focused on growing profits for its managers and investors. Silence is also a way of communication and if no sustainability report is found the odds are people will focus on the second option just mentioned.

In this way, consumers can decide whether they want to buy from a brand that protects orangutans by sourcing sustainable palm oil or one that produces clothes locally with little environmental harm and paying fair wages. Investors can anticipate if companies are becoming more resilient to face consequences of climate change and decide whether to invest in them or not. Journalists can share best case practices from companies leading the way on topics such as microplastics pollution or ocean acidification. NGOs can exert pressure and expose irresponsible practices.

Are CSR Reports Mandatory?

It isn’t (at least yet) mandatory for all companies to make their own CSR or sustainability reports. Yet, directive 2014/95 from the European Union demands large companies to reveal certain non-financial information about how they operate and run their social and environmental challenges. This means it is mandatory for large public interest entities to disclose non-financial information.

Specifically, it’s mandatory that these organizations give insights about how they’re taking care of environmental, social and personnel concerns. Diversity and inclusion, respect for human rights, and the fight against corruption and bribery inside businesses and within value chains are issues that must be contextualized too. Consequently, specific organizational data needs to be provided about the policies being pursued, as well as their outcomes. The main organizational risks identified and how they’re being managed, together with the financial indicators used must be presented as well.

This kind of information helps consumers, investors, policymakers and other stakeholders to evaluate the non-financial performance of large companies and encourages organizations to develop sustainable business strategies that can be up to the expectations.

Due to the benefits mentioned earlier, many companies choose to report their CSR and sustainability information. But how do they know what or how to report?

What’s Included In a Sustainability Report?

There’s is no one-size-fits-all approach to designing a sustainability report. While some (medium-large) organizations choose to write a standardized report that becomes along with certification, others opt instead for a free-style sustainability report. Either way, what is often included in a sustainability report is:

1. A CEO statement that briefly introduces the vision and the drivers behind the sustainability report;
2. A presentation of the organization’s governance structure and business model;
3. The sustainability context, i.e., kind of a SWOT analysis explaining what’s happening at the market and industry levels;
4. Inspired by the SWOT analysis, an impact assessment can be done to identify the organization’s main negative impacts and business risks (in which indicators to measure progress are also identified);
5. An identification of the organization’s main stakeholders and the issues that worry them the most;
6. A materiality analysis in which the main worries of the organization (4) and stakeholders (5) are identified as the priorities;
7. An overview of performance over time in which progress over time is shared – via key indicators and metrics;
8. Some stories and appealing pictures of how the sustainability strategy is leaving employees more motivated to work, investors more willing to invest or NGOs collaborating in strategic projects;

Standardized Vs. Personalized CSR Reports: How To Write A Sustainability Report

One of the ways for companies to share their CSR and sustainability policies, both internally, but above all, externally, is comply with strong standards and apply for certifications such as the ISO 26000, the Global Reporting Initiative (GRI), the Integrated Reporting, the B-Corp Certification or the FTSE4GOOD Index. They are great in terms of the truly impactful changes they demand and the reputation that comes along. Nonetheless, the sustainability proof or report submitted to get these certifications, sometimes used as a sustainability report, is usually very long and exhaustive and therefore, it might not be the best way to share sustainability practices with common, environmentally-worried consumers, who just want to get to know some sustainability highlights.

In this way, another approach organizations can take is to create a personalized sustainability report template. In this way, they can brief their stakeholders with the highlights of their sustainability strategies, letting them know about the risks and opportunities involved, the policies that are being undertaken and the outcomes achieved so far. Nevertheless, since it doesn’t respect any specific structure, this approach has the downside that readers must the more critical about the information they are offered.

Because if companies present data without showing how they got their numbers, or talk about random eco-friendly initiatives that don’t seem to be integrated within a global strategy, they might be trying to show that they have CSR and sustainability concerns, when in fact, they are mostly showing off and greenwashing.

Face with this, many companies end up doing both types of reports. They write a standardized report following the guidelines of, for instance, the global reporting initiative integrated with the SDGs (sustainable development goals). After finishing it, they extract the main points of these long reports and create an appealing design on which they advertise their sustainability practices. In some cases, the most curious people can find links in the short CSR report that redirects them to the online version of the long report – which is positive as it allows a deeper dive into an organization’s specific actions, data, or processes.

Examples Of Companies With Good CSR Reports

Please mind that some of the CSR or sustainability reports listed below will be not opened in another tab. Instead, they’ll be saved in the downloads folder of your browser. We hold no partnership with the brands listed below, we simply find their sustainability reports have quality and consider them best case practices to learn and inspiration from.

(Source: youmatter.world)