How to prepare a sustainability report

It is certainly reasonable to ask how a sustainability report should be drafted given the variety of existing standards and templates.

The process leading to the drafting of this document is quite complex. It is first necessary to know the company’s values, governance, culture and business model, as well as its products and target market, and to choose the methodology for measuring the relevant parameters. The next step is to identify stakeholders and engage in an ongoing dialogue with them in order to source the information that, together with existing data, will form the focus of the final stage: monitoring and evaluating the work and impact generated by the company.

Let us examine each of these aspects in more detail.

Defining values and methodology

Those tasked with preparing a sustainability report should know that a company’s value is not defined by profit alone, which is why we referred to “values” earlier.

A company should also be evaluated for its social and environmental effects, as well as in terms of governance. The 2030 Agenda and the relative SDGs (Sustainable Development Goals) have taught us how seemingly unrelated areas are actually closely interconnected.

A company that records profit, but does not respect the environment or violates the rights of the community in which it operates will inevitably also experience negative economic repercussions, since the environmental and human resources it harms are an active part of the production process.

This awareness is the starting point for drafting the sustainability report. Indeed, in order to draw up a report that provides a comprehensive assessment of the company’s value, it is necessary to consider – in addition to profit – a number of other factors connected to the six capitals that every organization must oversee in managing its business: human resources (human capital), environmental resources (natural capital), the relationship with customers and suppliers (relational capital), intangible assets related to knowledge and expertise (intellectual capital), capital goods (productive capital), and financial endowments (financial capital).

The variety of data that needs to be collected and the complexity of the analysis that has to be done are compounded by the proliferation of standards, norms and frameworks that govern preparation of the sustainability report.

Specifically, regulations concern topics to address and the reporting structure that must be followed. Observation of the most widely used standards or frameworks makes it possible to draw up a clear, complete and, above all, comparable report.

The GRI Standards, i.e., the standards developed by the Global Reporting Initiative, are certainly the best known and most widely used. However, this does not mean that it is mandatory to adhere to them. On the contrary, many companies typically use different standards in order to provide as complete a representation of their business as possible. In this case, it is useful to include a reconciliation table in the document that highlights the relationships between the different standards.

However, while companies are free to choose which standards to follow, they are nonetheless obliged to explain – in a methodological note within the Sustainability Report – which standards they have decided to follow and why.

But now let us turn to another key element of the sustainability report: stakeholders.

Stakeholders and translation

Anyone wondering how to prepare a sustainability report should also be aware that this document, in addition to being an excellent non-financial reporting tool, is a valuable tool for dialogue with stakeholders.

As mentioned in the previous section, this form of reporting stems from awareness that the company generates an impact (positive or negative) on a set of internal and external stakeholders, so it is crucial to establish and nurture a dialogue with them.

Those who have to prepare a sustainability report for the first time must take an additional step, namely, identifying all stakeholders connected to the company and pinpointing the most relevant stakeholders using a materiality matrix.

This may seem like a superfluous step, but it permits a more realistic view of the network that gravitates around the company. For example, it may reveal that the company is dealing with many more stakeholders than anticipated, or even that parties considered peripheral in fact prove to be crucial to the company’s operations.

It is only after identifying the most relevant stakeholders that the dialogue and listening stage can begin, an indispensable step in properly drafting a sustainability report. Indeed, being sustainable means addressing stakeholders’ interests, expectations and concerns. Surveys and interviews are just some of the functional tools for collecting data from which subsequent analysis and considerations are taken.

Naturally, the dialogue and listening process should be described within the sustainability report, so as to attest to the validity of the report’s conclusions. It is equally important to ensure that this document be publicly available for consultation, both to ensure transparency on the part of the company and to reach a wider audience of stakeholders internationally.

To this end, it is sufficient to use the sustainability report translation service, which allows speakers of different languages to access and use this document independently, without any linguistic and cultural obstacles.

However, it is first necessary to complete the last two steps involved in preparing the report.

Monitoring and evaluation

After collecting data relating to economic, social, environmental and governance activities, KPIs can be monitored and results and impacts assessed.

The only way to improve performance is to measure it through a set of KPIs (Key Performance Indicators) covering all the areas mentioned above. In the environmental domain, for example, it is possible to measure the percentage of energy from renewable sources used out of total energy needs, or in the social domain, the percentage of corporate volunteer initiatives.

Each company, depending on its industry and goals, may have an interest in measuring a certain parameter rather than another, and to do so, it must identify different KPIs and monitor their progress over time. Drawing up a sustainability report is therefore the perfect opportunity to take stock of the year that has just ended and see if the set goals were achieved or missed.

Monitoring indicators, in addition to highlighting the results achieved (output), also allows the company to self-assess the impact (outcome) or impacts it has managed to generate over time. This analysis is the basis for designing a future strategy, adjusting the focus where necessary.

The process of drafting a sustainability report is therefore transformed from a reporting tool into an important stage of strategic planning; Indeed, it is the overall observation of achieved results that makes it possible to plan actions to improve corporate performance.

In conclusion, although the form may vary from company to company, each sustainability report should contain the following items:

• introduction to the company;
• methodological note;
• analysis and dialogue with stakeholders;
• evaluation and KPIs;
• evaluation of generated impact;
• analysis of risks and opportunities, as well as future prospects.

It is therefore a challenging task that cannot remain an end in itself, but must be shared with all relevant departments from the moment data is first collected, and then communicated both within the company’s own circle of stakeholders and to the rest of the world.

As discussed above, in order to communicate with the rest of the world, a translation service can be used that makes the sustainability report available in other languages.

At Way2Global we have been handling financial translations for more than 30 years, and reports are our specialty. As a B Corp-certified Società Benefit, we are well aware of the value of tools like this, which is why we always welcome requests for translations of such documents, a symbol of the company’s commitment to the world at large.

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