A sustainability report is designed to inform stakeholders about a company’s economic, social and environmental results.
Everyone is now well aware that it is not enough for a business to make a profit in order to guarantee healthy, sustainable growth — social and environmental effects must also be considered.
The sustainability report thus becomes a crucially important document. It allows a company to comprehensively examine the effects of its business and, consequently, to plan its strategic development systematically to improve its performance in all the areas under consideration.
But what exactly does it consist of? Let’s take a closer look.
The three core aspects of a sustainability report
As mentioned, a sustainability report shows the results achieved by a company in three specific areas: economic, social and environmental.
For each of these three areas the document analyses a number of specific factors identified by the Global Reporting Initiative (GRI) Standards or other reporting benchmarks.
The GRI (Global Reporting Initiative) is an international organization established to standardize the many reporting metrics and methodologies that have emerged in recent years.
To make corporate sustainability performance consistent and measurable, the GRI has developed a set of standards to follow when drafting sustainability reports and non-financial reports.
Using a comprehensive system of universal industry standards on reporting principles, the GRI has outlined the factors to be assessed for each of the three areas: economic, social and environmental.
- Financial performance
- Target market and positioning
- Indirect economic impact
- Procurement practices
- Anti-competitive behaviour
- Employment data
- Worker-management relations
- Occupational health and safety
- Training and education
- Diversity, inclusion and equal opportunity
- Freedom of association and collective bargaining
- Child labour
- Forced or compulsory labour
- Respect for human rights
- Local communities
- Social assessment of suppliers
- Raw materials
- Water and wastewater
- Wastewater and waste
- Environmental compliance
- Environmental assessment of suppliers
The sustainability report therefore summarizes all the company’s actions and impacts in the three areas relating to sustainability.
Drawing up a sustainability report requires significant preparation, data collection and analytical skills, which is why the process leading to its completion is long and complex.
How to prepare a sustainability report
To prepare a sustainability report, it is necessary to follow the non-financial reporting guidelines set out by the GRI or by other international standards or frameworks.
Generally speaking, the process consists of three specific steps:
- Data collection;
- Document drafting.
The first step, analysis, is crucial as the foundation for the subsequent steps.
To analyse the situation, it is first necessary to define the scope of the report and select the aspects of the business that will be taken into consideration.
Preliminary activities include identifying stakeholders. Since the sustainability report requires the active involvement of the stakeholders with which each company interacts, at this stage the company must select which stakeholder categories are the most relevant and crucial to its performance.
Once the priority stakeholders have been mapped out, it is necessary to investigate which business issues deserve the most attention, both for the company and for its stakeholders, and to involve the latter through interviews, questionnaires or other dialogue tools aimed at collecting feedback.
The process of selecting stakeholders and determining issues feeds into compilation of the materiality matrix, which uses an infographic to show the company’s priorities in relation to those of its stakeholders. This is the starting point for the next stage of data collection.
The data and information that must be gathered relate to areas considered to be of primary importance by both company management and stakeholders. They must allow adequate evaluation of the performance in the financial year just ended, well as more accurate and integrated strategic planning of future development.
Once the data has been collected, the next step is analysis and drafting of the final document.
Drafting a sustainability report is therefore a complex task that needs to be carefully managed at every stage. It takes time, energy and cooperation from everyone, from internal employees to external stakeholders such as suppliers and customers.
The sustainability report as a communication tool
In addition to being an effective reporting and strategic planning tool, the sustainability report is also a valuable communication tool that brings many benefits to a company.
The inclusion and participation of stakeholders in the first stage of the process is itself a highly communicative action.
Listening to its stakeholders and sharing the results of this work by drawing up the report reflects the company’s desire to value and include stakeholders in the decision-making process. In doing so, every individual contributes, albeit indirectly, to co-designing the company’s development strategy.
Doing business in line with this vision helps build the loyalty of internal and external resources and to create a sustainable supply chain made up of participants who share the company’s sustainability-oriented value system.
Drafting a sustainability report therefore also brings the company concrete benefits in terms of reputational return, which is essential for building solid, lasting business relationships.
In addition to the positive return on image, there is also a more pragmatic aspect. Communicating and disclosing the sustainability report also offers real opportunities in economic terms.
The financial world has now initiated a momentous shift by declaring its intention to exclusively invest in companies capable of operating in a sustainable manner.
Sustainability reports are therefore becoming an essential requirement for accessing public and private funding, as well as for attracting investors from all over the world.
Drafting and disclosing a sustainability report is therefore a strategic choice for any company in the near future. This is why an increasing number of companies are turning their annual financial report into a much more comprehensive sustainability report.
Translating the sustainability report
There is no doubt that sustainability reports are an effective tool, but to maximize their impact, an additional step is necessary, namely translating them into other languages.
Companies operating abroad are fully aware of the importance of having their reports translated into the language of their stakeholders. Although English, the dominant language in the business world, is the most popular translation language, the desire to further reduce linguistic and cultural distance and thereby increase target market confidence leads many companies to translate financial statements into other languages also.
Translating the sustainability report into another language may also be a good option for those looking to expand into a new foreign market. Publishing the translation of the report allows the company to raise its profile among potential suppliers, customers and investors, thereby opening up new avenues for opportunity and growth.
Due to the strategic importance of the sustainability report, it is recommended that only experts and industry professionals be entrusted with the translation. At Way2Global, our team of native-speaker translators handle translation of financial statements under the supervision and coordination of our project managers and the strict oversight of our QA specialists, proofreaders and revisers.
In addition to over 30 years of experience in financial translation, our core business, we are also a B Corp-certified Società Benefit and are therefore always glad to handle translation of sustainability reports for our customers, a document we consider fundamentally important for the healthy, sustainable growth of any company.
Need to translate your company’s sustainability report? Contact us!