insights

Sustainability reports: six trends for 2021 and five tips

#Uncategorized  •  21/12/2020  •  Katelijne Norga

Whether it’s a listed company, a multinational, an SME, a start-up business or a public company, a sustainability report has become a must-have for every organisation. But in 2021, a sustainability report is much more than a dry summary of data and impacts. In this blog post, we list the most important trends and tips for 2021 for you.

You don’t need a crystal ball to know that transparency will be a key business theme in 2021.

 

Customers, employees, job seekers, NGOs, the media ... they all want organisations to proactively provide insight into the issues that are important to them. How your organisation limits its CO2 emissions, how it deals with safety, health and human rights, what it does to combat corruption, which companies it works with, and so on.

 

A sustainability report is the tool par excellence to show your stakeholders these data in an clear way.

 

Related content: Five good reasons to publish a sustainability report

Stricter legislation

The trend towards more transparency is also reflected in policy.

 

Since 2017, organisations of major social importance (such as listed companies, banks and insurance companies) across Europe are required to publish a non-financial report. The European Commission is currently updating the relevant directive, and the Belgian legislator will follow suit. NGOs, among others, are pushing for more harmonisation and a more uniform framework for non-financial reporting. In any case, the European policy will strongly encourage companies to take their sustainability report (more) seriously.

 

Economic and financial players are also stepping up. The recommendations of the Task Force on Climate-related Financial Disclosures, for example, are receiving more and more support.

Build your reputation

There is a good chance that your organisation is already committed to sustainability today, or will be embarking on the path of the circular or green economy in the coming years.

 

You want to make this new, positive story known to the outside world. It is also more and more necessary to do so. And that has everything to do with the increasing importance of reputation management.

 

In times of crisis and pandemics, the most secure future goes to companies that are agile and resilient, as various studies have shown. So if your organisation is working on sustainable business models, you are doing well! But you also have every interest in actively bringing your sustainable story to life, both inward and outward. And to involve all players who make decisions that are important for your organisation.

Belgian companies are lagging behind

In its Survey of Sustainability Reporting 2020, KPMG clearly pinpoints the problem. 72% of the large Belgian companies (Belgian N100) do indeed draw up a sustainability report (compared to 62% in 2016). However, compared to the 250 largest companies worldwide (G250), of which 93% writes a report, our companies are still lagging behind. The rest of the Belgian business community also still has work to do in terms of sustainability reporting.

 

Conclusion: Belgian companies, not only listed ones, will (have to) embrace sustainability reporting in the coming years. We list five trends to keep an eye on.

Trend 1: purpose-driven entrepreneurship

2021 will gain momentum for purpose-driven entrepreneurship, also in Belgium. More and more companies are no longer putting the financial interests of their shareholders first. They gear their course to the world and the lives of customers, employees and the stakeholders around them. Their purpose, or higher goal, is their strategic compass.

 

Among multinationals, the trend has been going on for several years. Unilever launched its Sustainable Living Plan back in 2010, and shoe brand Timberland has set itself the goal of planting 50 million trees by 2025. “We are not just planting trees, we’re planting hope, jobs, clean air and unity”, the company writes on its website. In the Netherlands as well, 70% of the companies has already stated a purpose or higher goal. With some delay, we expect that 2021 will be the breakthrough of the purpose in Belgium, too.

 

Solvay already stood out last year with its purpose “We bond people, ideas and elements to reinvent progress”. And before that, there was the meaningful name change from Philips to Signify. Fitting in with this list: Fiets!, a subsidiary of Colruyt Group, wants to let “as many people as possible cycle carefree”, and Alpro wants to make as many people as possible healthy through its food.

 

The increasing importance of purpose is reflected in businesses’ communication and also in their sustainability reporting. The time when you could consider sustainability as a separate activity and report on it as such, is over.

© Unilever

Our tip: maximise your sustainability investments and communicate in an integrated way. Write an authentic story that is aligned with your purpose and corporate goals.

Trend 2: integrated reporting

COVID-19 has shown that financial and non-financial risks are closely related. The ‘new’ risks are complex and far-reaching. They are largely beyond an organisation's control, manifest over longer periods of time and impact many dimensions of the business. To develop adaptive strategies, you need to make informed decisions today.

 

It should therefore come as no surprise that we are seeing a trend towards integrated reports that combine non-financial and financial information. An integrated report also makes sense to the outside world: there is no better way to make your long-term impact clear to your stakeholders.

 

More and more American and Japanese companies have adopted this way of reporting, driven by legislation, or have at least started adding sustainability information to their financial reporting. In Belgium, Colruyt Group set the tone in 2020 with an extensive integrated report.

 

But there is a pitfall. We see that extensive financial reporting can jeopardise the readability or attractiveness of your sustainability report. Our advice is to keep it concise and focus on your impact.

 

Annual report with sustainability reporting, Colruyt Group
Trend 3: science-based targets

Climate, of course, remains a crucial topic in which companies must demonstrate their commitments in black and white. For companies to align their CO2 reductions with the Paris Climate Goals seems logical, but it is far from a general practice.

 

In Belgium, four companies have committed themselves to aligning their climate objectives with the Paris Agreement: Thalys, bpost, Proximus and Lidl. They do so with science-based targets (SBTs) from the Science Based Targets initiative (SBTi), a collaboration of The Carbon Disclosure Project, WWF, the World Resources Institute and UN Global Compact.

 

Spurred on by sustainability network The Shift, the Belgian facilitator of the SBTs, other companies are expected to follow suit in 2021. As a result, Belgian sustainability reports will increasingly report about scope 3 or indirect CO2 emissions as a KPI, and no longer only the direct emissions.

 

Nevertheless, there is a divide. Some Belgian companies have been measuring their CO2 footprint for ten years or are already planning their next reduction plan, while others are still hesitant to set themselves climate ambitions.

Our tip: even if you are not yet where you want to be, communicate honestly about your CO2 emissions and the goals you set yourself. Mention the initiatives you are already taking and communicate your next steps and timeline.

Trend 4: SDG reporting

More and more companies worldwide choose to include the SDGs, the UN’s global sustainability goals, in their sustainability reports. 76% of Belgian companies are doing so, although only a minority communicates the negative impact of their activities on the SDGs.

 

The SDGs that companies most often prioritise, are Climate Action (SDG 13), Work and Economic Growth (SDG 8) and Health and Well-Being (SDG 3). Life on Land (SDG 15), Zero Hunger (SDG 2) and Life Below Water (SDG 14) are reported the least. Only seldomly do companies report on their impact on any of the underlying 169 SDG targets.

 

This means that the quality of SDG reporting can still be significantly improved in Belgium. According to the UN Global Compact, companies only stand to gain from this: "Measuring and disclosing their impact on the SDGs will help businesses better engage stakeholders, enhance sustainable decision-making processes and strengthen their accountability."

Our tip: report on the SDGs (there’s really no way around it) and be transparent about both your positive and negative impact. Also indicate how you intend to reduce that impact.

Trend 5: digital dashboard

Although digital reporting is not yet embedded in all companies, a new trend is already coming up: the digital dashboard.

 

With such a dashboard, companies communicate their ESG (environmental, social and governance) data in real-time. State-of-the-art software allows financial actors and other stakeholders to generate reports that are fully tailored to their questions and interests. Compared to the static PDF that is produced once a year, a digital dashboard offers clear advantages.

 

But even if you don’t want to invest in reporting software, a digital platform offers numerous advantages. A set of clear infographics with the most important trends is already a big step forward compared to a static report, from which your readers have to distil the information they need themselves. For your storytelling (see Trend 6) and communication, too, a digital platform offers a wide range of possibilities.

Our tip: transform your classic PDF into a digital report sooner rather than later. This does not have to cost you a fortune; you can have a simple microsite for just a few thousand euros. An investment that, given the impact on your stakeholders, certainly pays off.

Trend 6: storytelling

We have written it before: a sustainability report is more than a dry summary of facts and data. By focusing on storytelling and integrating a compelling sustainability story into your corporate communications, you build your reputation.

 

Think of stories about reducing climate emissions; testimonials from employees; initiatives for the local community; cases, programmes and pilot projects; collaborations with customers and other partners ... This kind of softer stories helps you to build trust and loyalty among your stakeholders.

Our tip: bring your sustainable story to life through internal campaigns, social media, press articles, your website and newsletter. This way, you maximise the added value of your sustainability communication, both for your organisation and for your stakeholders. And you turn the snapshot that your sustainability report used to be, into a true stakeholder journey.

Need help realising or updating your next sustainability report? 

 

Contact Katelijne Norga: katelijne.norga@pantarein.be

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