Sustainability reporting gets to the point

Sustainability reporting in New Zealand is on the rise with more companies disclosing their greenhouse gas emissions, water consumption and impact on society.

However, at the same time companies or organisations are moving to tell their sustainability story in a more succinct way, focusing on their most important issues, and are adopting international standards.

Nikki Wright, Managing Director of Wright Communications, says companies and public sector organisations are increasingly using international ESG standards and frameworks to ensure they are producing high quality reports that can’t be labelled as greenwashing.

“By following international standards, organisations can use their reports to build stakeholder trust and demonstrate greater transparency and accountability,” she says.

As more companies report nonfinancial data, there is greater demand from investors for reliable, high-quality and comparable data.

Julia Jones, Head of Insight at NZX Ltd, says ESG reporting is maturing in New Zealand as more businesses realise that effective ESG comes from disclosure and continuous improvement, rather than attempting to being perfect from the outset.

“NZX-listed companies have had a strong increase in disclosure over the past year. We have seen a noticeable improvement from 2020 to 2021, particularly in the area of greenhouse gas emissions reporting.

“Investors need information that allows them to assess how the companies they hold stock in are managing such issues and the impact they have on the company’s long-term success,” Julia Jones says.

Another emerging trend in sustainability reports is a willingness, among businesses, to look beyond box-ticking exercises and adequate international frameworks.

“They're looking to tell a story, a sustainability narrative, where they are in terms of their pathway, and their progress against sustainability targets. They’re seeking to convey their commitment, their intent, in a manner that is succinct, compelling, readable, easy to access, and appeals to an array of audiences,” Nikki Wright says.

If a business’s sustainability practises have not been ideal, the business should not necessarily shy away from disclosing this.

If there are ways in which the business needs to catch up, then they can promote the angle that they're being willingly transparent, accounting for any such omissions, and that their trajectory is towards better sustainability and a greater level of exposure. This is the point of sustainability reporting.

“We encourage our partners to take the first step towards sustainability reporting, which is internal transparency and a willingness to acknowledge the present position,” Nikki says.

Another trend is consolidation of sustainability reporting standards and frameworks. Over the last few years, frameworks and reporting standards boards have worked with a large degree of autonomy to set global sustainability disclosure standards. Some are more focused on the impact a business has on the environment, others are more specific to the value created for shareholders.

Under the umbrella of the International Financial Reporting Standards Foundation there's been a consolidation of several of these entities (International Integrated Reporting Council, the former Climate Disclosure Standards Board, and the Value Reporting Framework) to form one new International Sustainability Standards Board (ISSB) which has released draft reporting standards.

Another important and well-known entity, the Global Reporting Initiative (GRI), has engaged with the ISSB to discuss further alignment of standards. With everything coming together into a greater global framework, life will be a lot easier for reporters and sustainability managers who will be able to spend less time untangling the technical standards and more on telling the organisation’s story instead.

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