The value of sustainability reporting beyond regulatory compliance

CRS Trends  »  Sustainable regulations   »   The value of sustainability reporting beyond regulatory compliance

As increasingly demanding regulations begin to pile up on companies’ doorstep, it is easy to get overwhelmed and lose sight on how valuable sustainability reporting actually is. 

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The hot topics of these past few months in terms of corporate sustainability have been pretty divisive; on the one hand, the EU is making headlines with its ambitious efforts developing sustainability reporting regulations; but on the other hand, companies find themselves overwhelmed and underprepared (financially and otherwise) to endure all these new regulatory responsibilities. 

And so we find ourselves in a very complex crossroad, one where organizations understand the importance of sustainability and the transparency that needs to accompany it through reporting, but fail to see its value beyond regulatory compliance as they drown in more and more legal paperwork.

So what is the right thing to do? Should companies solely attend to their sustainability reporting responsibilities and leave all other ESG concerns to the side? Or, should we try to dig a little deeper into the real value of reporting? 

sustainability reporting

The importance of compulsory sustainability reporting

Where would be be without compulsory sustainability reporting regulations? Probably deep (deeper than we are) into corporate greenwashing and its many shapes and forms; not to mention the governance related flaws that companies would carry upon themselves regarding company structure and behavior. 

But, we are not here for the what-ifs. Corporate sustainability reporting is the compulsory reality of many companies, big and small, and so they should try to embrace it before it becomes too much to bare. 

The fact is that addressing sustainability is a crucial and very real global necessity, with corporate related sustainability being one of the most pressing issues today. If we look at the UN’s Sustainable Development Goals or the 2015’s Paris Agreement, for example, we can clearly see how global and urgent addressing the topic is. 

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And it is precisely from this urgency that many countries and organizations set themselves to create robust frameworks for reporting and disclosing the sustainability information that was kept underground and away from the public for too long. 

The compulsory disclosure of environmental, social and governance related matters from companies is the necessary step towards making sure corporations are in line with what the planet and society need to thrive. 

Furthermore, such disclosures of sustainability information are crucial for stakeholders’ ability across the value chain of a given company to make informed decisions. 

The 'regulatory tsunami' dilemma

We cannot sit here and pretend that following and complying with all current (and closely upcoming) sustainability reporting regulations is a piece of cake. 

The so called regulatory tsunami is quite a real problem, and it refers to the fact that in a very short span of time companies have had to face many new and demanding legal, regulatory, and compliance responsibilities; and the challenges that have arisen from this context are quite complex, to say the least. 

Much like the time when companies faced the challenges of becoming digitalized, regulatory requirements are easily understood as a necessary step for better efficiency, as well as a better relationship with the environment and society; but, it also points at the need for new and more resources that are not always easily available or achievable.  

sustainability reporting

For many organizations reporting about their sustainable endeavors has come as something completely new, which is a big challenge on its own. 

But even for those many others who were already on a good path towards sustainability, new reporting regulations have often times ended up disrupting some of their ongoing ESG processes, as the data needed for compliance radically differs from what organizations were measuring. 

This is not to say that regulations are unnecessary or unimportant, quite the opposite, they are crucial for advancing sustainability and holding the corporate world accountable for their impact on the planet and society. Nonetheless, it is just as necessary to explore how feasible it is to demand this much from companies without bringing in the necessary financial support, among other resources. 

The value of sustainability reporting beyond compliance

Now that we have laid down the current context for corporate reporting responsibilities and the dilemmas it presents, we think it is important that we bring light to just how valuable sustainability disclosure is beyond compliance and its pressing challenges. 

And although we cannot offer clear nor absolute solutions to the problems we’ve presented above, we do think that understanding the value of sustainability reporting can help companies advance their ESG strategies just by looking at regulatory requirements through different lenses.  

sustainability reporting

First thing’s first, sustainability reporting and disclosure can actually help companies manage sustainability related risks and opportunities much more efficiently. The latter may appear as a result of any and every interaction between the business itself and its stakeholders, and often times it is only through the compulsory nature of reporting that companies measure or put an emphasis on these. 

Similarly, climate disclosures, including how its risks are managed and opportunities taken, can help companies closely monitor the later in an effort to transform them into strategic plans. 

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As compulsory reporting demands closely monitoring of different ESG elements from businesses, they may find that focusing on sustainable practices can actually open up opportunities for cost reduction, as well as an improved employee performance, productivity and engagement. 

And lastly (although we are definitely missing many valuable points) we’d like to point out how reporting helps respond to investors’ and other stakeholders’ demands for transparency. By showcasing their commitment to sustainable practices, organizations are able to build trust in their community and gain competitive advantage, as well as access to ESG capital. 

Engaging employees in the sustainability strategy

A basic and necessary aspect of sustainability reporting is assessing a company’s sustainable efforts from the inside out and viceversa. Often, companies may overlook their employees as essential actors in developing a successful sustainability strategy. 

In DoGood, we aim to simplify the complex web of sustainability objectives for companies by offering a platform that translates the high-level ESG (Environmental, Social, Governance) objectives into actionable tasks for every single employee. 

Then, each employee not only knows how to make an impact but also feels empowered to contribute meaningfully to the greater sustainable strategy. 

No more vague directives. No confusion. DoGood automates the process, making it seamless for the workforce to know precisely what steps to take.