The European regulations, and consequently the Spanish one (Law 11/2018), already established the legal need to make a sustainability report by obtaining reports of a non-financial nature. However, today’s regulations are only addressed to a particular type of company.
This does not mean that the reporting of information on sustainability and social responsibility is a mere legal requirement that only concerns some companies. Al contrario, más allá de la legalidad, estos informes pueden ser beneficiosos para cualquier empresa, y las ventajas de reportar en materia sostenible son cada vez más evidentes.
Transparency in environmental, social and governance (ESG) matters, the traceability of the impact in these areas and the consequent accountability, is an essential process to understand the progress of companies towards sustainability. In addition, it adds value to the company, increases trust with stakeholders and helps improve corporate reputation.
Why is it important to report non-financial information?
The real situation of a company cannot be intuited only with the financial information of accounts and balance sheets. Investors are increasingly aware and demanding of this fact.
Non-financial information is key to understand the positioning of a company when it comes to addressing the future, including topics such as the environment, personnel, respect for human rights, the fight against corruption, commitment to the SDGs, policies and internal governance, the relationship with suppliers, health and safety measures…
And why is the disclosure of this information important?
The reporting and disclosure of non-financial information is an essential factor to identify risks and opportunities to later transform them into competitive advantages. Disclosure makes it possible to anticipate regulatory and political changes, as well as identify the most imminent risks and find new opportunities.
A very high percentage of the value that a company has and creates is given by intangibles that traditionally were not reported together with financial information. The transparency that these reports generate helps society and investors to better understand the real value of companies.
Transparency is, after all, the bargaining chip of credibility and trust, which, as well as economic benefit, is the cornerstone of any organization’s survival.
Advantages and opportunities of reporting and disclosure
The reporting and disclosure of non-financial information is the first step to be able to take appropriate environmental and social action measures.
The traceability of information and its monitoring is what makes it possible to measure progress on the path towards sustainable development, in such a way that it is increasingly easier to set and achieve objectives that benefit both society and companies. .
The benefits of disclosing non-financial information translate into multiple advantages and opportunities, as well as the identification of risks at the internal and external level of organizations:
- Internal alignment: The collection of information jointly and across all departments is an opportunity for better alignment of all employees. Likewise, information asymmetry is reduced, better communication is generated and therefore facilitates the internal management of the organization.
- Reputational improvement: Transparency is essential to gain credibility and trust from stakeholders. Disclosure of information on sustainability is a way to respond to growing social and environmental concerns. Complete and accurate information is essential to foster a good corporate reputation that attracts and retains clients, talent and investors.
- Collective well-being: Working for the sustainable development of companies and society leads to better economic growth, employment and living standards. Being good practices and their dissemination a pillar for the collective benefit. Society needs good companies as much as companies need a good society.
- Anticipation: The trend is for regulations and regulations in environmental and social terms to be increasingly demanding and strict. Following a reporting method with increasingly widespread global standards such as GRI or CDP, among others, allows us to anticipate information requirements in these areas. In addition, the evolution of non-financial variables can influence future financial variables, with non-financial reports being a key factor in interpreting market and organizational trends.
- Identify risks: Reporting on the non-financial state of the company can help identify risks both externally and internally. These risks, however, can become opportunities and advantages for those companies that are most involved in the achievement and transversality of their reports. This can be especially beneficial if we follow a traceable and measurable reporting strategy, where we can see tangible progress as challenges turn into opportunities.
- Measurement and comparability: It is important to report rigorously, looking for precise indicators of impact and risk on the measures or policies implemented. This is beneficial internally for the company, as well as for external stakeholders.
- Internally: thanks to accurate, measurable and verifiable data, companies have a clearer and more tangible vision of their progress, being able to evaluate it and make the best decisions, as well as manage and mitigate risks appropriately.
- Externally: The EINF should be understood as a letter of introduction to interest groups, where to project as much information as possible in such a way that transparency is transferred to credibility and trust.
Report and disclose in the medium-long term
Although the benefits are many, the collection and disclosure of non-financial information is a process that requires dedication and cooperation. The results of the reports are positive in the short term, but as time goes on we can start to really see progress in a comparable way, assessing increasingly specific risks and opportunities.
This means that in the medium-long term the quality and quantity of the information collected, verified and disclosed will be better and greater, helping companies to define themselves more transparently and clearly to all their stakeholders, internal and external. externally.
It is essential that this entire process be established across the organization, both to guarantee the quality of the information and to ensure the alignment that makes social, environmental and economic progress possible.
At DoGood we promote cross-company collaboration to improve the positive impact of organizations. We involve all employees in the sustainability strategy through a technological tool that provides traceability on the total impact of each person’s small actions.
Thanks to this measurable data on sustainability and social responsibility, we help companies improve their ESG impact, build a culture of ethical and social responsibility, create reputational value and encourage commitment and cross-company collaboration.
If you want to know more about how we work to create a positive social and environmental impact, click here.