Sustainability Reporting For Small Businesses – Five Questions To Ask Yourself.

Nike wins Best Sustainability Report 2010 at Ceres ACCA Awards (Copyright: Nike, Inc., 2010)

Have you ever sat at a restaurant and wondered what the kitchen looks like? Do they keep all the surfaces clean? Do they use fresh ingredients? Do they follow the “Employees must wash hands” policy to the letter and then some? If only the kitchen had glass walls, the germophobe in you thinks wistfully. Now extend that to knowing what went into any everyday product, where they were made and what happens to them once you throw them out and you have a wonderful, transparent world. With the multitude of information sources on the internet, that scenario is not that unthinkable. Customers, investors, employees or any concerned citizen can find and create searchable information on businesses. What about companies themselves? One way for businesses looking to stay one step ahead and put out accurate, permanently available and third-party reviewed information on their operating practices is to publish a sustainability report.

The Global Reporting Initiative or GRI, an independent organization that sets down reporting guidelines and standards, states, “A sustainability report enables companies and organizations to report sustainability information in a way that is similar to financial reporting.  Systematic sustainability reporting gives comparable data, with agreed disclosures and metrics. ” Such reports address a wide range of issues, from GHG emissions and carbon footprints to human rights and corporate governance, helping present a clear overview of a company’s stance on sustainability and their impact on society and the environment. Shouldn’t everybody be publishing one then? Although GRI encourages both small and large companies to use their guidelines, nearly 84% of the 3000+ reports produced in 2011 were from large companies, and more than half from publicly traded ones (Click here for the complete report). To understand why the scales tilt towards corporations, it is necessary to look closely at what sustainability reporting involves.

GRI has formulated a five-step process; Prepare-Connect-Define-Monitor-Report. This is a year-around activity, requiring significant commitment from owners and staff. As a first step, you are required to look closely at current impacts and define a future sustainability vision. This is followed by setting up a reporting road map and identifying responsible people. In the next stage, you must engage key stakeholders and determine their requirements and, in case of suppliers, capability to collect data. This is followed by setting down the structure of the report and putting information collection systems into place. Once you have monitored and gathered data, the final step involves compiling a formal report. This report can be self-assessed or certified by third-party organizations for clarity and accuracy.

Small business owners/first-time reporters are likely to lack clearly documented
impacts from past years, a potential speed bump. Dedicating time and money to
collecting and reporting is another significant barrier from smaller companies. The most difficult step, however, is setting up data collection systems and getting suppliers to participate. As a small business owner, if you are wondering whether sustainability reporting is for you, ask yourself the five questions given below;

Why are you reporting? – The most important of them all. In a study published in 2010 by SustainAbility, Futerra and KPMG, the big question had surprising answers from both readers and writers of sustainability reports. The top answer was not regulatory compliance or stakeholder engagement but “improving internal performances”. What is your reason?

When is a good time? – Reporting is not the same as measuring your impacts. While small companies will benefit from collecting and analyzing sustainability impacts, not all of them need to report this formally. Perhaps as the company gets bigger, it might make more sense than today. The question to ask is, “Is it the best time to start reporting for my company?”

Who is the audience? – To go the extra step and publish a formal report, one must have an audience in mind. Is it intended for your customers, buyers, investors or regulators? The information, presentation, even media can be tailor-made to suit the audience. For example, customers might be better engaged through Facebook than a 60 page document, no matter how glossy it may be.

What is your message? – Emissions, water usage, raw material sourcing, employee policies, community development – there are so many aspects to sustainability. Choosing how much you can measure and how far you want to assess your company’s influence is a critical decision that will impact the time and money you spend on this activity.

How are you going to share your report? – Is it going to be sitting in an online database such as Corporateregister.com? Or a print version for key stakeholders, such as buyers or investors? Or a website, such as Coca-Cola? Consider this: distributing your report need not be limited to a once-a-year affair. With the increasing presence of business on social forums, releasing bite-size chunks of the report spread out over a longer period might increase visibility and impact.

If the answers to these critical questions indicate that a formal reporting process is necessary, cost-effective and will produce significant benefits, then start with the GRI’s Get Started Kit, which can be found here.

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