Executive summary
Desire by stakeholders to keep track of organizational performance has led to emergence of sustainability reporting. The report is prepared focusing on social, economic and environmental issues that affect organizations as well as their positive and negative impacts. Implementation of sustainability reporting follows a certain sequence which ensures that final report captures all the relevant information. Management team and stakeholders are involved in identifying issues affecting their organization.
These issues are then evaluated and report compiled before it is communicated. Some of the reasons why organizations report include enhancing financial value and encouraging innovation to improve competitiveness.
The main features of the report include organization’s profile, strategies and analysis as well as parameters used in collecting data and compiling the report. Sustainability reporting helps organizations cut down on operations cost and improves on their profitability. Consequently, organizations ought to adopt it if they wish to continue improving their performance and profitability.
Introduction
Stakeholders want to keep track of organizational performance so as to tell when their organization is making progress or failing. Desire to understand organizational performance is triggered by need of the business community to respond to matters affecting sustainable development (KPMG International, 2008, p. 14). Currently, business strategies, public disclosure and operational strategies are developed in line with enhancement of sustainable performance.
Overview of the task
As organizations turn to sustainability reporting, there are numerous reasons that have made them take this direction. This paper aims at looking at reasons why organizations are adopting sustainability reporting, some elements of the report and steps followed in implementing sustainability reporting process.
Reporting purpose and structure
This report aims at bringing out benefits associated with sustainability reporting thus explaining why organizations are adopting the practice. It will focus reasons for sustainability reporting, outline features of sustainability reporting and describe how it is implemented. Recommendation why organizations need to adopt sustainability reporting will also be given.
Sustainability reporting reasons
Exhibit transparency
Through sustainability reporting, organization is able to demonstrate its dedication to managing its environmental, economic and social impacts. This provides a platform for stakeholders to deliberate on what needs to be done to help the organization realize its goals (Commonwealth of Australia, 2010, p. 1).
Enhancing reputation
Organizational reputation depends on how stakeholders view the organization with respect to social, environmental and economic dimensions. As sustainability reporting enlightens stakeholders on how an organization is performing in the market as well as strategies being used to achieve organizational goals, it facilitates in managing their perceptions (Commonwealth of Australia, 2010, p. 1). Consequently, sustainability reporting helps in maintaining and enhancing corporate reputation.
Creating financial value
At times, sustainability reporting process entails collecting and analyzing information regarding materials and resource usage as well as assessing organizational processes. Accordingly, organizations using this process are able to identify opportunities for cutting down on operations cost and at the same time boosting their revenues. Moreover, sustainability reporting helps in coming up with measures to ensure that organizational materials and resources are efficiently utilized.
Encouraging innovation
Sustainability reporting leads to stakeholders coming up with strategies to improve organizational performance (Commonwealth of Australia, 2010, p. 1). This helps in enhancing competitive advantage. For instance, understanding various stakeholder concerns leads to creation of ground-breaking products and services.
Enhancing regulatory compliance
Sustainability reporting helps management identify emerging areas of compliance such as global warming thus ensuring that they comply with established guidelines. Besides, it may help organizations influence prospect regulatory responses such as mitigating regulations in areas where deliberate disclosure frameworks are found to be effective.
Sustainability reporting features
Strategies and analysis
One of the elements of sustainability reporting is strategies and analysis. This contains statement from managers that are given the mandate to make final decisions in an organization (White, 2009, p. 125). The statement outlines relevance of sustainability reporting to the organization and measures put in place to ensure sustainability. Moreover, key impacts are describes as well as potential risks facing the organization and possible opportunities.
Organizational profile
The second feature entails organizational profile. Name of the organization is given as well as brands offered by the specific organization. For a company offering services, the various services offered are described. In addition, operational structure of the organization is described paying attention to different divisions found within the organization if any (White, 2009, p. 125).
Organization is fully described leading to stakeholders and public understanding it better. Features such as market served by the organization and awards received are brought out.
Report parameters
These include parameters such as reporting period, course for determining report scope and boundaries and any restrictions on report coverage. Tables indicating standard disclosures contained in the report; with respect to global reporting initiative are also included. Insight into the organization’s policies and practices regarding assurance for the report is also included in the parameters (White, 2009, p. 125).
Sustainability reporting implementation
Preparation
The first step in implementing sustainability reporting is preparation. Here, an internal dialogue has to be done at the management level to identify social, economic and environmental issues affecting the organization. Positive and negative impacts of these issues are also identified (Geraghty, 2010, p. 145).
Connect
This is a very important part of implementation process. It entails collecting views from stakeholders on what features to be included in the report. It helps in ensuring that all vital information is included in the final report thus ensuring that a comprehensive report is achieved (Geraghty, 2010, p. 145).
Define
Information gathered from stakeholders (in connect section) confirms if positive and negative features highlighted by management team (in preparation section) are the most vital (Geraghty, 2010, p. 145). This helps in defining the report’s focus. In addition, the reasons why various choices were made are made clear.
Monitor
This involves collecting data that will be included in the final report. Global reporting initiative indicators help organizations in identifying what to monitor or what to look for during data collection (Geraghty, 2010, p. 145).
Communicate
Information collected in the monitor section is included in the final report. Implementation process does not end here. Final report is prepared and compiled. Besides, decisions about how to communicate the report’s findings are made (Geraghty, 2010, p. 145).
Recommendation
Enhancing financial value
Organizations are continuously looking for ways to improve their profitability by cutting down on operations cost. The fact that sustainability reporting facilitates in enhancing financial value of an organization underlines the reason why organizations need to adopt it. Through this, organizations will be able to assess how resources and materials are utilized. Apart from monitoring material and resource usage, organizations will effectively manage their operational processes thus improving overall efficiency.
Sustainability reporting looks into both internal and external factors affecting an organization. Accordingly, the practice will help organizations identify novel opportunities for increasing their revenues.
Reference List
Commonwealth of Australia, 2010. Sustainability reporting. Web.
Geraghty, L., 2010. Sustainability reporting – measure to manage, manage to change. Keeping Good Companies, 3, pp. 141-145.
KPMG International, 2008. KPMG International Survey of Corporate Responsibility Reporting 2008. Web.
White, G. B., 2009. Sustainability reporting: Managing for wealth and corporate health. New York: Business Expert Press.