The non-financial reporting landscape can appear crowded and confusing, particularly when it comes to choosing the right non-financial reporting framework for your organization.
While reporting non-financial performance has become increasingly important for organizations, it’s also, if anything, become more complex. The need to navigate through a wide range of definitions, timescales and expectations puts pressure on individuals and organizations to make the right choice when it comes to selecting a reporting framework. They need to understand their reporting requirements and choose the most appropriate reporting framework.
There are many clear reasons for organizations to report on their non-financial performance, including legal requirements, reputation enhancement and opportunities to identify saving opportunities. But these reasons alone don’t necessarily help when it comes to choosing the right reporting framework to use.
Here are three questions to consider when it comes to choosing the right non-financial reporting framework:
1. What does the framework cover?
Having a framework that applies to your priorities is essential. In addition to mandatory reporting requirements, organizations will often set a specific goal or focus for their non-financial performance. As a result, it’s important that the framework you choose will help you to achieve these goals.
2. How is the framework used?
Another way to think about this is how prescriptive or otherwise do you want the framework to be? Different frameworks have different degrees of flexibility. Organizations need to consider the approach that is most suitable for their non-financial reporting requirements before making a choice on the framework to use.
3. Who is the framework aimed at?
There are two sides to this point. First, who is the audience for your reports and, second, what is the makeup of your organization.
Engaging with stakeholders to understand what is relevant, valuable or material to them is a key foundation of transparent, concise and resonant disclosure on sustainability performance.
Stakeholder groups will vary and require tailored information that matches their needs. The different guidelines and requirements of non-financial reporting frameworks will appeal to different audiences. Therefore, understanding what your stakeholders want to know and what they feel is relevant to them is important when it comes to choosing the right non-financial reporting framework.
The second thing to consider is choosing a framework that is appropriate to the size, type and structure of your organization. While some frameworks can be applied to any organization, others are more specific.
To find out more about choosing the right framework for you and your organization, take a look at our eBook: Sustainability Reporting Frameworks Guide
