The non-financial reporting landscape can be confusing for organizations that need to navigate definitions, timescales and requirements for different reporting channels. Most global organizations report in some way on their non-financial performance, strategy and vision. Whether it’s through mandated legislation, voluntary schemes, social media or direct communication with stakeholders. As pressure mounts to disclose more information to a broader range of stakeholders, in an accurate and timely manner, it’s understandable that organizations can feel overwhelmed.
Additionally, let’s not forget that the expectation for clear and concise communication tailored to different stakeholder groups remains paramount. This necessitates not only transparency but also an understanding of what stakeholders perceive as relevant, valuable, or material.
This blog addresses the challenges of non-financial reporting, emphasizing the need for tailored communication to diverse stakeholders and the importance of aligning goals with relevant ESG reporting frameworks.
WHY report?
An organization might report on their non-financial performance for various reason. The key examples include enhanced reputation, ensuring investors and because it’s mandated. Inevitably there are a multitude of reasons but the key question to consider throughout the process is why it’s being done and what’s hoped to be achieved as a result? It could be winning new business, improving stock prices or gaining new investment. Whatever it is, it is important to keep this in mind and choose a framework that facilitates achieving the goals.
WHO is the audience?
At the heart of any kind of successful communication is knowing your audience. In non-financial reporting, the stakeholder groups are varied and often want different information communicated in a tailored way. As an example, if you considered a manufacturer, how investors, the public and NGOs might view their supply chain for obtaining raw materials would vary. The various ESG reporting frameworks, standards and guidelines available target different audiences. Thus, companies should align with what the relevant stakeholders see as material issues for each organization.
Key ESG reporting frameworks include:
- Global Reporting Initiative (GRI). Focused on sustainability reporting, GRI provides a comprehensive framework for organizations to disclose their environmental, social, and governance (ESG) performance.
- International Sustainability Standards Board (ISSB). The ISSB was established to create global sustainability disclosure standards, integrating guidance from SASB to provide consistent and comparable sustainability information for investors.
- Task Force on Climate-related Financial Disclosures (TCFD). TCFD focuses on providing guidance for organizations to disclose climate-related financial risks and opportunities, helping investors make informed decisions.
- Carbon Disclosure Project (CDP). CDP enables companies to measure, manage, and disclose their environmental impact, specifically in areas like climate change, water security, and forest management.
- Corporate Sustainability Reporting Directive (CSRD). This EU regulation mandates that companies report on sustainability matters, enhancing transparency and accountability in non-financial disclosures.
WHAT needs to be reported?
More recent guidance on non-financial reporting has placed materiality at the forefront of the reporting process. Engaging with stakeholders to understand what they perceive to be relevant, valuable or material issues for an organization is the key foundation to a transparent sustainability disclosure. It’s important to balance what a company reports between what they are currently doing and their future goals.
Finally, when thinking about choosing a non-financial ESG reporting framework, it’s important to emphasize that it should be part of a process and not a box-ticking exercise to satisfy a real or perceived requirement. Does the framework ‘work’ for the organization? And inevitably is it going to support the transition to a more sustainable business?
How Cority Can Help
Cority offers comprehensive sustainability software and advisory services designed to assist organizations in navigating the complexities of non-financial reporting and ensuring compliance with evolving ESG regulations.
Our solutions provide robust tools for accurate data collection, streamlined reporting, and third-party verification, enabling companies to transparently demonstrate their sustainability commitments.
Whether you are an experienced reporter or just beginning your sustainability journey, Cority is here to support you at every step. Discover how we can help you enhance your non-financial reporting practices and achieve your ESG goals.
