Global Compact Network Singapore

Five things to watch out for when reading a sustainability report

Most people feel a little lost when they pick up their first sustainability report. Where to start? What to look out for? What constitute a good report? Here are five things that you should watch out for when reading a sustainability report:

  1. CSR policies and practices. A report should provide an overview of a company’s CSR policies and practices. This could be in the form of a letter from a senior management which would convey the company’s CSR commitment at the highest level. It should also share the goals that company had announced previously, tracked against actual progress, as well as the company’s future goals.
  2. Systematic data, not just anecdotes. While anecdotes may be useful in providing insights into initiatives, a good sustainability report should show data of the issues that is being tracked, company-wide. This could be also in the form of regional level reporting, facility-level reporting (eg. for a company in a capital intensive industry) or specific environmental or safety records. The data should also be presented in a comparable format, adjusted to reflect changes in size of operations or corporate structure for instance, or allow for year-on-year comparisons. The company producing sustainability reports should report data in the same format each year.
  3. Includes good and bad news. Many companies are afraid of sharing ‘bad news’, preferring to present their best face to the readers. But the reality is every company has its share of problems, issues and controversies, and often, some of these would already have made news. In fact, readers may conclude that a company is not serious about looking into issues that it is facing or not thorough in its response when it choose to downplay ‘bad’ news in its sustainability report. A credible sustainability report thus would contain a balance of ‘good’ and ‘bad’ news. This could provide the company with an opportunity to share how it handled the difficult challenges it faces and demonstrate its progressiveness on CSR issues.
  4. Go beyond community affairs. Community engagement programmes and initiatives may be the first steps that many companies make in their CSR journeys and it important for companies to report on their commitments to communities in which they operate in. But a sustainability report is more than a report of the company’s community affairs activities, and a comprehensive report should address a wider range of activities that affect their stakeholders and society. A company progressive in its CSR journey should be transparent in addressing the biggest challenges faced by the company and the industry that it is in.
  5. Integrate sustainability data with business strategy and financial reporting. So that readers can understand the financial implication and benefits of its CSR initiatives, a company should strive to integrate data of its sustainability efforts with its business strategy and financial reporting. It also signals that the company takes sustainability issues seriously.

Information adapted from "How to Read a Corporate Social Responsibility Report", a 2010 study from the Boston College Center for Corporate Citizenship.

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