Why Companies Should Disclose Business Sustainability Risk

sustainability reportingWhen it comes to business sustainability monitoring and reporting, the debate continues on whether a company should focus on transparency and continuous individual improvement or corporate performance measures relative to a broader all-encompassing target.  Rather than separating traditional performance from sustainability, would the business be better served in aligning business sustainability with traditional financial reporting?

To navigate these complexities, our sustainability consulting practice leverages further insight from the GreenBiz.  Contained within the article, Materiality Matters: Why Don’t Companies Have to Disclose Sustainability Risk, our sustainability consulting practice finds an in-depth discussion of sustainability reporting.   The author explains that the traditional definitions of risk are evolving with the growing need to integrate sustainability concepts into standard business practices.

“Given that disclosure of financial risk always has been a difficult mandate for publicly-traded companies, requesting the voluntarily disclosure of sustainability risks may seem like a nearly Sisyphean task…Although more companies are disclosing sustainability information, there are few standards and the reporting is often vague and subjective…Some companies have been under increasing pressure to disclose sustainability information from investors in part due to increasing concerns over the risk of stranded assets.”

Further building on this conversation, the article, 6 Reasons Your Company Should Report to CDP, we find a value discussion for business sustainability measurement and reporting.  Here the author presents a list of reasons why a company might want to report its actions, specifically to the Carbon Disclosure Project (CDP).

  • Your investors want you to: A few years ago, Goldman Sachs released a study (PDF) documenting how the publicly traded stocks of sustainability reporters outperformed that of non-reporters…the belief that strategic sustainability enhanced profits. 
  • Your stakeholders demand it: Consumers, business partners and other entities are clamoring for transparency…communicate a message to stakeholders that you’re serious about tackling the environmental challenges material to your business.
  • Everyone is doing it: This collective wisdom suggests these organizations see and are realizing value in excess of the costs and burden it takes to report. 
  • The reporting process will make you rethink your business: The act of disclosing inherently means embarking on an effort to measure your performance in new ways. 
  • Benchmarks matter: The hardest part of sustainability reporting is just getting started.. standard such as CDP is a great way to launch your disclosure efforts while getting an excellent benchmark against your peer group.
  • You will learn how to better attract, retain and engage top talent: Recent studies have shown that sustainability is an important factor in acquiring talent. Involving employees in your sustainability programs leads to higher levels of engagement on the job, particularly among millennials who want to make a difference through their work.

At Taiga Company, we believe that a comprehensive business sustainability reporting perspective would focus on incremental and continuous improvement relative to traditional measures.  Rather than jumping directly to consequence and accountability, a global business shift toward greater transparency and aligned business sustainability metrics could drive significant change.  We encourage each company to reevaluate their economic and sustainability metrics in order to improve internal and external communication and create alignment across the value chain.

By | 2016-11-12T11:53:31+00:00 April 29th, 2015|Supplementary Content|0 Comments

About the Author:

Leveraging 15 years of business development, marketing, and communications expertise in the Energy, Medical, and Information Technology industries, Julie now consults and advises clients on purpose driven stakeholder communications in the social space. Specialty areas include a variety of issues intersecting between environmental stewardship, sustainable business practices, and the bottom-line benefits of sustainability strategies. Julie leverages a BA in Political Science from Indiana University of Pennsylvania and IT studies from Southern Methodist University to meet the social, technological, environmental business objectives of Taiga’s clients.