Help … where do I start with sustainability reports?

• 8 May 2017

Always I get asked, “how on earth do I get started as a responsible investor?”

So last month Moxie Future launched YOUR RESPONSIBLE INVESTMENT ROADMAP, an 8-step action plan to support investors on the journey.

It goes without saying that one of the most important actions we can take is to learn more about what companies are doing. There is a wealth of information out there now, so using this to our advantage and being more empowered as responsible investors has never been easier.

And this is where sustainability reports come in – in my view, one of the best places to start.

What is a sustainability report?

A report issued by a company telling you about the economic, environmental and social impacts of its everyday activities. These can be found on company websites, sometimes stand alone or incorporated into the annual report.

Is that it?

Pretty much, but the report should also give you a strong sense of the company’s values, and the extent to which the company’s strategy is linked to its commitment to a sustainable global economy.

Taking it up a level, the purpose of a sustainability report is to answer the question of whether a company’s present practices and operations can persist. And that’s a big question.

Why does this matter?

Well, because responsible investors are looking for companies that create more value than they destroy.  And so a company’s report is a useful starting point. It helps us measure and understand the company’s performance beyond simply its financial results. Some companies are going even further and producing an integrated annual report that reports on performance and strategy for managing the six capitals – financial, manufactured, intellectual, human, social and relationship, and natural capital – to create value.

What makes a good report?

Some sustainability reports can look great and be easy to read but it’s worth bearing a few things in mind. Good reports should:

• Only report on the big issues – the sustainability issues that matter to that company. What are the most material issues and where does the company have the greatest impact? How does the company perform on these issues?
• Get specific about targets – it is one thing to report, but another to set targets to improve and report back on these. So look out for KPIs and commitments to get better. These may include targets such as emissions or resource reductions, plans for improved community engagement or external standards.
• Provide the full picture – look at what is in the report but also what is left out. Some reports can be full of anecdotes and pretty pictures. But what information is not being included? And what is the broader context? This is where year on year numbers are important. Is the report balanced and credible – does it share the good, the not so good and how it plans to improve or change?

Who does it well?

There are a lot of companies that publish some great sustainability/integrated reports.  Corporate Register runs an annual global award program and provides a useful resource to better understand who does it well. Last year, Marks & Spencer came out on top, with other front-runners including Coca Cola and Nestle SA.

The likes of adidas, H&M, the Crown Estate and Unilever also do it well, among others.

Top tip – try to read more than one report at a time. This is really important to be able to judge the story you are being told.

What else should I know?

Many companies report simply because … well, companies report. But a good sustainability report should be about having a conversation with its stakeholders – customers, local communities, employees and investors.

Yours responsibly,

Jessica Robinson
Founder