Companies should consider ditching “phone book-sized” reports on corporate social responsibility (CSR) and environmental, social and governance (ESG) in favour of more focused communication, according to a think tank.
The Conference Board ESG Centre said in a study that companies needed to develop a more tailored approach to communicating core sets of sustainability issues to key stakeholders.
The research examined how companies can tell their sustainability “story” more effectively, authentically, and reliably to multiple audiences.
It concluded that lengthy CSR/ESG reports failed to meet companies’ objectives or the needs of employees and customers – who needed relatable narratives – and investors and business partners – who crave data to make decisions.
Companies needed to focus on the handful of top priority issues which will have the greatest impact on stakeholders, society and the environment, the report said. They need to note that investors, reporting frameworks, and ESG rating firms are also looking for timely data.
The study recommended companies focus on explaining how sustainability is integrated into their business and tell their story in a tiered manner, with a core narrative featuring a company’s highest priorities along with supplemental, searchable, data-heavy information.
The report, Telling Your Sustainability Story, was produced in collaboration with Weil, Gotshal & Manges. It is the result of a working group convened by The Conference Board involving more than 340 ESG and communications executives.
It includes guidance for companies on determining what to include in their sustainability story, communicating it authentically and effectively – by linking it to business strategy and reflecting it in decision making, operations, approaches to risk management, and product development.
Engaging employees and allowing them to offer a “reality check” for authenticity is allow crucial, the report said.
Sustainability reporting should be balanced and transparent and the report warned downplaying negative information risked credibility with stakeholders and left companies open to accusations of “greenwashing”.
Companies should also increase the use of external sustainability assurance services to ensure the reliability of their reporting, while being selective about which rating organisations to engage with.
The report recommended company coalitions with investors and stakeholders to find common ground in addressing the increased disclosure being sought by policymakers in the EU and US.
Paul Washington, executive director of The Conference Board ESG Center, said the two biggest challenges companies would face on this issue were disclosure regulations and accommodating business partners’ requests.
“Unlike prior waves of disclosure regulations, US and EU regulators are looking to impose similar obligations on both companies and investors,” he said. “Given this common ground, the corporate and investment communities should work together to have more impact on the final rules adopted.”
Companies are having to deal with suppliers, partners and customers who want help achieving their own sustainability goals, said the report.
“Companies are facing a looming tsunami of often highly detailed information requests from their business partners on environmental and social topics,” said Washington.
“To avoid the system being overwhelmed, companies should start, if they have yet to do so, engaging with their business partners and with industry coalitions to set reasonable expectations.”
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