Companies are facing pressure to become more open about how they do business. With income inequality, governance failures and the mismanagement of natural resource capital threatening both society and the environment, there are growing calls for more corporate disclosure and accountability . Many firms now report how they are doing along economic, environmental and social lines in what is called a sustainability report .
These reports give stakeholders, such as investors, customers and regulators, a comprehensive view of how businesses create value over time. Companies may share indicators such as greenhouse gas emissions, board member composition and water usage . Benchmarks differ depending on a company’s industry and location.
Recent events, such as the campaign to block Shein’s proposed IPO in London due to social concerns , data breaches at Evolve Bank and the ongoing contamination of waterways , all illustrate the importance of managing the risks shown in these reports. Some see sustainability reporting as helpful in running their business and managing key relationships outside the company. That said, not everyone is convinced they are useful.
Only 24 per cent of top executives surveyed by Ernst & Young understand how sustainability reporting will add value to their firm . Many companies are required to produce sustainability reports. For example, the Government of Canada requires reporting of greenhouse gas emissions under the Greenhouse Gas Reporting Program .
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