New global regulatory requirements for sustainability reporting enhance the information to an investor-grade standard. The EU’s CSRD and the ISSB’s standards, which now have been adopted or considered in 20 jurisdictions representing nearly 55% of global GDP¹, create a new paradigm for sustainability reporting. 

The approach of both sets of standards calls for a deeper integration of financial and sustainability information. Disclosures on environmental, social and governance (ESG) issues should be rigorous, standardised and written to meet investors’ decision-making needs. Specifically, companies are required to report their sustainability in terms of governance, risks, materiality, financial impacts and financial planning. 

Yet, this informational rigour may be even more difficult for mainstream audiences to interpret than previous sustainability reports. Companies still need to communicate their sustainability goals and purpose in a way that resonates with non-financial audiences. Digital impact reporting could prove effective.  

What’s changed? 

In the past, annual sustainability reports were often prepared with mainstream engagement in mind to satisfy the needs of diverse audiences. They would feature positive impacts, stories and purpose narratives to attract talent, customers and partnerships. 

Today, investors require more information on sustainability to consider systemic issues linked to sustainability that are deeply influencing the global economy. To better compare how companies are managing their sustainability risks and upholding commitments to transition to a low-carbon economy, investors are seeking highly precise and detailed data and disclosures. To support these needs, regulations have emerged to support the standardisation of sustainability information found in annual sustainability reports.

However, this creates a new gap in sustainability communications for mainstream audiences. Research shows that audiences are deeply interested in a company’s sustainability profiles. A Unily survey across 2,000 UK businesses found that 57% of employees wanted more information on their company’s environmental goals². Other research suggests that when companies share sustainability information it  could translate into positive consumer and employee engagement.  

According to an IBM survey³, approximately two thirds of respondents said they would be more willing to apply for and accept positions in environmentally sustainable companies. Only 21% considered their current employers sustainable. However, the survey found that when companies embedded sustainability across core business functions, they were 56% more likely to outperform on talent attraction. 

The same survey addressed consumer perspectives on sustainability. Half of the respondents said they’d pay more for sustainable products, while three in five of the respondents said sustainably branded products made up more than half of their past purchase.  

These statistics reflect the deep interest in brands and employers that can deliver on their sustainability promises. Reaching the audiences with the right messages in a compelling format is critical to ensuring they receive relevant sustainability information. 

Regulated reporting could present challenges to readers

Readers have multiple challenges to interpret regulated sustainability reports, such as the volume of information, its granularity, and the methodological terminology and explanations: 

• Volume:  Companies preparing CSRD-compliant reports are obliged to report–as indicated by the phrase “shall”–a total of 823 data points across all of the ESRS standards⁴, subject to materiality.  This includes 132 data points for ESRS 2, which is required for all companies. The high volume of detailed data points could place a burden on readers seeking to understand the bigger picture of a company’s purpose. Granularity: Companies surveyed by EFRAG⁵
  on their efforts to align their reporting with CSRD, suggest that 45% of companies are enhancing the granularity of their value chain mapping to meet reporting requirements beyond simple depictions of upstream, downstream and direct operations.
• Terminology:  CSRD has adopted new terminology that is causing debate among sustainability professionals, specifically those related to materiality such as “double materiality.” However, even more familiar terms may be hard for mainstream audiences to interpret. For instance, a survey⁶ of 1,000 UK adults showed only 11% felt they had a strong understanding of the term “carbon offsetting”. 

While the informational rigour is expanding in compliance-focused reporting, companies may need to deliver this information to mainstream audiences using more engaging formats and storytelling techniques. 

Reimagining the sustainability page 

Compared to a traditional report, sustainability webpages offer greater flexibility in design and communication strategies. By sharing insights, highlights, progress and more, companies can transform their sustainability pages into impact reporting hubs. This approach eases the headache of the annual reporting slog, providing engaging information to stakeholders that is regularly updated–not a static snapshot of sustainability performance.

Companies that connect sustainability purpose with outcomes through storytelling can mirror their brand culture in their sustainability communications. Within a sustainability page, companies can include interactive, media-rich insights that can be interpreted at a glance, without special knowledge of industry jargon. 

Key benefits to enhancing sustainability communications on a sustainability page include: 

• Interactive design

Webpages can expand the insights from words on a page to a highly interactive design format, appealing to younger, more tech savvy audiences. 

• Sharable formats

The information can be parsed into shareable elements such as videos and social media content that aligns to the brand voice and culture of a company. Alternatively, companies can repurpose parts of their communications as training material for employees to learn about sustainability initiatives. 

• Targeted messaging

By delivering sustainability information in a wider range of formats, companies can focus on the specific needs of their unique audiences. 

• Greater creativity in sharing values and purpose

Digitally enhanced impact reporting opens up new creative opportunities. Companies can incorporate the stakeholders’ voices in interviews, include case studies, and share highlights and external recognition in a way that tells a values-centred story about sustainability. 

It’s clear that compliance-focused reporting will deliver an abundance of rich data that investors are calling for. Going one step further, companies can bring the data to life in an impact report by sharing their sustainability journey as a compelling narrative that engages and inspires. This is essential for attracting people to your organisation based on shared values and purpose.  

To develop a purpose-led impact report to engage communities, customers and talent, get in touch here.

1. https://www.esgtoday.com
2. https://www.esgtoday.com/ibm-survey
3. https://www.esgtoday.com/ifrs
4. https://www.efrag.org
5. https://www.efrag.org
6. https://sustainablebrands.com