13.2 Identify User Needs for Information

Sustainability reporting has become crucial for businesses to communicate their environmental, social, and governance (ESG) performance. Companies use these reports to showcase their commitment to responsible practices, addressing the diverse information needs of stakeholders like investors, customers, and employees.

Comprehensive reporting approaches, such as integrated reporting and the Global Reporting Initiative, help companies provide a holistic view of their sustainability efforts. These methods enable stakeholders to assess a company's long-term viability, make informed decisions, and drive positive change in corporate behavior and societal impact.

Sustainability Reporting and Stakeholder Information Needs

Stakeholder use of sustainability reports

• Investors and shareholders
  • Assess financial risks and opportunities related to sustainability issues (climate change, resource scarcity)
  • Evaluate company's long-term viability and potential for growth based on sustainability strategies
  • Make investment decisions based on ESG factors (carbon emissions, labor practices, board diversity)
• Customers
  • Assess company's alignment with personal values and ethics (environmental stewardship, social responsibility)
  • Make purchasing decisions based on company's sustainability practices (sustainable sourcing, eco-friendly packaging)
  • Evaluate company's transparency and accountability in reporting sustainability performance
• Employees
  • Assess company's commitment to employee well-being and development (health and safety, training programs)
  • Evaluate company's alignment with personal values and career goals related to sustainability
  • Make employment decisions based on company's sustainability performance and reputation
• Regulators and policymakers
  • Monitor company's compliance with sustainability-related regulations and standards (emissions limits, waste management)
  • Assess company's contribution to broader sustainability goals and initiatives (Paris Agreement, SDGs)
  • Develop policies and regulations based on industry sustainability trends and best practices

Impact of ethical investing

• Ethical investing
  • Involves considering ESG factors in investment decisions alongside financial returns
  • Aims to align investments with personal values and beliefs (environmental protection, human rights)
  • Promotes responsible and sustainable business practices through capital allocation
• Impact on corporate behavior
  • Encourages companies to adopt sustainable practices to attract ethical investors and access capital
  • Increases accountability and transparency in corporate sustainability performance through investor scrutiny
  • Drives innovation and development of sustainable products and services to meet investor demand
  • Promotes long-term value creation and risk management by addressing sustainability challenges

Sustainability reporting for stakeholder needs

• Employees
  • Provides information on company's commitment to employee well-being and development (diversity and inclusion, work-life balance)
  • Communicates company's values and sustainability goals to align with employee expectations
  • Enhances employee engagement and retention by demonstrating commitment to sustainability
• Customers
  • Provides transparency on company's sustainability practices and performance (carbon footprint, ethical sourcing)
  • Allows customers to make informed purchasing decisions based on personal values and preferences
  • Builds trust and loyalty through demonstrating commitment to sustainability and responsible business practices
• Communities
  • Provides information on company's impact on local environment and society (water usage, community investment)
  • Communicates company's contribution to community development and well-being (job creation, infrastructure development)
  • Enhances social license to operate and builds positive relationships with local stakeholders

Comprehensive Sustainability Reporting Approaches

• Integrated reporting: Combines financial and non-financial information to provide a holistic view of a company's performance and value creation
• Global Reporting Initiative (GRI): Provides standardized guidelines for sustainability reporting, enabling comparability across organizations
• Triple bottom line: Focuses on reporting economic, social, and environmental performance to measure overall sustainability impact
• Corporate social responsibility (CSR): Emphasizes a company's voluntary actions to address social and environmental concerns beyond legal requirements
• Materiality assessment: Identifies and prioritizes sustainability issues most relevant to the company and its stakeholders for focused reporting