At CtrlPrint we produce and publish a biannual survey called ‘The production of a sustainability report’, which focuses on how reporting entities go about producing and publishing their sustainability reports. During the fall of 2022 we will conduct the next survey, which will be published during the spring of 2023. Although only four years have passed since the first survey, our anticipation is that the speed of change will have increased.
In 2018 when we conducted our first survey, the Non-Financial Reporting Directive (NFRD) had just come into effect and a large number of European companies had published their first sustainability report.
For the second survey, which was conducted in 2020, the reports had developed. In Sweden, the UK and Finland, where the majority of the respondents were located, the general opinion among the respondents was that the development of the sustainability reports was mainly driven by an increased demand from stakeholders and a continued general increased focus and demand for sustainability information.
The survey showed that internal progress and development in the sustainability area was ranked higher than legislation, which was considered the fourth-most important reason. Companies not only act on legislation, but also by choice take action to improve the reporting as a response to demands from other stakeholders.
Respondents from all three markets mentioned that compared with 2018 the ‘positioning vis-à-vis competitors’ and ‘self-interest in more extensive reporting’ was less relevant for the development in 2020. We interpreted this as a result of sustainability reporting now being a regulatory demand for a large number of companies and organizations, and not only voluntary additional information to satisfy stakeholder demands.
The introduction of the NFRD has decreased the importance of reporting by self-interest and positioning toward competitors as a driver of the development. Sustainability reporting has become more of a hygiene factor like many others in financial and non-financial reporting. With the upcoming sustainability reporting standards from the International Sustainability Standards Board (ISSB) and the European sustainability reporting standards, will this development continue?
When asked to compare the sustainability report from 2017 with the one produced in 2019 the responses were as follows:
- further developed the format and KPIs
- increased inclusion of the UN Sustainable Development Goals was the second-most common change
- included a different reporting framework compared with 2017
- entirely new format and new KPIs.
As an endnote, a mere six entities answered that there were no apparent changes in the reporting. Although change is mostly for the better, we believe there is an advantage to not changing the format and KPIs too often, as there is an imminent risk that comparability will decrease.
But with the upcoming standardization, change will lead to increased comparability. The lack of consistency in reporting and information comparability has been a common criticism of sustainability reporting, as well as the fact that there is no common standard to be used. The work of ISSB and the EU will hopefully solve part of that problem, but it will probably not immunize sustainability reporting from the criticism. What is certain, however, is that the reporting landscape will continue to change and evolve. And we are looking forward to following it closely.
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