Unit 49: Sustainability Reporting

Introduction

Businesses have traditionally focused on their performance on financial and accounting information. It is only in recent years that the business community has shifted to additional metrics — in terms of environmental and societal impact — to assess their business performance. Over the past decade, sustainability reporting has been increasingly adopted by corporations worldwide. In fact, in Canada alone, 91 percent of companies report on their sustainability and environmental, social and governance (ESG) performance (“KPMG in Canada Report,” 2022).

ESG reporting is not yet mandatory in Canada, with the exception of federally regulated financial institutions (banks and insurance companies). In Canada, the Canadian Sustainability Standards Board (CSSB) was launched in 2022 to “advance the adoption of sustainability disclosure standards in Canada” (FRAS Canada, n.d.) “The CSSB develops Canadian Sustainability Disclosure Standards (CSDS) that align with the global baseline standards developed by the International Sustainability Standards Board (ISSB) – but with modifications to serve the Canadian public interest” (FRAS Canada, n.d., para. 1).

For now, sustainability reporting currently focuses on two main goals:

1. Documentation and assessment of an organization’s environmental and social impact
2. Communication of a company’s sustainability efforts and progress to stakeholders

Sustainability reporting typically focuses on comparing performance in the current year to the previous year and comparing it to specific goals and targets. It can also include a longer-term focus and comparisons to other companies in similar industries and in the same geographic areas.

Sustainability reporting is also referred to as “triple bottom line” reporting, meaning that it takes into account not only the financial bottom line of a company but also the environmental and social “bottom lines” for a company. Sustainability reporting reflects the interrelated progress of a company in the three areas — also referred to as people, planet, and profit.

Sustainable data metrics

For businesses to understand and improve corporate sustainability performance, organizations need accurate carbon, energy, toxics, waste, and other sustainability data. While traditional business financial statements — such as balance sheets and net income statements — may help a business determine if it is financially sustainable (an important part of business sustainability), they are alone inadequate in measuring a company’s environmental and social progress.

Just as there are accounting standards, such as generally acceptable accounting principles (GAAP), to provide organizations with a common “language” of reporting financial information, there are also standards and processes that have been developed for organizations to measure and communicate their position and progress on sustainability.

The corporate sustainability report

One of the most important aspects of sustainability reporting is the communication of the information so that it can be evaluated by stakeholders. For most businesses, the most visible form of sustainability information communication is in their annual corporate sustainability report. This has become an increasingly common document released by major companies and is typically featured on their websites. Many companies will have a section of their website specifically dedicated to highlighting their initiatives and outcomes relating to sustainability. Sustainability information can be included on consumer packaging or other marketing pieces to help brand the sustainability efforts of the company and assist consumer choice.

Companies may not always call this document an annual sustainability report or environmental, social and governance (ESG )report; it could also be called a corporate social responsibility report, corporate responsibility report, global responsibility report, or many other variants, but they all represent an annual report that discusses the ecological, economic, and social impacts of the company. While each company’s annual sustainability report is different and tailored to the organization, there are often several key common features in a sustainability report.

Key common features of an annual sustainability report include the following:

• Executive introduction. A statement from the CEO or other prominent officials at the company discussing the importance of sustainability for their company and discussing how sustainability integrates into their organization.
• Performance summary. A summary of goals, sustainable performance indicators (SPIs), and key events related to sustainability over the past year. Many sustainability reports base their presentation of information on the Global Reporting Initiative (GRI).
• Detailed sections. These sections provide more in-depth discussion of areas of sustainability highlighted in the performance summary. At a minimum, reports will typically discuss economic, environmental, and social impacts. But there may be dedicated sections for specific areas, such as the supply chain or corporate governance.

Table 49.1: Sustainable Performance Indicators

Note. Table 49.1 highlights the most common sustainable performance indicators that are used to evaluate an organization’s sustainability practices over the past year. Adapted from Canada Energy Sector, 2023.

Conclusion

Businesses have become increasingly more sophisticated in their aspirations and approaches to sustainability—including an embrace of greater transparency—which has translated into tools and sustainability evaluation methods that continue to improve and expand over time.

Currently, there are a number of guides and toolkits online to assist organizations with their ESG reporting.

ESG resources

• CPA Sustainability: A library of sustainability resources for Charted Professional Accountants.
• Bank of Canadian Entrepreneurs (BDC): A site that contains reporting templates for both ESG and EDI intiativies.
• Government of Canada – Corporate Social Responsibility: A government of Canada website that features an implementation guide for Canadian businesses, corporate social responsibility toolkit, sustainability roadmap, and other useful resources.
• SHIFT: An online platform containing sustainability frameworks and ESG tools.

Sample ESG reports

• Canadian Tire
• City of Toronto
• Loblaw Companies Ltd.
• Scotia Bank

Other resources

• Seneca Libraries Sustainability Guide
• The 17 sustainable development goals