Reporting sustainability metrics is becoming a widely accepted practice as consumers demand increased transparency throughout the supply chain and today’s leaders in packaging are now making public declarations to reduce what is currently 40,000 metric tons of landfill waste to zero by 2020. Along with this, partners, investors and nongovernmental organizations (NGOs) are requesting that same sustainability data. Here are five steps to improve efficiency as you build your sustainability reporting process.
1. Start with a solid foundation. Numerous customers have told me that their sustainability reporting initiatives started out as internal initiatives charted by the board of directors, the CEO or the vice president. As organizations begin sustainability reporting, we typically see them launch a new business process to collect and report their data. Often the solutions start out low-tech, such as data entry into spreadsheets that make the rounds as email attachments. We cannot escape the spreadsheet as an easy and flexible business tool that helps meet short-term deadlines. However, in the long-term you want to consider systems that better facilitate data entry, provide robust audit logs, and have the capacity of linking the sustainability reporting with the regulatory reporting process.
2. Prepare for an expanding scope. As companies evolve sustainability reporting, they see the data scope and detail expand. One common metric that our customers track is total waste generated. Looking at the first year of tracking, they might just have one request to track total hazardous waste. The second year they include hazardous waste and non-hazardous waste. In year three, they add recycled and reused hazardous waste, and recycled and reused non-hazardous waste. So, even though the process started out tracking one metric, soon they have many more. Think ahead and work with stakeholders early on to understand desired changes and create a plan to handle an expanding scope.
3. Data can change over time. Another challenge customers struggle with is how to handle data that changes over time. Common examples include errors in initially reported data, the categorization of data changes and the reconciliation of production data 60, 90 and 120 days past the period close. In all of these cases, the corrections can lag by months, which represents a hurdle to sustainability reporting. When data shifts, those updates need to flow through the entire reporting process — both regulatory and sustainability reporting — and be reflected accurately and consistently.
4. Synchronize regulatory and sustainability reporting. Customers frequently struggle with whether sustainability reporting should be its own independent business process or simply an extension of regulatory compliance reporting. As they gravitate toward more detail, having two processes with overlapping data starts to introduce potential risk. If a number changes in one system and doesn’t get reflected in the sustainability reporting process, that discrepancy can have negative consequences down the road.
5. Approach reporting with a financial mindset. Every public company gets audited and has prescriptive guidelines on how to manage financial information. We see parallels between the rigorous management required for financial data, and that of sustainability reporting. Similar to financial information, customers should audit and certify their sustainability data and reports. Achieving this requires having a process and system that ensures consistency and traceability from the point of origin all the way through to the reporting. You wouldn’t want to put 10,000 pounds of hazardous waste in the sustainability report when your waste management system shows there are actually 11,000 pounds.
As consumer sentiment trends to sustainable supply chains and transparent business processes, sustainability reporting is a major factor in financial and long-term success. What used to be something nice to have has become a must-have in an era where both consumers and investors evaluate companies by their commitment to sustainability. Communities are demanding responsible neighbors and customers are responding by evolving their purchasing decisions. Don’t get left behind. The new normal is a smooth integration of regulatory and sustainability reporting in a common system, improving data integrity and accountability.