User:Rammck/sandbox

Introduction
Sustainability reporting is the practice of businesses measuring and disclosing organizational performance towards the goal of sustainable development. This includes reports on economic, environmental, and social impacts that the business causes through its everyday activities. Sustainability reporting helps businesses show their goals and progress towards decreasing their impacts to stakeholders, shareholders, and the general public. It helps businesses to quantify and understand these impacts, which leads to achieving sustainability goals more easily and efficiently. There is financial gain in examining a business’s sustainability, as identifying inefficiencies in everyday workings lead to opportunities to make corrections and improve operations. These improvements often lead to cost savings on materials, industrial processes, transportation, or other aspects of the business. Because of this, sustainability reporting is a trend on the rise, as more and more businesses are focusing on the good they can do in their communities while also improving their day-to-day operations.

History of Sustainability Reporting
Corporate sustainability reporting has a long history going back to environmental reporting. The first environmental reports were published in the late 1980s by companies in the chemical industry who had serious image problems. The other group of early reporters was a group of committed small and medium-sized businesses with very advanced environmental management systems. Non-financial reporting, such as sustainability and CSR reporting, is a fairly recent trend which has expanded over the last twenty years. Many companies now produce an annual sustainability report and there are a wide array of ratings and standards around. There are a variety of reasons that companies choose to produce these reports, but at their core they are intended to be "vessels of transparency and accountability". Often they also intended to improve internal processes, engage stakeholders and persuade investors.

Development of Reporting
The development of sustainability reporting has reflected prevailing social and political climates. During the 1960s and 70s, US society was concerned about social issues such as women’s rights, and racial equality. Corporations started to include information about employee relations and human resources in their social report, which was disclosed in company financial statements rather than in separate reports. From the late 1960s, environmental catastrophes greatly attracted public attention and brought environmental issues to the forefront. These include the fire on Cleveland’s oil-contaminated Cuyahoga River on 23 June 1969, and the massive chemical leak in Bhopal, India in December 1984 that caused 20,000 deaths and left almost 600,000 people with permanent injuries. Environmental issues have become one of the main concerns of society. Because of this, the government put more pressure on corporations to provide information about how their activities affect the environment.

John Elkington’s concept of the ‘triple bottom line’ also had a significant impact on sustainability reporting. Its basic idea is that in addition to financial consideration, corporations should report their social and environmental performance in order to achieve future market success. This idea has benefited companies, as they have seen that being good social and environmental performers leads to improved financial gain.

Importance of Reporting
Sustainability reporting is important to corporations because it keeps companies accountable, provides financial incentives, promotes environmental responsibility, creates societal opportunities, and allows for a standardized system for corporate evaluation.

The first major significance of sustainability reporting comes from company accountability to their shareholders. Through transparency and public reporting, a company will be held accountable for its activities by those who invest or hold a stake in the company. This relationship between corporate transparency and stakeholder opinion can then open up opportunities within the social realm. For instance, public reporting of the current sustainable standing within a company can greatly impact public perception. This is important because the company can visibly show their efforts to better society and the environment, and create a better public opinion which can lead to increased sales, future investment opportunities, and other financial incentives. Another importance of sustainability reporting is the aspect of environmental responsibility. Through normal operations corporations are constantly impacting the environment around them. Therefore, it is important that they recognize where their operations have the most negative impact and what areas they can and should improve upon. This is accomplished by taking the time to lay out and report on the sustainability of a company’s activities. With a standardized reporting system, companies are able to follow basic guidelines to report their activities and determine their impacts, which leads to a better understanding of their operations and any possible improvements that can be made. Having a standardized sustainability reporting system is essential for being able to evaluate organizations. The ability to compare and evaluate corporations is important to governments, investors, other companies, and society as a whole. It lets them know which companies are the most progressive in enacting sustainability initiatives, as well as revealing those companies which are struggling to reduce their impacts. Both aspects are important because it allows outsiders to assess the current position of a company in regards to sustainability and environmental friendliness. Conforming to a standardized system can be beneficial to companies when looking to partner with other companies, find investors on new projects, or follow regulatory guidelines set by local and federal governments.

Standardized Reporting
There are large number of different frameworks and benchmarks that are used to report sustainability activities and performance, while offering comparison and evaluation for investors. Some of the most credible and well known examples include the CDP framework and the Dow Jones Sustainability Indices (DJSI). Some other examples of sustainability reporting systems include GRI, SASB, and GRESB; where the GRI framework is most notable. This framework has practically set the standard for corporate sustainability reporting with its attempts to create consistent and inclusive reports.

The Dow Jones Sustainability Indices are a benchmark and tracking system designed to follow stock performances from global leaders in the scope of environmental, economic, and social criteria. They were the very first sustainability benchmark system, and are an important asset to investors looking to integrate sustainability concepts into their portfolios, while also providing a discussion platform for organizations who are interested in integrating further sustainable ideas.

Global Reporting Initiative

GRI is an organization that has established and pushes for consistent sustainability reporting across all organizations and industries. Specifically, they look at a company's performance and impacts in regards to four key areas; economics, environment, social, and governance in order to create a framework for standardized reporting. They are responsible for a major shift in policy and conduct for many businesses, as companies started to see the benefits of disclosing their environmental footprints to the public.

Carbon Disclosure Project

The CDP is an organization that collects and publishes sustainability reports from companies and investment groups from around the world. The CDP website states that "in order to protect long term investments, institutional investors must act to reduce the long-term risks arising from environmental externalities." This shows that the goal of investors partnering with the CDP is to work together to better the planet to ensure the safety of investments moving forward. The information the CDP publishes is measured and disclosed by the companies themselves for the benefit of investors, shareholders, and governments. The main purpose behind CDP is to incentivize and motivate companies to change their operations to better protect the environment and work towards long term profits and goals, not just short term ones.

Non-standardized Reporting
Non-standardized reporting is when companies report their sustainability progress without using any standardized reporting system. Companies are free to report anything they would like, which leaves them free to include only positive things and leave out any shortcomings they may have. Because of this, there are issues with non-standardized reporting, mainly due to inconsistencies that occur without standardization. This can make it difficult to compare companies and understand the scope of their report. Companies are also less likely to report without a standard framework because the benefits of doing so in that situation are greatly diminished.

Advantages of Reporting
Generating sustainability reports has many advantages for businesses that choose to do so. Sustainability reports can increase the internal awareness of climate change and other environmental issues within the company. Management can see problems more clearly, which can lead to finding solutions more easily. Employees tend to be more motivated to work for these solutions when they have a clear idea of the goals they are working towards. If a company consistently reports and meets their sustainability goals, the public tends to view the business in a higher light than they would otherwise. The accountability a business shows by acknowledging that it is working to remedy its shortcomings leads to a positive reputation impact within the public eye.

Many sustainability assessments are included in corporations’ sustainability report. The most common ones are carbon footprint and water footprint sustainability assessments. They disclose the amount of greenhouse emissions and water consumption from corporations’ activities, such as extraction, production, trading, etc. Corporations use these assessments to compare which activities produce more greenhouse gases and require more water. After identifying areas to reduce environmental impacts, they look for ways to be more efficient in using natural resources. When businesses identify and implement more efficient processes as a part of their everyday operations, it often leads to a reduction in operations costs. This stems from the fact that oftentimes an increase in efficiency means a reduction in material use. Less material going through the system means that less money has to be spent buying these materials. Increasing efficiency at any point in a businesses supply chain will likely translate to cost savings for the business. Changing processes to be more efficient can lead to business getting done more quickly than it previously was. Cutting out unnecessary steps can increase a process’s speed, which means that more product can be produced. Consequently, the profits can increase because more material can be sold.

Trends in Reporting
Sustainability reporting is seldom required for a business to do, but more and more companies voluntarily generate sustainability reports because of the many advantages that come from doing so.

Most large businesses generate sustainability reports. Because they have the biggest and longest processes, they generally have the most room for improvement within their operations. This means that the issues they find in their sustainability reports will have a bigger impact on their processes and profits than a smaller business could have. Larger companies also have the opportunity to make a bigger impact in local areas through community involvement. More money can be given back to the community, and a bigger workforce can be used for volunteer service work if the business chooses to promote employee involvement. A higher percentage of companies in Europe report on their sustainability strategies than companies in the United States.

Impact of Reporting
Sustainability reports can help businesses shift their philosophy and conduct toward how their organization is run. Once flaws are exposed through the standardized report, widespread changes can be made to improve operations. This often involves a large shift in priorities for the business, as focus can change solely from profit generation to environmental and social impacts of the business. Seeing a business’s sustainability report provides opportunities for research on sustainability-related areas. Once areas for change are identified, resources can be put towards researching new and innovative ways for the company to become more sustainable. Generating sustainability reports gives businesses the opportunity to partner with other organizations, such as NGOs (Non-Government Organizations) to help conduct research and identify ways to reduce the business’s impact on the society around it. Partnering with outside organizations is an excellent way for companies to have a neutral party examine their situation and provide honest feedback on what the ideal strategy is moving forward. There have been many successful partnerships between businesses and a neutral party that collaborate to create a more sustainable business. There are corporations that spend more time and money claiming to be “green” through advertising and marketing than actually practicing sustainable development. By reporting about only good things they do on sustainability reports, corporations can depict themselves more “green” than they actually are.