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Over the past few months, we’ve been scouring the search engines to decipher an actual template for impact reporting. With so many frameworks in place, the knowledge that it is a voluntary process, and minimal accountability in this space - describing Impact Reporting as a minefield would be apt.
To make it clear, the following are all the same thing:- ESG report- Sustainability Report- Impact Report- Social and Environmental Impact reportWhen we talk about the impact and the interchangeable terms above, we are referring to the positive and negative effects a company has on:
An impact report helps you communicate the extent of the positive (and negative) effects you have had across people, communities and the environment.
But do you have to write one? That’s a good question; at the moment, some companies do, and some don’t.
Current UK Companies Act 2006 regulation is still ambiguous at best, with the following providing the only insight from the act:
- Large to medium companies need to publish an annual strategic report which, to a certain extent, showcases environmental matters, employees and social, community and human rights issues.
- Directors of a company “must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole"". When referring to members, the act includes employees, communities, the environment, suppliers, customers and others. However, don’t be mistaken that the primary objective is still to please the shareholders.
- Note: the BetterBusinessAct seeks to level the playing field, so companies by law must seek to fulfil all stakeholder needs, not just shareholders.
- Quoted companies must report their Greenhouse Gas Emissions (GHG) in their Directors’ Report.Some organisations are responsible for reporting their impact by nature of work such as Charities, Social Enterprises and public sector organisations. You also have certifications, such as B Corp, that stipulate you must report the impact you have had.
What should you do if the laws around this are ambiguous? That’s where frameworks come into play.We are seeing great movements globally, with sets of standards such as the International Financial Reporting Standard (IFRS) and the EU Sustainability Reporting Standards (ESRS) pushing for a more robust framework to which all large-medium companies will have to report.With the ESRS taking shape and the EU doorstep, this will likely affect UK companies. And in the UK as well, we have our framework known as the Taskforce for Climate-related Financial Disclosures.
You also have the Sustainable Accounting Board Standards (SASB) that provide an industry-specific framework - which is good as an ad agency should be viewed against a different set of criteria to a product packaging company to a certain extent.But can you see what’s starting to happen? In total, there are 13 commonly used frameworks, referencing one another - all with a different approach, but all working towards the same goal. This can be frustrating for businesses as to which one you assign to.
There is no hard and fast rule here. It would be best if you did your research to work out what makes sense for you to report to. Give your stakeholders the relevant transparency, and give your investors the information they need to make educated decisions.
So you’ve got the framework you want to work to, or you may be of a size that this is relevant to you. That’s great - now you have to write the thing!Now - there isn’t just one way to do this. Still, frame constructing our own recently and helping companies across a multitude of industries build there’s, we’ve worked out a template that does the job.Before you put pen to paper to tell the world how much impact you make, you need to understand who you are writing this report for.
Ideally, you are writing for all stakeholders and, therefore, in a simple and informative manner. Your focus may vary by section of the report, and some of the stakeholders you may want to address at a deeper level may be:
So you know who you are writing to, now you need to build out your template by thinking of what information you will put into the report. You may rejig the structure around, and that’s fine, but understanding what information you will be showcasing is required for the next stage.You may wish to break your report down into:- Environmental, Social and Governance (ESG)- Align with certification frameworks like B Corp’s Governance, Workers, Community, Environment and Customers- Or you may even have an internal framework to useHaving read through 100s of reports this calendar year and helped curate more than we can remember, we’ve seen some good and not-so-good ways of showing impact. Some favourites that stick out for me this year:
- Rapha’s with their clear layout and simple graphs
- Ferrer for their interactive approach
- Patagonia are one of the best for a reason, they don’t necessarily produce one report - but instead, their website oozes with the positive impact they have made
- Pieminister shows that a concise report can still be incredibly valuableFrom our analysis, we’ve come to a favoured structure when constructing an impact report:
1. Introduction - start with a senior member introducing the report, then summarise what your company does - the services/products you offer, markets/industries/types of clients you work with, etc.
2. Snapshots - provide a summary of the impactful highlights across the year and a financial snapshot.
3. Company - from senior leadership to business ethics and your ESG objectives - showcase everything you have done at a governance level to prioritise ESG across the business. Showcase policies implemented, the processes you take to manage risk and how you progress against your ESG objectives and accompanying KPIs.
4. Standards - make a clear breakdown of how you will report your impact, any standards you have been working to, ie. TCFD or SASB. Where possible, showcase a partner holding you to account; if you choose to get audited, this may be a service your auditor can provide; if not, seek a 3rd party that will validate the information you are stating. We do this for companies that seek to impact report through our platform.
5. People - look at the work you have done with your employees and suppliers to improve happiness, increase levels of representation and improve the lives of those that work with you. You can dive deeper here into what
6. Planet - highlight your current position regarding the impact you have on the planet, looking at your Carbon Footprint and the direct and indirect impact your work has on the biodiversity in the world. Then showcase what you will do to reduce this impact and any projects you work with from a carbon removal/offset standpoint.
7. Customers - showcase the impact your work has on your customers, showcasing short-term satisfaction and longer-term benefits from using you. Also, look to SASB to understand what other information is worthwhile showing, dependent on your industry.
8. Community - Last, look at your philanthropic work with charity partners, from money raised and time donated to issues resolved.
Once you are happy with the structure, you must gather all the information you need. To be honest and transparent throughout your report means backing up anything you say. Depending on the size of your company, this process could take a couple of months, so be sure to consider this in any timeline.
Analysis comes next; although you may wish to omit bits of information, don’t. It would be best if you looked to give a fair representation of what you have done. If you haven’t met the targets you set the year before - then don’t shy away from showing this. State clearly why this happened - think, did you not prioritise it enough? Were there significant external factors at play, i.e. recessions? These learnings are often arguably more important than reaching the goals in the first place. I say this because you have worked out what needs to improve and can implement these changes heading into the following year. If you had just met the target, you might not take such a proactive approach into the new year.
With everything considered, what do next year’s objectives now look like? Are you altering any 5-year goals at all? Explain the adoption of any new objectives and the plan in place to reach them.
Make it informative and exciting, and do it through the design of your impact report. It doesn’t need to be a boring corporate document with legal jargon. Instead, it can be a living branded piece of advertising showcasing your company’s impact.
And you’ve gone to all of the hard work in writing the report; make sure as many of your stakeholders can read it as possible. Communicate the report effectively through your various touchpoints (i.e. newsletters, email, social media, press releases etc.).
- Show the journey, not just the final piece reporting the impact your company has made is not like hanging a finished picture in a gallery. Instead, showcase the journey of how you got to the painting, the scribbles at the start, the failed attempts, the other routes you explored, and the finished piece that is arguably still unfinished.
- If you’re claiming it, make sure you can back it up - the sustainability space can get a bad reputation due to the few who utilise greenwashing. Greenwashing is a topic for another time but, put simply, it’s a screen to pretend you do good when, in reality, you are doing more harm. If you claim to do anything, ensure you have quantitive and qualitative evidence to validate your claims. Better yet, show these to a 3rd party so they can validate your claims. The sorts of things you claim may be: whether you use 100% renewable energy, improve your customers’ lives, or are working towards a Net Zero target.
- Don’t be dismayed, and don’t stop - finishing your annual impact report can provide you with mixed emotions. On the one hand, there will be all the good you showed with nice pictures, and on the other will appear mountains you have to climb to improve. Whatever your feelings, note this is just a snapshot of your journey, and the following year is your next opportunity to improve.Wherever you are on your sustainability journey - from getting the ball rolling to showcasing your positive impact, we’re here to help.
Reach out to us today, and together let’s really shift the dial in 2023.
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