What Role do Sustainability Reports Play?

Sustainability reports are written for an organization’s stakeholders. A stakeholder has been defined as a person, group, organization, or system which is affected by and can also affect an organization’s actions.

Stakeholders have been classified as

  • primary (engages in transactions with the organization); and
  • secondary (may not transact directly but are affected by, or can affect, the organization).

Initially, a variety of secondary stakeholders motivated the reporting cause and were the organization’s loudest critics, pressuring for accountability. Now, many primary stakeholders are concerned about the risks associated with poor environmental and social performance as well. Operating in an irresponsible manner can create considerable risk and lessen the value of an organization. Many look to the sustainability report to help them make decisions.

Stakeholder Decisions
Employees want to be proud of their organization’s performance.
  • How will I be treated?
  • Will I find personal fulfillment with an organization?
Shareholders want their investments to minimize risk of costly conflicts and lawsuits.
  • Is the board of directors representing my wishes as an owner?
  • Are my savings and pension funds invested safely and will they be available when I want them?
Customers want products that will not be harmful to their families’ health.
  • Which products are safe and healthy?
  • Which organizations steward the end use of their product?
Banks do not want to make loans to organizations or persons that might incur large amounts of environmental liabilities.
  • Which organizations are most likely to pay back their loans?
  • How can innovative financing arrangements support sustainability efforts?
Corporations want to do purchase materials and supplies from, and work with, responsible organizations.
  • Which suppliers and partners have values similar to mine?
  • Which organizations would be good merger and acquisition candidates and not carry high environmental or social risk?