They are management and communication tools, and as such make the company's economic, social and governance performance transparent and enable a process of continuous improvement towards sustainability.
The main advantages of integrating these reports as a process of your company are:
Allow all your business stakeholders to know in detail:
In addition, they serve as reference points and reference material that investors and shareholders increasingly demand when betting on or supporting a business.
There are three universal causes that motivate companies to adopt ISR as part of their strategy, investing time and resources in it. Which ones does your business most identify with?
Companies seek to optimize their resources, generate savings and increase profitability margins.
Generally, the initial objective is not to contribute to the sustainable development of the environment, but it is an expected result. Examples include recycling and reusing resources and opting to store data in the cloud instead of paper, which necessarily generates significant savings and reduces costs.
Corporate reputation is by far the most important intangible asset of a company, and is reflected in the value that the brand acquires in its interaction with its stakeholders.
And more and more stakeholders are looking for companies to declare, implement and report on their sustainability management, motivated by environmental, social and governance concerns or needs.
A company that begins to be sustainable strengthens its value chain. It is also perceived as socially responsible, enjoys a better reputation and makes 78% of consumers willing to buy from it (compared to 9% when the reputation is poor), as shown by the 2020 Global RepTrak ranking.
More and more sustainability standards that were once voluntary are now mandatory. Financial institutions (investors and financiers) are adopting them and increasing their weighting when evaluating company performance.
In Brazil, companies included in the Sustainability Index significantly outperformed companies listed on the Ibovespa (145.36% vs. 94.11%), according to IDB Invest. They also proved to be slightly less volatile (25.25% vs. 28.05%), with data from 2016.
These reports make your business performance transparent in economic, environmental and social areas, allowing your internal and external stakeholders to understand its impact and evaluate opportunities for improvement.
Specifically, your company achieves one or more of these benefits:
Your business visualizes and measures the impact of its operations, and with that evaluates what to maintain, reorient or eliminate from the current strategy to move towards a more sustainable development.
For example, if your company negatively impacts surrounding communities and this is specified in the report, it has the opportunity to modify its modus operandis to transform this aspect.
For years, sustainability reports have been an ally of boards of directors to disseminate their management to their respective stakeholders, generating trust, more personalized interaction, and opportunities for growth and development.
Through this tool, they are able to establish a transparent relationship with collaborators, neighbors, suppliers, public institutions, non-governmental organizations and clients. A 33% of the latter prefer to purchase products from companies that have and make known their social or environmental purpose, according to a 2017 Unilever study.
The consulting firm BCG explains that companies that report their environmental, social and governance practices have more sustainable operations and and generate greater profitability and improvements in their market value over time.
They also have in their favor these dimensions have become highly valued factors by investors and have a direct impact on the future financial health of the organization.
In fact, a Harvard study evaluated several companies over 18 years and showed that those that addressed ESG areas saw their stock price increase by 46.4% compared to those that did not.
Your business identifies and orders all business processes, allowing it to better prevent and manage occupational and sustainability risk factors. It also diagnoses risks associated with management and its value chain.
Moreover, it identifies business opportunities, consolidates competitive advantages and acquires a powerful management tool. Moreover, 61% of companies consider that this type of annual report adds value to their organization and strategy, according to Deloitte's Sustainability Trends study.
Demonstrating transparency and comprehensive management makes your organization more attractive to attract capital and on more favorable terms compared to laggards. This new vision contributes to long-term management success and increases the value of your company.
By disclosing financial and non-financial information, your business delivers valuable information to shareholders and investors, enabling them to study and understand how the company creates, sustains and delivers long-term value.
This challenge/vision motivates these agents to bet on your company and opens new business opportunities, cost savings and risk control.
The quality of integrated reporting positively affects the perception and trust of investors because transparency throughout the process is fundamental.
There are codes of ethics and regulatory frameworks in environmental, social and corporate governance matters that govern the preparation of these reports.
For this it is essential to know the universal reporting standards or GRI, SASB, Dow Jones or ODS indicators and establish which ones will be addressed in your organization. According to the consulting firm PwC, 60% of company reports in Latin America use GRI guidelines.
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