Sustainability reporting season is here & so are the hiccups...

If you are a Sustainability Professional, you are probably in the middle of reaching out to your stakeholders for data to be reported in the Annual disclosures on sustainability. You are, also, likely to have a long list of to-dos and follow up post its splashed all across your desk. You are most definitely wracking your brain along with the team, to zero down on the most suitable theme to best represent everything that has been done during the year. And I am pretty sure, you are also, low-key losing sleep over the enormity of sustainability disclosure requirements that face an organization and invariably, the team that takes care of it.

It's that time of the year, the reporting season is here and I am sure, like me, a lot of you may find it overwhelming to manage the challenges that come with time-bound, accurate disclosures. But I have to admit that it does get better with time, if one genuinely tries to learn from experience, every year is an opportunity to refine the approach and make the process less daunting and more effective. Through this article, I have tried to put together the challenges commonly faced as custodians of these disclosures and what I have learnt from them:

1) The last minute rush: For organizations following the financial year cycle, the beginning of April marks the beginning of what is a long drawn 'Reporting Battle'. This phase lasts well into September and could get super exhausting if organizations take this activity on in the eleventh hour. One of the biggest reasons for this is that organizations look at disclosures as an isolated activity that is to be COMPLETED after the year ends. When in reality it is something that should be used as a feedback tool to identify and improve practices at the organisation, which in turn reflects in improved disclosures over time.                     

Solution: Background work, Background work and Background work is the key to making Sustainability disclosures effective. Spending enough time on the disclosure requirements, identifying gaps from the previous year, benchmarking and doing the homework, way before it’s 'Show time' is the only way to avoid the last minute rush and to actually sail through the ‘reporting season’ smoothly. 

2) Delayed receipt of information from data owners: We have all been there, following up with our data owners for information, till the very last minute. One thing to understand here is that the end of the FY is the beginning of not just sustainability disclosures but also the Annual Report and everything that comes with it. As I have mentioned in my article earlier, mandatory, regulatory requirements will always claim precedence over something that is considered to be GOOD to have. Though there is a shift in the needle, and it’s expected to garner more seriousness with Mandatory Sustainability disclosures such as BRSR coming into the picture, we still have a long way to go before we reach that level of robustness.                   

Solution: Dialogue, sensitization and awareness are ways in which this obstacle can be overcome. Explaining the importance and relevance of the disclosure, setting clear expectations & deadlines, providing clarity on the disclosure requirement (as some data points maybe new, unfamiliar and may require systems to be put in place to capture. As a Sustainability professional, one’s job is to facilitate this process, researching and knowing the requirement well, keeping a few examples ready for reference is key). Again this cannot be expected to happen during the disclosure process, it is important to engage regularly and before hand to seek timely, adequate responses. Also, it’s extremely important to make the data provider’s job simpler and avoid multiple to and fro’s when it comes to reaching out for information (read more in point 4)

3) Data integrity and accuracy: There are multiple reasons why financial information reported by an organisation is trusted to be accurate, two major reasons being:

- That they have been reported for years, thus, data capturing mechanisms have evolved and practices have been perfected over time.                    

- That they undergo a rigorous independent audit (with regulatory controls in place to ensure fair practices and avoid conflict of interest). Thus, the confidence levels are high               

For a lot of organizations, ESG related disclosures have found place only in the last few years. Organizations are still grappling with the idea of capturing and reporting a lot of data sets for the very first time. Given this, it is understandable that data quality, standardization in capturing the same data point across different offices/factories may take a back seat.                         

Solution:

1. Development of standards / protocols for capturing data or centralized data capturing.

2. Internal sign off by department heads to increase accountability for the data captured.

3. Evidence-based internal data verification (backups such as bills, readings, SAP etc.)

4. Subjecting to external, third party, independent assurance of data and disclosures made public, with the same rigour subjected to financial disclosures.

4) Too many submissions around the same timeframe: Picking from point 1, the reporting season is named that for a reason. There are multiple reporting platforms that an organisation may choose or be obligated to respond to and this can get overwhelming. A lot of these submissions are due within the same timelines and that could make it even more challenging. Different platforms may seek similar and starkly different information at the same time & it could get tricky to reach out to the same data owners multiple times and may end up confusing them.                         

Solution: Planning well, in addition to the background work - it is very important to prioritize and plan for these submissions as per their timelines and levels of difficulties so that when the time comes, the team isn’t lost on what is to be done. Again, a thorough background work offers the opportunity to see which points are repeated and the same can be avoided so that no room is left for duplicity, repetition and loss of time for data owners . As far as possible, having a single format that addresses all data requirements (qualitative and quantitative) is what an organisation must aim to achieve. Mindful assignment of roles and responsibilities while planning for the season is one of the key ways to making it less taxing and more fruitful

But the most important lesson that I have learnt is that every reporting cycle is an opportunity to grow as an individual and as an organization, there will always be something that will be left unaddressed, just like life. What is important is that all of those lessons are noted down and taken into account while attempting the next season.

Continual improvement needs to be encouraged over perfectionism.

If your organisation is starting on its disclosure journey or if you are new to this field and navigating through this for the very first time, I hope this is useful. If you have been on this journey for a while, I’m sure this was relatable. Thank you for reading.