Sustainability and climate change are interesting topics to discuss as they have become a concern among various sectors of society, including organizations and companies. The focus of organizations and companies is no longer solely on profits but also on efforts to meet the demands of sustainability and balance, both environmentally and socially. Reporting a company's activities related to environmental aspects is necessary to meet these demands, and this is where the sustainability report comes into play.

 

What is a Sustainability Report?

A sustainability report also known as a sustainability or CSR (Corporate Social Responsibility) report is a periodic report published by a company with the aim of widely sharing their actions and results in social responsibility. This report communicates organizational information to convey their commitments and actions in the social and environmental domains.

 

Through a sustainability report, a company can consider its impact on various sustainability issues, allowing for greater transparency regarding the risks and opportunities they face. It also enables stakeholders to understand how a company integrates sustainable development principles into its daily operations.

 

A company's sustainability report typically encompasses three main aspects: economic performance, social performance, and environmental performance. These three elements are also referred to as the triple bottom line. Therefore, a sustainability report provides valid data and information that are not included in financial reports, assisting stakeholders and investors in making informed business decisions.

 

The Importance of Sustainability Reports for Companies

As mentioned earlier, sustainability reports contribute not only to addressing environmental and social issues but also to the long-term sustainability of a company. They serve not only internal purposes but also external goals. Here are some key points regarding their importance.

 

Benefits of Sustainability Reports for Internal Stakeholders

For internal stakeholders, a sustainability report is essential in helping companies assess the impact of their operational activities on the environment, society, and the economy. Through detailed data collected for the sustainability report, companies also have the opportunity to improve their operations and reduce operational costs.

 

In the process of gathering data for the sustainability report, it requires collaborative efforts from various departments. Through this process, employees within the company become aware that their organization is focused on Corporate Social Responsibility (CSR) and sustainability aspects. As a result, they feel a sense of pride, which can lead to increased employee retention, reduced turnover, and improved company branding.

 

Moreover, sustainability reports offer several other benefits for internal stakeholders, including:

  1. Enhances understanding of risks and opportunities.

  2. Emphasizes the interconnection between financial and non-financial performance.

  3. Influences long-term management strategies, policies, and business plans.

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  4. Streamlines processes, reduces costs, and improves efficiency.

  5. Serves as a benchmark for assessing sustainability performance in relation to laws, norms, codes, performance standards, and voluntary initiatives.

  6. Helps prevent involvement in environmental, social, and governance failures.

  7. Provides internal and external performance comparisons between companies and specific sectors.

 

Benefits of Sustainability Reports for External Stakeholders

From an external perspective, a sustainability report can help improve positive interactions between the company and stakeholders. By informing stakeholders about short-term, medium-term, and long-term project decisions, the company can better understand which projects have positive financial outcomes. The sustainability report helps stakeholders determine whether the company is making positive contributions to minimizing negative environmental impacts or simply focusing on increasing profits.

 

Furthermore, the sustainability report can be used by investors to assess how the company is addressing climate change. This allows investors to decide whether the company is worthy of investment. For journalists, the sustainability report can serve as a source of information to share positive news about leading companies related to environmental topics. Additionally, non-governmental organizations (NGOs) can utilize the sustainability report to exert pressure and expose irresponsible practices carried out by a company or organization.

 

In conclusion, there are several benefits that external stakeholders derive from a sustainability report, including:

  1. Reducing negative environmental, social, and governance impacts.

  2. Enhancing reputation and brand loyalty.

  3. Enabling external stakeholders to understand the true value of the company, including its tangible and intangible assets.

  4. Demonstrating how the organization influences and is influenced by expectations regarding sustainable development

 

Components of a Sustainability Report

There is no one-size-fits-all approach to designing a sustainability report. Some companies, both medium and large-scale, choose to create standardized reports with certifications, while others opt for a more flexible approach. However, there are several components that should generally be included in a sustainability report, such as:

  1. CEO statement: A brief statement introducing the vision and driving force behind the sustainability report.

  2. Corporate governance structure and business model presentation.

  3. Sustainability context: A SWOT analysis that explains what is happening at the market and industry levels.

  4. Impact assessment inspired by the SWOT analysis: Identifying the company's major negative impacts and business risks (including indicators to measure progress).

  5. Identification of key stakeholders and their most concerning issues.

  6. Materiality analysis: Identifying the organization's main concerns and stakeholder priorities.

  7. Performance review over time: Demonstrating performance progress over time through key indicators and metrics.

  8. Engaging stories and visuals showcasing how sustainability strategies can enhance employee motivation, attract investor funding, and promote collaboration with NGOs on strategic projects.

 

Examples of Leading Company Sustainability Reports

To gain a better understanding of sustainability reports, it can be helpful to review examples from leading companies. Please note that we do not have any partnerships with the companies mentioned below, but they serve as case examples for your business study.

  1. PT Unilever Indonesia Sustainability Report

  2. Sustainability Report Bank Mandiri

  3. Sustainability Report Bank Central Asia (BCA)

  4. Sustainability Report Bank Rakyat Indonesia (BRI)

 

Conclusion

In conclusion, a sustainability report is a periodic report published by a company to widely share its actions and social responsibility results. If you are a business owner with a publicly traded company, it is important to pay attention to and create a sustainability report annually to inform investors and other stakeholders about the sustainability of your business.

 

In addition to preparing a well-structured sustainability report, conducting an audit on the report is also crucial. The audit provides a company's perspective within a sustainability context, evaluates and assesses its activities in terms of sustainability, examines how sustainability contexts affect the company's operations and the management's response, and ensures that the sustainability information conveyed by the company is reliable and trustworthy.

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