The first step in sustainability reporting

It’s the new year and maybe, at your company, leadership or team members have decided that it’s important to begin the process of sustainability reporting. That’s great! Now, what?

Many times businesses jump into sustainability reporting because a customer or other stakeholder asked for data. Or because of upcoming regulations. So, they may hastily put together a report. But, later you find out that the data you shared isn’t what the customer expected.

You may also waste valuable time figuring out exactly what and how to report what you have. When businesses take the time to define why they are reporting and who it is for, the entire process becomes more focused, efficient, and valuable.

Determining clear objectives is the first step when creating your sustainability report.

Objectives set you on the correct path

Why exactly have you made the decision to report? Your objectives are the foundation for every decision that follows, including:

• What data you collect (and what you don’t)
• Which sustainability topics to prioritize
• Which reporting frameworks or standards to align with
• How to document your data
• How often you update and communicate progress

Without clear objectives, reporting can seem like an administrative burden instead of a strategic tool. You’ll waste valuable time and resources on the wrong things.

How to determine your objectives

There are five important, actions to take:

1. Clarify the primary purpose(s) of your reporting.

Start by asking a simple question:

What do we want to achieve with our sustainability reporting?

Common goals include:

• Meeting customer or supply chain requirements
• Preparing for current or upcoming regulations
• Responding to investor or lender expectations
• Improving internal decision-making and efficiency
• Demonstrating credibility and transparency to stakeholders
• Supporting long-term business strategy and growth

Once you figure out your main goals, you will want to consider your stakeholders’ needs. This brings us to the next action step.

2. Identify key stakeholders and their expectations.

You want to have a grasp of who will actually use or review your sustainability information. It’s wise to include stakeholder input from the beginning when setting objectives.

Typical stakeholders include:

• Customers and potential customers
• Large corporate clients
• Investors
• Lenders or insurance carriers
• Regulators
• Employees and potential employees
• Community members

For each stakeholder group, ask:

• What sustainability topics matter most to them?
• What data do they specifically want to see?
• How detailed do they expect the information to be?
• How often do they need updates?

For small businesses, this step also helps avoid over-reporting. You don’t need to satisfy every stakeholder—only those that are most relevant to your business. After identifying stakeholder expectations, you will want to figure out a realistic scope for your reporting.

3. Define scope and reporting ambition level

“A good question for you to consider when setting out your sustainability ambitions is if you want to be best in class or if you are content to do the bare minimum to meet requirements. Fundamentally, this asks whether your organization aims to make sustainability one of its strategic objectives or not.”

source: Sherry Madera in Navigating Sustainability Data

In her book, Sherry Madera discusses levels of any company’s “ESG Data Maturity Journey.” [ESG stands for “Environment,” “Social”, and “Governance” topics – the pillars of sustainability reporting]. For example, she states that companies at the highest ambition level, “…value data and invest in producing, managing, and analyzing data for continuous improvements…You track your sustainability and ESG data against disclosures by your peers and strive to be best in class.”

However, when first starting to report, it’s okay to have a lower ambition level. Not every business needs a complex sustainability report from day one. Your ambition can and most likely will increase once you get the basics down.

Success may look different depending on your current stage:

• Baseline stage: Setting up consistent, reliable data collection
• Compliance stage: Meeting specific customer or regulatory requirements
• Performance stage: Using data to track trends and improve outcomes
• Strategic stage: Integrating sustainability metrics into core business decisions

Being honest about your current maturity level helps set realistic aims and timelines.

So, now you have clarified your purpose, listed stakeholder expectations, and figured out your scope. Next, make sure that all of this aligns with your core business strategy.

4. Align objectives with business strategy.

Sustainability reporting should align with your overall business goals, not be a separate exercise.

Questions to consider:

• How can sustainability data help us reduce risks?
• Where could it improve operational efficiency and save costs?
• Can reporting support market differentiation or customer retention?
• How might sustainability performance affect future growth opportunities?

For example, a manufacturer may focus on energy use and waste reduction to lower operating costs. A professional services company may prioritize data security and anti-corruption. A restaurant may focus on procurement and community engagement topics.

When objectives align with strategy, reporting becomes a management tool rather than a compliance exercise. Plus, you’ll find that you can achieve multiple objectives at once.

Of course, your objectives will evolve over time. This brings us to the last action step for determining your objectives.

5. Revisit and refine over time.

Revisit your objectives as your business grows, regulations evolve, and stakeholder expectations change. You will want to do this quarterly, or annually at a minimum. Starting small and building over time is a wise and practical approach.

Conclusion

Sustainability reporting doesn’t need to be perfect—it needs to be purposeful. When you’re a beginner, defining objectives upfront will save time, reduce frustration, and make your reporting more strategic.

Ready to simplify your sustainability reporting?

If customer or other data requests are driving your reporting efforts, tools designed for small businesses like yours can make all the difference.

Try our Simplified Sustainability Reporting for Small Businesses System to:

• Capture report-ready data in one place
• Respond faster to questionnaires and greenhouse gas emissions requests
• Build a consistent, repeatable reporting process
• Reduce time spent reinventing spreadsheets

Note: This System is intended for U.S.-based businesses because the greenhouse gas emissions calculator is based on the U.S. grid. Folks from other countries can use the System, but you will need to calculate emissions based on your country’s emission factors.

Source of featured image: stockcake.com (no, not stocktake)