Assessing impact, value creation through sustainability reporting

Sustainability reporting provides a medium for organisations to communicate their value-creation and impact stories to stakeholders. At a time when stakeholder demands for sustainability reporting are increasing, organisations should be mindful of the information needs that are driving this demand.

One of these requirements is for stakeholders to understand how an organisation creates value and the impact it has on society.

Sustainability reporting can help provide this understanding by offering readers a holistic picture of an organisation’s combined value.

Stakeholders can get a full picture of the organisation’s value beyond the traditional balance sheet. A perspective that extends to broader societal impact and to the value created for shareholders and other stakeholders.

Sustainability reporting provides stakeholders with forward-looking information about an organisation’s value creation and impact, addressing limitations of financial reporting and speaking to the financial viability of an organisation beyond the immediate financial performance.

Another important insight from sustainability reporting is the ability to provide stakeholders with a clear understanding of an organisation’s value chain.

A view of the dependencies and impact outside the organisation’s traditional boundary of reporting. For example, an organisation can highlight the number of indirect jobs it provides across its value chain within a community, indicating the value it creates and the impact it has on the community beyond profits.

Through sustainability reporting, organisations can report on their material sustainability topics, providing stakeholders with an opportunity to understand the enablers of the organisation’s business growth strategy that create value over time and deliver impact.

An organisation’s material sustainability risks and opportunities are the non-financial catalysts and capabilities that enable it to maintain its competitive advantage over time. Sustainability reporting can also provide a balanced view of an organisation’s performance, helping its stakeholders understand the trade-offs considered to achieve value creation.

Understanding these trade-offs is so important today, as stakeholders are keen to ensure that a business-minded approach to sustainability is applied, one that balances business and sustainability to create value and impact for society. Lastly, with sustainability reporting, stakeholders obtain decision-useful information.

Investors are keen to obtain financial and non-financial information when weighing investment decisions because credible sustainability information enables them to evaluate investment opportunities more comprehensively.

Organisations must move beyond compliance and utilise their sustainability reports to provide stakeholders with an understanding of their value creation and impact on society.

Akinyemi Awodumila is a Partner at PwC Kenya. He is an author who writes and speaks widely on corporate reporting topics.