• Ehsan Jacobi

Why is non-financial reporting important for your business?

Non-financial reports come in different shapes and forms, depending on the size of your organisation, the purpose you need them for, and your audience. You may have heard them referred to as sustainability reports, integrated reports, Corporate Social Responsibility (CSR) reports, or even carbon footprint documents.

This post focuses more on why reporting on your company's environmental and social impacts is important, rather than what tool is the right one for your business. What follows is a quick overview of why you should start thinking about creating a non-financial report right away.

1. Investors and suppliers will ask you (or already have) to create one

The most common reason that our clients ask us to help them report on their environmental and social impacts, is because their investors and suppliers have asked them to do so. If your supplier is a large company, or your investors are involved with large fund managers, chances are that you will be asked to publish a non-financial report sooner or later. There are two reasons for this. One is because The New Zealand Stock Exchange has introduced a new recommendation where publicly listed companies are advised to disclose their non-financial information and therefore are more interested to supply companies that do the same. The second reason is that many large fund managers in NZ now do CSR investing and subsequently non-financial reports have become a major assessment tool for them. So it may pay off to start thinking about putting one together.

2. Creates value through the process as well as the outcome

Based on our experience, business owners actually gain a lot more from the process of creating the report, rather than the report itself. While gathering the information on your environmental and social impacts, you learn a lot about your own business and operations. Things that you may have overlooked before. This allows you to concentrate on efficiency in production and creating goods and services that are made using a minimum amount of energy and material. While this strategy lessens effects on the environment, it also gives your company a competitive advantage in terms of cost reduction, due to efficient production, and a good reputation in environmental performance.

3. It enhances your ability to think strategically

Creating a non-financial report also enables you to concentrate on all possible sustainability-related matters in every aspect of the business, and focus on innovation and diversity based on the opportunities that arise in the market. Something beneficial for your customers as well as your business.

4. Gives you Social License to Operate (SLO)

An SLO is described as the continued approval of a company’s operation by the community in which it is active, and by other stakeholders. In other words, it is seen as an investment for company legitimacy. According to the Sustainable Business Council (SBC) and Business NZ's Major Companies Group (MCG), an SLO is a company’s ability to continue to operate because society trusts that the firm will act legitimately, and be socially and environmentally responsible. If you want to build a reputable brand, there is no attribute better than trust.

#Sustainabilityreports #Integratedreports

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