After a tumultuous year of global loss and uncertainty, the latest Edelman Trust Barometer report finds that 2020 marked ‘an epidemic of misinformation and widespread mistrust of societal institutions and leaders around the world.’ People are worried about losing their jobs, that technology is moving too fast, that fake news is being used as an informational weapon or that their leaders are simply no longer up to the job.
Despite this dark cloud of mistrust and misinformation there is a glimmer of hope in business. This year’s study shows that business is the most trusted institution, more than governments, the media and even NGOs. Trust depends on a range of variables of which communication effectiveness is central. Good communication leads to trust if it is authentic, genuine, consistent and effective. In other words, good communication will lead to trust if it is transparent. So how do you deliver a transparent sustainability report and win the trust of these essential stakeholders?
We’ve outlined the following principles:
Ground your reporting in a thorough materiality assessment
Materiality is an ongoing process within an organisation, designed to identify and prioritise the environmental, social and governance (ESG) topics that matter most to its business and its stakeholders. By disclosing a materiality assessment and then aligning the content of your report to the outcomes of that assessment, you can really add transparency to your sustainability reporting because you are demonstrating to your stakeholders that you are reporting on the issues that are most material to you and your stakeholders. Disclosing the materiality process that your business underwent, the different factors considered when prioritising issues, as well as how the results of your assessment were internally validated, all give stakeholders confidence in the robustness of your approach to addressing key ESG issues and add an additional layer of transparency to your sustainability reporting.
Demonstrate a genuine stakeholder engagement process
Regular stakeholder engagement and feedback is crucial because it helps a business to identify its most critical issues and can drive transparency in two ways. Firstly, establishing personal connections with stakeholders and maintaining a dialogue with them builds business credibility as it demonstrates that a business is willing to listen to and respond to stakeholder concerns. Secondly, outlining the stakeholder groups, methods and outcomes of that engagement in your sustainability report offers access to ‘behind the scenes’ information and assures the reader that a thorough process has been followed.
Give your audience the whole picture
In sustainability reporting it’s a common mistake for businesses to focus on their direct impacts rather than including information on their broader indirect impacts too. But remember, reporting is just as much about what you leave out as it is about what you put in. Giving your stakeholders the full picture and reporting on your broader value chain demonstrates transparency because it presents your business as an open book and prevents stakeholders questioning why certain details have been left out. Reporting on both your direct and indirect impacts also demonstrates that your business is self-aware and alert – a credible and honest quality that helps others to view your business as transparent.
Ensure to balance your successes with your challenges
A balanced report discusses an organisation’s risks, successes, failures, challenges and opportunities, both now and in the future, and adding balance to your sustainability report is one of the easiest ways to demonstrate transparency. Every business knows how to talk about success, but what stands you apart from your peers is admission of challenges and communicating how you’ve learned from them. Although it can sometimes feel uncomfortable talking about where your business hasn’t quite met the mark, it is exactly this kind of honesty (and humility) that builds trust amongst stakeholders because they can see that you are informed, attentive and genuine in relation to your ambitions and your performance. But beyond critical self-awareness, it is hugely important to include a narrative that explains what your business has learned from any failures or challenges and, how you plan to improve.
Show, don’t just tell
The sustainability achievements of your business are much more likely to resonate with stakeholders if they are brought to life through interactive charts, stories and pictures. While it’s crucial to communicate your performance in your sustainability report, this doesn’t mean you have to rely on data and technical language alone. Instead, help your audiences make sense of data by simplifying complex content and using infographics or stories to ensure that you’re making the key headlines and messages accessible for all. This approach demonstrates transparency because it shows your inclusivity and desire to help all audiences understand all aspects of your sustainability reporting.
Make your reporting personal
One of the words often associated with transparency is ‘authenticity’, so injecting a feeling of authenticity into your sustainability reporting can help your business to be viewed as more transparent. You can do this by including a variety of different voices in your report instead of relying on the CEO and other business leaders. Messages delivered by employees, external business partners and members of the community can come across as more believable because stakeholders may view them as less likely to be biased in their opinions of the company’s progress and performance. Moreover, giving others a voice shows that your business is willing to empower and trust others – both of which foster trust in the business itself.
Seek assurance for added stakeholder confidence
Engaging an external independent assurance provider can provide increased confidence in the quality, completeness, credibility and reliability of your sustainability report. External assurance demonstrates transparency because accountability goes beyond internal controls and audit to provide a robust external opinion which many stakeholders value. However, a business should be honest about its intentions behind external assurance, because if it is simply a tick-box exercise then this undermines the trust afforded to the business by seeking external assurance. For many businesses, external assurance is used as a means to provide internal confidence in the report data so that it can be used as an internal management tool to drive decision-making. In instances such as this, disclosing the intentions behind the external assurance adds another layer of transparency on top of the act of external assurance itself.
In an age of increasing mistrust in other institutions, the increased trust in businesses which we’re seeing comes with a great deal of responsibility. Businesses cannot take this for granted, nor simply demand to be trusted, they can only seek to continue to demonstrate their trustworthiness.
If you’d like to make your sustainability reporting more transparent then we’d love to hear from you. At RY we offer sustainability strategy, engagement and reporting services to help our clients make their case in a way that’s brave, compelling and credible.