In recent years, there has been increased attention on the sustainability of businesses and their impacts on society and the environment.

Institutional investors are putting companies under pressure to improve the levels of their sustainability disclosures. This has led to a rise in non-financial reporting and greater disclosure of sustainability impacts by companies.

It is difficult for companies to figure out how best to approach sustainability reporting. There are a huge array of different frameworks to report on sustainability issues, each with a slightly different purpose and perspective on sustainability. It is tricky to understand how they interact and relate to each other, and which ones should be prioritised.

The number of different frameworks can make some people feel that they have to choose at least one of the frameworks before they can begin making any improvements to sustainability reporting.

The reality is that no framework will accurately capture all of the considerations and disclosures for your company, and a common step to many of the sustainability reporting frameworks is identifying the material issues of the company. This means that actually, the best first step to improving your sustainability reporting is to identify the material issues of your company.

Material issues are issues that can reasonably be considered important to the success of an organisation. For sustainability reporting, importance is generally considered in terms of the organisation’s economic, environmental, and social impacts, the interests and expectations of the organisation’s stakeholders, broader society expectations, and the organisation’s influence on upstream entities, such as suppliers, and downstream entities, such as customers.

By defining the material issues of your company, it will guide you to the areas that the company needs to focus on when considering its sustainability strategy and measuring its sustainability performance. It is possible to develop a sustainability strategy and KPIs without any reference to sustainability frameworks. We would recommend the use of sustainability frameworks as they help companies consider a wider range of issues, and improve their disclosure on their sustainability strategy and performance.

Defining a company’s material issues helps with the selection of the frameworks, as it will highlight which ones are of the greatest use. For example, if the company’s material issues focus on its ability to utilise its core competencies and its product and service offering to improve sustainable development, then the United Nations Sustainable Development Goals will be a high priority for consideration.

For more detail on how to approach identifying your company’s material issues, and the steps that need to come next, sign up to receive a copy of our guide.

Keep up to date

Our latest opinions