Reasons why businesses like to produce and publish sustainability reports (Sustainability Report) over the past decade. Not just because it is a tool that helps in disclosing economic, social and environmental information. for communication with stakeholders for transparency and ready for inspection and inquiries only
But the sustainability report is also a tool to systematically improve operations in all three areas. with operational indicators and clear management guidelines according to the principle that “Things that are difficult to measure will be difficult to manage” (You can’t manage what you can’t measure)
The sustainability report has been widely accepted. Because it provides information that reflects the operating results, which are not financial figures. (Non-financial Disclosure) in an orderly fashion This is important information that indicates opportunities and risks. including the ability of the organization to affect the future performance of the business In addition to the information obtained from the traditional annual report. This is information that indicates the ability of the organization and the past performance of the company.
The key difference between the two reports lies in the fact that firstly Sustainability Report Targeted audience audience (Target Audience) who are stakeholders. (Stakeholders) in all groups, from civil society to investors. While the annual report in the original format will mainly focus on disclosing information that is beneficial to investors (Investors)
Because each user group reports have different expectations or interests in the information disclosed thus leading to differencesThe second is materiality. or the essence of the information disclosed in the sustainability report will allow the organization to consider the significance of the impact caused by the organization (economic, social and environmental aspects) by analyzing the influence on the assessment and decision-making of the stakeholders To get important issues (Material Topics) to include in the report. After building relationships with relevant stakeholders which is both employees Business owners, suppliers, distributors The communities surrounding the operation site, investors, creditors, customers, etc.
While the annual report in the original format will consider the essence of the information disclosed from the relevant and important things that influence the investor’s assessment that it affects the ability to create value for the business which in this analysis will come up with financially significant issues (Financially Material Topics) that affect the decisions of investors or capital owners.
make the present Businesses that want to communicate the results of the organization in both aspectsEnvironment, Society and Governance (ESG)to relevant stakeholder groups therefore chose to produce a sustainability report. in addition to the original annual report (or to combine ESG and financial information into the same report)
in fact There are many companies that still disclose information using traditional annual reporting. The ESG data is also not given importance to the organization, therefore it is not possible to determine the indicators of performance. no follow-up including no management in those important issues This is an important factor in leading the organization towards sustainability. and creating long-term value
In addition, businesses lose access to investments that are managed under sustainable investment principles. According to a survey by McKinsey and the Global Sustainable Investment Alliance (GSIA), the number of global ESG-based investments in ESG assets has increased from $22.8 trillion in In 2016, it rose to $30.6 trillion in 2018 and $37.8 trillion in 2020.
and predict will reach $53 trillion by 2025, representing 37.72 percent, or more than a third of total investment assets of $140.5 trillion.
It is undeniable that today, businesses that are known for conducting business in a sustainable way It is necessary to disclose both financially significant information. and communicated to investors and sustainability data resulting from sufficiency testing and then communicate to relevant stakeholder groups. through appropriate channels in each stakeholder group
Because the last line of reporting is the transparency and auditing required to build trust with investors and stakeholders as a whole. as well as improving operations by using reporting as a tool to change the course of sustainable development. and creating value for the business at the same time
Article by Dr. Phiphat Yodphuttikan
President of Thaipat Institute
