Companies quickly realize that reporting can’t happen without strategy development. As firms start the process of putting a report together—talking to stakeholders, examining core businesses—they’ll have to back up and ask, What is our strategy on climate change anyway? What is our approach to managing this risk? The discipline of sorting out which activities are material to report on and in what depth, and what data will be used to document progress, forces companies to formulate strategies. For companies that haven’t been engaged in climate change and need to catch up with competitors that are disclosing, the reporting process is a stimulus for opening up a dialogue with stakeholders about the issue.
Just as important, the report serves as an accountability mechanism. It allows a company to make commitments and show through performance that it is doing what it said it would do. If you think about the “plan, do, check, act” cycle of corporate management, reporting provides the check: Here are our goals; here’s the system we’ve put in place. Now let’s see how we’re progressing and where we need to readjust.
Author: Alyson Slater
Source: Harvard Business Review
Subject: Social Responsibility (ESG)
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