How sustainability reporting can bridge the trust deficit in society
In recent months, many countries have experienced social unrest and different forms of civil disturbances. These events can be attributed to several factors, including a trust deficit within society.
Institutions within the public and private sectors are dealing with record-low levels of trust, which remains one factor resulting in stakeholders’ actions across society. Building trust includes, among many things, providing a comprehensive picture of an organisation beyond the numbers.
It involves the value for money analysis, societal impact, and how an organisation lives its values. Fundamentally, for an organisation, it involves a consistent behaviour or action and can be translated to mean doing what you say you would, consistent with the organisation’s values and brand promise.
Firstly, through sustainability reporting, stakeholders can access information about how an organisation functions, makes decisions, evaluates overall performance and promotes accountability. Even SDG 16, aimed at building strong institutions, recognises the importance of providing access to information.
Beyond the financial, organisations can demonstrate accountability to stakeholders on the story behind the numbers.
Secondly, sustainability reporting oriented towards outcomes and impact can provide an organisation’s stakeholders with unique information to enable them to assess the value for money based on spending.
Organisations can provide data on the lives impacted in the communities in which they operate, which is becoming vital for private sector organisations because these social issues affect private sector organisations just as much as public sector organisations.
Therefore, a proactive rather than reactive approach to stakeholder engagement is critical for organisations to ensure they understand the demands of their stakeholders.
Thirdly, sustainability reporting provides a mechanism for organisations to demonstrate their accountability to stakeholders by emphasising an organisation’s performance relative to its non-financial targets.
Too often, organisations are quick to report on how they have performed without the context of the set target, making such reporting less relevant to stakeholders because they cannot assess performance credibly.
Sustainability reporting enables organisations to compare their performance against targets while providing information on the tradeoffs, for example, helping stakeholders understand the balance between economic development and protecting the environment.
Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.
Source: businessdailyafrica.com
