IFC recommends that, in the long term, companies move toward full disclosure of strategic priorities, governance systems and processes and financial and ESG performance. However, most companies do not begin with a complete, integrated annual report the first year they report.  It is normal to approach reporting as a journey that takes place over time.  Reporting requires data, so good reporting is a multi-year achievement.

Identify and prioritize your target audiences, and your objectives for communicating to each audience: Are you primarily trying to make the case that your business is profitable and sustainable to regulators and investors?  Are you trying to communicate good management practices in terms of environmental manage, safety, labor policies to attract new employees and maintain your license to operate in society?  If you are trying to attract capital, financial reporting may be a good place to start.  If your current priorities are more about community or employee relations, ESG, non-financial or sustainability reporting may be of greater immediate benefit.

The reporting tools, frameworks or standards you choose should reflect the needs of your target audience—the people you are trying to disclose information to where possible, talk with your target audiences to gain insight into how they use and source financial and sustainability information and what they find material (the content of the frameworks and standards can be used to inform that process).

Determine which framework(s) or standard(s) best meet the needs of your target audience(s),taking into account which framework(s) or standard(s) best align to your existing internal (management) reporting.

Decide what type of reporting (mainstream, integrated, sustainability, specialist) you will use to report to your target audiences and the channels. Do you want to meet the needs of all audiences with one report, or will you segment delivery of information?

Just as there is not one framework that is the perfect way to report for all companies in all markets, reporting tools are continuing to evolve as the information needs to investors and other stakeholders continues to change.  More and more investors are interested in long-term impacts of businesses on society—and the long-term impacts of climate change on business models.

As the information report users require changes, reporting frameworks and standards will continue to change.  However, since reporting is always a multi-year journey, don’t wait—start now!  All companies have to start somewhere.  Your reporting will evolve, improve and change as the operating environment changes (e.g. covid 19), as your business changes, and as your stakeholders’ needs change.  But start now, where your business is, to help investors and other stakeholders understand how your company is managed, and how it will create value for all stakeholders over the long-term.

Specific disclosure requirements—such as IFRS, or specific environmental metrics—are easier to require in regulations.  Regulations usually come from stock exchanges and regulators overseeing corporate governance, company law, and capital markets. However, reporting required information may not necessarily serve the information needs of all of your key stakeholders—it may be necessary to report more information, or information in different formats, to achieve real transparency and understanding.

Good, valuable, useful reporting means providing insight into how the company is managed, and how future progress is being achieved and measured. Achieving compliant disclosure may not produce reporting that is useful to all key stakeholders of all businesses. Think of reporting requirements as starting place to think about what to disclose—not a complete list.

Principles-based’ frameworks generally provide high-level guidance, such as the principles that should underpin the preparation of the report and what content the organization should look to include, but generally they do not suggest detailed disclosure topics or indicators. For example, a principles-based framework may suggest that organizations report on human capital and provide general guidance on what this information could entail, but it does not prescribe specific human capital disclosures or indicators.

“Standards” frameworks explain how to specifically report for certain categories (topics, indicators or sectors, for example). It should be noted that a framework is not necessarily only one of the above – some frameworks are a hybrid of a principles and standards.

The existing frameworks and standards complement each other. The IIRC integrated reporting framework provides guidance without prescribed disclosure requirements and so are principles-based frameworks. GRI provides both a principles framework, as well as specific disclosure standards. SASB provides more detailed disclosure topicsand indicators (metrics) and are seen as standards. ISO 26000 provides bothhigh-level guidance and specific actions and expectations for the conduct of organizationson how to address specific sustainability topics and is therefore a hybrid of aframework and a standard.