Sustainability and climate change are racing up the Corporate Reporting agenda, with additional requirements already in place for large companies, and lots of guidance around for producing good sustainability reporting, a requirement for public companies.
Unsurprisingly, this is something the SORP committee are considering for the next iteration of the Charity SORP and whilst it’s too early to be able to predict exactly what any requirements may look like, it is certainly becoming best practice to start to include something on the subject within trustees’ annual reports.
Good charity reporting has long included reporting on nonfinancial performance, largely around charitable objects and achievements, and I would expect good sustainability reporting to follow a similar model. The reporting should not therefore be a year-end box ticking exercise with a bland statement saying something like you have considered the environment impact of your operations and are taking steps to reduce or mitigate it, but should really stem from embedded culture and practices about becoming a truly sustainable organisation. Sustainability is not just environmental, but generally has wider scope to cover things such as social, economic and governance performance.
The three elements of sustainability were defined at the World Economic Summit in 2005; these were: the environmental element, the economic element and the social element (otherwise known as the 3 P’s: People, Plant and Profit). There is already some guidance around carbon reporting – see SORP Information Sheet 5: www.charitysorp.org/about-thesorp/helpsheets/, but this is just one piece of a very large and complex jigsaw.
I know most people will have already started to consider and act, even in a small way, on the direct climate change things – which may range from encouraging staff to use public transport, holding more meetings virtually and replacing your lighting with LED to reduce your carbon footprint. However, charity reporting and good practice generally mirrors corporate reporting at least to some degree and so I would recommend broadening your thinking and your planning to ensure the principles are embedded into your forward planning, included within your risk framework and considered by your board. The response to climate change should now becoming part of an organisation’s overall strategy, flowing through into the governance, risk, metrics, and targets as what’s best for the climate is no longer a separate consideration to what’s best for doing business, and charities, which exist in the public interest regardless of their objects, should always be seen to be doing the right thing.
Reporting will always be commensurate with the size and complexity of the organisations, so I am not trying to scaremonger anyone that a full sustainability report running to several pages and needing to be independently verified is about to become mandatory as it isn’t. What is clear though is that those who don’t adjust and adapt to the challenges ahead (and are prepared to report on it and be held accountable) are the ones that may not be around for long. Public opinion is shifting and those without clear policies, frameworks and reporting may find that supporters are harder to find. Watch this space for future developments as any likely changes in mandatory reporting for the sector emerge.
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Sustainability is not just environmental, but generally has wider scope to cover things such as social, economic and governance performance.