Sustainability Reporting (also Non-Financial Reporting) is the disclosure (publication) of private information that reveals non-public aspects of an organization's Sustainability profile. It may be voluntary, solicited, or required disclosure.
In current taxonomies sustainability reporting might concern information addressing environmental, social, economic and governance issues ESG Criteria. The SDG Compass has been created by Global Reporting Initiative with the aim of linking the GRI standards to the Sustainable Development Goals
In Europe, the legislative framework for sustainability reporting practices is based on Directive 2014/95/EU (Non-Financial Reporting Directive or NFRD), which provides a uniform regulatory framework for non-financial information for EU Member States. Companies that fall within the scope of the EU Directive 2014/95/EU on non-financial reporting, the main EU-wide initiative in this area, must publish information on the following areas:
- Environmental protection
- Social responsibility and treatment of employees
- Respect for human rights
- The fight against corruption and bribery
- Diversity on company boards (in terms of age, gender, education and professional experience).
Issues and Challenges
- Lack of standardization (multiplicity of reporting frameworks hindering comparison)
- Greenwashing (manipulating sustainability reports to present an improved organizational image, either by not disclosing negative information or by over-emphasizing positive information