Sustainability reporting involves disclosing a business’s actions to achieve or progress toward its sustainability goals. These reports address a wide range of environmental, social, and governance (ESG) issues, allowing companies to reflect on their impact and communicate their plans for future improvement.
It highlights a company’s sustainability mission, vision, values, research, data, and future plans.
Sustainability reporting is a legal requirement for large and public organisations. However, small, private companies can still report voluntarily to demonstrate strong corporate governance and transparency. In turn, they can establish trust with customers, investors, employees, and other key stakeholders.
In this blog, we explain why sustainability reporting matters for SMEs and take you through the five steps to creating a sustainability report.
Key Takeaways
- Sustainability reporting is the formal disclosure of a company’s environmental values, goals, and achievements.
- Publishing sustainability reports can help SMEs attract customers, gain a competitive advantage, and access ‘green’ funding schemes.
- The key components of a sustainability report are: introduction and sustainability highlights, clear goals and values, key achievements, details of each sustainability target, and future commitments.
How to create a sustainability report
If you’re an eco-conscious business owner and are ready to take the next step toward transparency and accountability, implementing sustainability reporting is a powerful way to demonstrate your commitment to the environment and society. A well-structured sustainability report showcases your eco-friendly initiatives and builds trust with customers, investors, and stakeholders.
Here’s a step-by-step guide to help you get started with sustainability reporting:
1. Introduction, mission statement, and sustainability highlights
Begin your sustainability report with a compelling introduction to your company — who you are, what you stand for, and why sustainability matters to your business. Set the tone by clearly articulating your sustainability mission statement: a concise declaration that captures your long-term commitment to environmental stewardship, social responsibility, and ethical governance (ESG). This statement should align with your overall corporate values and future vision, serving as a guiding thread throughout the report.
Consider including a succinct summary of the report’s key contents to engage readers immediately. This executive summary gives readers an overview of the main themes, achievements, challenges, and goals they’ll encounter, allowing them to grasp what to expect in the fuller document quickly.
It’s also crucial to highlight your company’s proudest sustainability achievements early in the report. Use infographics, charts, and other visual elements to showcase major milestones, awards, certifications, recognitions, or data points that reflect measurable progress. A strong visual snapshot draws attention, provides credibility, and demonstrates tangible results.
Additionally, introduce the key individuals who drive your sustainability efforts. This could include naming committee members, board representatives, or sustainability officers who are responsible for setting strategies and monitoring progress. Putting faces to your initiatives humanises the process and shows accountability at a leadership level.
To make the introduction more engaging and personal, include direct quotes from executives, the CEO, or other senior leaders. Their words can offer insight into the company’s passion for sustainable development, reflect on past progress, and set an aspirational tone for future goals. Authentic, forward-looking messages from leadership help build trust with stakeholders and demonstrate a genuine commitment to making a positive impact.
2. Set clear sustainability goals
Next, explain what your organisation wants to accomplish. For example, it could be carbon reduction, energy conservation, community engagement, or launching an innovative, environmentally friendly product.
You should consult your key stakeholders and capture your collective sustainability values at this stage. Be as clear and descriptive as possible. Explain why these initiatives matter to your organisation and how it remains committed.
If you’re unsure how to define your sustainability goals, try the SMART method:
- Specific – state exactly what you want to achieve and how you intend to do it
- Measurable – which metrics will you use to measure progress?
- Achievable – are your sustainability goals realistic?
- Relevant – how does your sustainability strategy align with overall business priorities?
- Time – set a deadline for achieving these objectives
3. Provide a snapshot of the previous year’s progress
In this section of your sustainability report, indicate your most recent sustainability targets and whether you achieved (or exceeded) them. If you failed to meet a target or your progress is delayed, but you have a clear plan for achieving it soon, explain the challenges your business experienced and how it will overcome them.
A common way to portray annual performance is in a table. With so much information to display, tables are convenient, easy to read, and visually appealing. Here is a simple format you can follow:
| Category | Target | Target status | Details |
| Waste reduction | Reduce commercial food waste by 20% | ⛔ | Target missed due to lack of internal training and limited recycling facilities. We have since provided dedicated food recycling stations and partnered with a sustainable waste removal provider.
We are continuing to educate and inspire staff to recycle and repurpose excess food. |
| Sustainable travel | Initiate Cycle to Work Scheme | ✅ | Implemented in [month] and [X] employees have signed up |
4. Explain each sustainability goal in detail
The core of your sustainability report should focus on each of the sustainability targets from section three in granular detail. Here is some of the key information you should aim to provide:
Strategic planning details and outcomes
Provide an in-depth explanation here of the actions your organisation has taken to achieve a specific sustainability goal. Detail any internal policies, supply chain improvements, or new partnerships that may have contributed to your progress.
For example, a tech company’s strategic report might say it switched to 100% renewable energy suppliers and cut its carbon footprint by 50%. Or a fashion brand might express that it implemented an internal upcycling policy, encouraging employees to repurpose excess textiles and fabrics.
You should also explain what you did and how you did it. For instance, did you run regular audits? Or maybe you achieved new sustainability certifications. Explicitly detail how you achieved the metrics you’ve outlined in this section.
Research insights
You want to demonstrate tangible impact in this part of your sustainability report. In other words, how do your sustainability achievements affect the wider community?
Example metrics could be:
- You were able to reduce your commercial plastic waste by 40% by switching to compostable materials
- New sensor technology in the workplace allowed you to decrease your water usage by 30%, saving over 1 million litres of water per year
- A stronger dedication to philanthropy enabled you to donate £1,000 towards verified carbon offset projects
- Switching to a sustainable commercial waste carrier reduced your contribution to landfill waste by 45%
Demonstrate your research insights with clear charts, infographics, and images to make the in-depth data more digestible for the reader.
Key Performance Indicators (KPIs)
This is an opportunity for you to go into more detail on the KPIs you used to track your sustainability efforts. For example:
- Kilowatt-hour (kWh) to measure energy production and efficiency
- Percentage of your suppliers that meet ethical sourcing standards
- Volume of waste diverted from landfill
- Decrease in carbon footprint over the reporting period
- Number of sustainability accolades the business has received
If available, provide a comparison of your KPIs from previous years to demonstrate progress.
Visual content
Do you have any photos of employees participating in volunteering events, before-and-after images demonstrating the positive impact of your eco-friendly actions, or images of your sustainable materials?
Images, snapshots, and other visual content help bring a sustainability report to life.
Risks and challenges
A sustainability journey can present various risks and challenges, especially for small businesses. In this section of your report, explain any difficulties your organisation faced in achieving its environmental goals and how it overcame them.
For example, if you’re a retail brand seeking to use recycled packaging, maybe you struggled to find a partner aligned with your budget, so you teamed up with another sustainable startup to integrate eco-friendly packaging.
Another example of potential challenges could be that you could not introduce a green policy for employees, as you didn’t have a suitable staff member to manage it. Therefore, you prioritised recruitment to overcome this issue.
No matter how big or small these challenges may be, it’s crucial to be transparent and build trust with stakeholders.
5. Future sustainability commitments
Sustainability is an ongoing journey. So, what is your business doing to show long-term commitment?
Use the same table from section three (excluding ‘target status’) to illustrate the sustainability efforts you want to prioritise over the next 12 months. Clearly state the headline target and top-line details on the actions that will get you there.
Finally, you may want to include an appendix page. This is where you can add any supplementary information that the reader might find useful, such as links to websites or further research. It’s also a perfect space to provide a full breakdown of your business’s carbon footprint and explain how it was calculated.
The above steps are a rough guide to creating a sustainability report. Feel free to customise each section to your brand’s style and identity.
Take a look at the M&S ESG Report 2024 and the University of Reading’s Environmental Sustainability Report to see what this document looks like in practice.
Benefits of sustainability reporting
If it’s not a legal requirement, why should private SMEs take the time to create a sustainability report? Here are the key reasons why sustainability reporting matters:
Show that you’re a force for good
It’s easy for anyone to say they care about the planet, but taking action and demonstrating progress are a separate matter.
The 2024 Grant Thornton International Business Report found a substantial gap between UK SMEs with sustainability targets and those that have actively implemented sustainability reporting. More specifically, 60% have sustainability strategies in place, yet only 46% practice sustainability reporting.
Creating regular sustainability reports shows that your company isn’t simply ‘greenwashing’ the public with sustainability claims it can’t live up to. It demonstrates integrity and a genuine recognition of your business’s environmental impact, along with a clear commitment to addressing it.
Provide insight into your ESG management
As a business with sustainable values, you’ll likely have customers, investors, and partners who share those values with you. They’ll want to know how your company manages its ESG strategies and objectives.
Regular sustainability reporting is a convenient and efficient way to keep key stakeholders updated on your climate action and likely future performance.
Gain a competitive advantage
Standing out from the crowd is one of the biggest challenges small businesses face. After all, why would someone choose a brand they’ve never heard of over a household name they can trust?
Well, sustainability reporting can help. Nowadays, consumers generally expect businesses to lead by example rather than profit. They seek brands that actively stand for and support good causes, and when they find them, they’re willing to pay for their products and services.
By publishing sustainability reports, you’ll show your audience that you’re doing just that and gain an advantage over competitors who may not be ESG-focused.
Access ‘green’ finance
Small businesses and startups can benefit from numerous forms of financial support, including grants, loans, and recognition awards. Many of these schemes are specifically designed for sustainable companies.
Some eligibility criteria might also specify the need for sustainability reporting, demonstrating your organisation’s existing environmental policies and targets and how it plans to use the funding.
Therefore, sustainability reporting can widen your access to finance and secure crucial funding to help your business achieve its ESG targets.
Prepare for the future
Following COP26, TCFD aligned reporting became mandatory for UK companies with over 500 employees. This suggests that reporting requirements for SMEs will likely follow suit in the next few years. By adopting sustainability reporting now, SMEs can strengthen their business in anticipation of changing regulations.
Ready to benefit from sustainability reporting?
We hope you found this article useful in understanding a sustainability report and how to create one. If it’s your first time, follow the five steps in this blog to help you get started.
At Rapid Formations, sustainability isn’t just a business objective — it’s a core responsibility. We believe that by embedding sustainable practices into everything we do, we can create lasting value for our customers, our communities, and the environment.
If you have any questions or comments about sustainability, please post them below and we’ll respond. Alternatively, browse the Rapid Formations blog for more tips and advice on sustainability and corporate social responsibility.
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