Circular Event Nyenrode, Interface, Government

Interface and Dutch government go circular!

Planet Earth is a beautiful circular business model. From which we can learn as people and organisations. Linear business models have dominated our global economy in the past centuries. Yet it has devastating effects such as the depletion of finite resources and the creation of waste, which either needs to be stored or ends up in the environment. In the circular economy, we reuse all primary resources and residual materials. Renewable sources provide all energy used. A growing number of companies and other organisations are starting to see the benefits of circular business models and are joining in!

On January 29, 2019, I had the opportunity to facilitate an interactive session with an audience of Nyenrode Business University alumni after listening to Geanne van Arkel, Head of Sustainable Development at Interface (and Dutch CSR Manager of the Year 2018) and Martie van Essen, Program Manager Sustainability Acceleration at the Dutch Ministry of Economic Affairs share their stories about working more circularly.

What’s the business case for ending life on earth?

Ray Anderson, founder of carpeting company Interface would ask people this question when they asked him about the business case of working more sustainably. After reading The Ecology of Commerce by Paul Hawken he completely changed the course of his company. He became convinced that, as humanity, we need to learn from nature and we need to stop using fossil fuels. In 1996, Interface launched Mission Zero, the ambitious plan to no longer have a negative impact on the world by 2020.

Through Mission Zero, stock-listed Interface progressed in various areas. Compared to 1996, by the year 2017, Interface reduced:

  • Its greenhouse gas emissions per unit produced by 96%;
  • The use of water per unit produced by 88%;
  • The CO2-footprint of carpet tiles by 66%;
  • The energy used per unit produced by 43%;
  • 88% of the energy used comes from renewable sources;
  • and 58% of the materials are either recycled or bio-based.

The circular approach also yielded added value in other areas: costs came down, the reputation grew, innovation rose, employee and stakeholder engagement grew and the company became more future-proof. Because 2020 is almost there, Interface launched a new mission: Climate Take Back. It’s objective is to not just eliminate the negative impact but to also contribute positively to the recovery of our planet. Interface doesn’t confine the circular economy to its raw materials; it’s all about new business models, innovation and inspiration as well. An inclusive business model supplies part of the yarns from damaged fishnets from the Philippines and other places. With a great bycatch: H&M and other carpeting companies are also sourcing circular yarns which the supplier created at the request of Interface!

Practice what you preach on circular business

Through different programs and regulation, the government stimulates Dutch companies to work in more sustainable and more circular ways. And what does the government actually do itself? With 111 thousand FTE, 10% of all Dutch offices and € 12 billion purchasing power per year, the national government has an enormous impact. And with that the opportunity to drive change. The purchasing power is actually € 72 billion is we add regional governments’ and municipal budgets.

The program Think Act Sustainable (Denk Doe Duurzaam) delivers nice results. The national government’s annual report shows that in 2017, compared to 2016:

  • Energy use per square meter of office space decreased by 12%;
  • CO2 emissions decreased by 9%;
  • And an online marketplace for used office furniture saved € 7.4 million.

As much as possible, the government buys refurbished (circular) copiers, reuses its ICT devices, and the army reuses clothing or fiberizes it to recycle it to towels. In the offices, people are encouraged to reuse their paper cups during the day. Cups collected after use are recycled into toilet paper. These measures also deliver cost savings. For example, the army saved € 500 million by reusing clothes. Yet at the same time, circular and sustainable ways of working also raise dilemma’s within the government. Sometimes the scale of what the government needs provides a barrier. For example, there isn’t one supplier which can provide enough circular copiers. And sometimes the switch to new and different business models can require an upfront investment – funded by taxpayers.

A circular dot on the horizon, yet both feet on the ground

After these stories, the audience got on its feet to engage with the speakers and each other by Marjolein Baghuis of The Terrace. On the basis of our “Take a stand icebreaker” – they literally had to take a stand in respons to various statements about the circular economy. I really enjoyed facilitating the discussions among the audience and with the speakers. Everyone was convinced about the need for more circular business models. And everyone had the ambition to work in a more circular way.

Yet there were also plenty of doubts about the willingness and abilities of their organisations to really get going. Everyone expected a large role from the government, through its own actions as well as support and regulation for companies. At the same time, there was a passionate plea from the group not to wait for the government to lead; to just get started. Everyone agreed that this transition requires visionary leaders. Over drinks, we continued to discuss what roles we’d like to take up personally in this exciting field.

Circular Event feb 2019

This event was a co-production of the Nyenrode alumni circles for Sustainability and Market & Government following up on an earlier event about the energy transition. An inspiring Mindspace location in central Amsterdam hosted the event. Marjolein Baghuis was a guest at the Circulair Event, where the Nyenrode alumni were told how Interface and the Government work more circular.


Are you brave enough to take a stand?

Being brave can be terrifying: standing up for what you believe in, exposing yourself to the danger of being laughed at and criticized… That is why, when we support our clients to build a brave brand, we always start with a small but incredibly important step: creating a safe space to take a stand.

Brave starts small

A great way to encourage people to be brave is through the “Take a stand” icebreaker. We often use this exercise in our workshops or stakeholder dialogues, with the goal to support a safe conversation, where people open up to each other and feel comfortable to show what they stand for.

We get the room off their seats, clear the space and place colored dots on the floor. Green stands for “I totally agree” and red for “I totally disagree”; everything in the middle is an imaginative spectrum. The most important step is carefully preparing and selecting provocative statements. We present the statements one by one and participants physically move along the spectrum to the spot that best fits their own stand. The moderator of the session moves around the room and asks people to share why they have chosen this position. This often leads to an interesting exchange of different arguments. After a few statements the group starts feeling comfortable to take a stand. The atmosphere is set for the rest of the session.

Taking a stand is easier than it seems

What often gets in our way when we want to be brave is that annoying voice in our head: “What if I’m not right? Will they judge me? What if I fail?”

As it turns out, what goes wrong here is that we focus too much on ourselves – on our own feelings and what others might think about us. But if we picture any of our childhood heroes or role models, one thing they most probably all have in common is their focus on something bigger than themselves. They have a purpose in life: from saving the world from evil villains, to extinguishing fires and rescuing kittens.

The big secret: don’t be selfish

So, shifting your focus to the outside might help you to be more brave and courageous, not only to take a stand, but to turn this stand into decisive action that makes real positive impact.

Brave Brands on the rise

Self-focused people might survive; self-focused companies won’t. Increasingly they are in the spotlights, with nowhere to hide. Brands can no longer afford to simply focus on selling; they are expected to solve real problems for their consumers and society as a whole.

A large brand report by Nielsen (2015) – where 30,000 consumers in 60 countries around the world were interviewed, shows that 66% of consumers would spend more on a product if it came from a sustainable brand. For millennials this percentage is even higher. Moreover, according to Horizon Media’s Finger on the Pulse study, 81% of millennials expect companies to publicly commit to sustainability.

More and more brands take these expectations seriously. For example Ben & Jerry’s (Unilever), an ice cream company that takes a stand on issues as peace building, refugees, climate justice and the LGBT community. Another great example is DSM, a food and materials multinational company that strives to contribute to the Sustainable Development Goals for zero hunger and affordable and clean energy for all. And have you heard of Tony’s Chocolonely? A Dutch company that sells delicious chocolate bars as a means to fight slavery in the cocoa industry.

What do these brands all have in common? They all focus on something bigger than themselves; they show bravery; they make bold decisions that are guided by a bigger vision; they have clear purpose of making meaningful, positive impact.

Bravery pays off

In a recent interview in the FD newspaper, Unilever Europe’s president Hanneke Faber reveals that Unilever’s brands that take a stand grow 46% faster than the rest of the company. In the US, Ben & Jerry's market share is now more than 35%! “By taking a clear position you might antagonize some customers,” says Faber “but the rest become your fans, and that pays off.”

So let’s start encouraging brave

Research carried out for the Brave Brand Rankings shows that brave companies are more likely to be innovative, have great work environments with supportive managers and engaged employees and have organizational structures that promote cooperation and break down barriers.

To encourage bravery we need to create safe spaces where people dare to take a stand; no matter which stand they take. Our tip: start small and encourage bravery around you. Why don’t you try out our “Take a stand” icebreaker during your next team meeting? You can download more detailed instructions here.

After practicing in your team meeting, have your brand take a stand. What is your positive impact? What is your purpose? How can you ensure everyone in the company is aware of that purpose and prepared to fight for it?

You can find out in these cases how we have helped some of our clients to take a stand: Ecover-Method “Brand strategy for the people against dirty”; Dopper “Crystal clear positioning for crystal clear water”; and Nutricia “Define the societal relevance of a baby food company”.

Ready for your next brave step? Sign up for our Brand Purpose Training. Or just pop in our office for a cup of coffee!


Tony's Chocolonely: Raising the chocolate bar for industry change

For years, I’ve been supporting chocolate – and change – maker Tony’s Chocolonely to create their annual report. My kids and my colleagues love that I work for them. Because I always return from meetings with their yummy chocolate in funky flavors. Their bars are a treat, but what inspires me most to work with them is their commitment to creating positive change in the industry. Here’s my take on their key ingredients for positive change!

Crazy people raising the (chocolate) bar

Positive change usually starts with frustration about an issue plus people crazy enough to doing something about it. And this ccompany started just like that. Investigative journalists were shocked to find out how much child labor and slavery there is involved in nearly all chocolate. In 2006, in an attempt to prove that it could be done, they produced 5000 bars of slavery-free chocolate. As this first batch sold out in just a few hours, they turned the experiment into a company.  The company tagline says it all: “Crazy about chocolate, serious about people.”

Partners towards a common goal

A shift to more sustainable business practices is needed at all steps along the chain. From cocoa farmers, chocolate companies and governments, to retailers and consumers. The people at Tony’s understand they cannot transform the cocoa industry by themselves. Tony’s therefore developed a roadmap towards its mission: “Together we make chocolate 100% slave-free”.

The roadmap engages five key actors in the industry to work towards this common goal:

  • Strengthen farmers to increase their income
  • Engage the largest companies in the industry to take action in their supply chains
  • Encourage retailers to leverage their buying power
  • Push governments to adopt and enforce legislation
  • Enable chocofans to raise awareness and spread the message

Scaling up for real movement

To really engage partners along the cocoa chain, Tony’s knows there needs to be a business case every step of the way. Its own story and success provide lots of inspiration to get different parties to act.

At the launch event for its 17/18 annual report that scale became very clear:

  • Over 5,000 farmers benefit from the special premium Tony’s pays, nearly 1,000 farmers are involved in awareness-raising activities to prevent unwanted child labor and slavery;
  • The Netherlands’ largest retailer Albert Heijn announcedit will use Tony’s principles of cooperation for 100% slave-free chocolate for its very successful private label chocolate brand Delicata. World leading chocolate manufacturer Barry Callebaut supports the change process;
  • 5,000 chocofans joined the party, over 8,500 people support Tony’s mission as Serious Friends;
  • And the brand became the market leader in the Netherlands with a market share of 19%. Net revenue grew by 23% to nearly € 45 million and a net profit margin of 4.5%.

Relentless ambition for chocolate and change

Nice numbers for a company that produced its first bar of chocolate just 12 years ago… But they know there’s still a lot of work to be done. Therefore, Team Tony’s continues to work – and party – very hard to increase its own impact by expanding the business to other countries and continuing to drive collaboration in partnership with many others.


It’s official: The Terrace is a B Corp! Time for celebration

What do The Terrace, Tony’s Chocolonely, Triodos Bank, Ben & Jerry's, Patagonia and Dopper have in common? We are all companies that are B Corp certified! At The Terrace we are extremely happy with this new status.

But what is a B Corp?

B Corp is an abbreviation for Benefit Corporation. The B Corp certification was set up in 2006 by the American non-profit organisation B Lab. The goal of B Corp is to redefine success in business by not only focussing on profit but also focussing on making a positive impact on the environment and society. In other words: ‘Using business as a force for good'.

Why did The Terrace become a B Corp?

The Terrace has always had the DNA of a B Corp. We were founded with the aim to help companies and organisations realize positive change. We have been doing this for eleven years already, through sustainability strategies and reports, branding, communication and stakeholder engagement. Our ambition is to inspire and activate brands and consumers to make better and more sustainable choices.

Leontine Gast (Founding partner & Managing director): ''I believe that B Corp provides an important framework for implementing positive change throughout the entire business. Moreover, it offers a network of like-minded companies with which we can take faster and larger steps towards a meaningful economy.''

B Corp doesn’t just evaluate a product or service; it assesses the overall positive impact of the company behind it. How sustainable are we really? After all, a good world starts with yourself.

That is why, in order to become a B Corp, you have to go through a strict 'impact assessment' with many questions about five key impact areas of governance, workers, community, environment and customers. We score the most points with our impact on the (local) community and workers, check our online B Impact Report for all the scores. To actually obtain the B Corp Certification, you have to score at least 80 out of 200 points. This seems easy, but it is not! Try it yourself by filling in the Impact Assessment for free.

No time to waste!

Once you are officially a B Corp it doesn’t mean you can sit back and relax. Every year, all B Corp certified companies have to prove again how much impact they make. The movement is rapidly growing which means it is currently very busy at the B Corp offices. And that’s great news! Currently there are 2655 Benefit Corporations in 60 countries around the world. In the Netherlands, there are already 66 B Corp certified organisations. Join in and be the change!


Millennials and Corporate Social Responsibility: the perfect match?

On 25 June we were guests at Friesland Campina to give a workshop for ICA (Inter Company Association), an association for young professionals from the fifty top employers in the Netherlands. The theme of the evening was the responsibility of companies for their impact on society, in other words: Corporate Social Responsibility (CSR). More than forty employees (millennials) from companies such as FrieslandCampina, a.s.r, ASML, VolkerWessels, Aegon, Randstad, Tennet, Aon, Arcadis, Eiffel, Royal HaskoningDHV and EY participated in our workshop "CSR Essentials".

CSR, the new normal for companies

Nowadays at almost every large company you can find a CSR-report on the website. Initiatives such as B-corps, The Shared Value Initiative and The Circle Economy are growing every day and help companies to deal positive with the impact they have on society and the environment. In short, CSR is indispensable for most companies.

The importance of CSR was also confirmed by the young professionals who all agreed that companies have a responsibility for their impact on the world. But on the question whether their company itself is active in the field of CSR, other answers were given. For example, 20% of the people in the room felt that their company was totally inactive in the area of CSR. As many as 52.5% of the people indicated that their company is active but not active enough. And only 27.5% people can proudly say: my company is super active!

How do millennials choose their employer?

Research from the Reputation Institute Benelux shows that 'Innovation' and 'CSR' account for more than 55% of the 'drivers' of a company's reputation. But do the young professionals of today also choose for an employer with a high CSR standard?

An European study by YoungCapital in collaboration with the University of Utrecht shows that millennials increasingly choose a fun job with a modal salary over boring work with a top salary. What stands out in the research is that CSR's policy falls outside the top three of what young people consider as the most important when choosing an employer. learning new things, the salary and clear expectations of the employer all go above the performance on CSR. Still 58% of Dutch respondents say CSR is an important subject for choosing a job

How green is the 'green generation'?

The millennials are sometimes called the 'green generation'. But is this title true? Research from Milieu Centraal shows that in practice this is very disappointing. A reason for this is the insufficient knowledge and motivation to make the right sustainable choices.

During the workshop we ask the question whether the young professionals have sufficient knowledge about CSR. More than half said they miss knowledge! Often the millennials are interested in CSR but they have a lack of sufficient knowledge to ensure that CSR comes on the agenda of their business. We believe that more knowledge can lead to a perfect match between CSR and millennials!

CSR something  for  you?

CSR  Essentials workshop is  for  (young) professionals  who  are passionate  about  making a  positive  impact (just  like  us!), and  want  to learn  more  about how  to  get started  with  CSR in  your  organization. This  is  the perfect  workshop  if you:

  • Want to  get  smart on  the  basics of  CSR
  • Area  board  member, manager  or  employee of  a  company that  is  not yet  very  active on  CSR  and you  want  to drive  the  change
  • Areworking  at  a company  that’s  already doing  a  lot with  CSR  and you  want  to get  in  on the  action!

Are you interested in a CSR training? Send an  e-mail to  hello@theterrace.nl and we’ll  get  in touch  with  you ASAP.


What sustainability leaders can learn from treasure hunters

Is sustainability leadership like a treasure hunt? Initially, I didn't think so, as these two concepts have different characteristics. Treasures generally don't move, while sustainability is an ever-moving target. Treasures are usually quite tangible and concrete, making it easier to express what you're looking for than when stating sustainability as a goal. And while both require an investment of time, willpower, and other resources, the treasure hunt usually benefits just a few, while sustainability strives to benefit many. Find out in this flog what sustainability leaders can learn from treasure hunters. On March 15, I attended Sustainable Talent's Sustainable MBA in One Day. When Mondo Leone, the guide for the day, was introduced as a treasure hunter, I was quite skeptical. But after a day at the Interface Awarehouse with a diverse group of people, I must admit there were great learnings to be captured from his treasure hunt. Some he listed at the end of the day, others developed over time in my mind. So here they are:

Explore for treasure

There are so many sides to sustainability. Use your curiosity to explore which topics are most relevant to your organization. The program highlighted the Sustainable Development Goals, Kate Raworth's Doughnut Economics, and the circular economy as sources to explore. Emerging technologies could also provide inspiration for areas to explore. One key caution: always start from why. If you don't know what your why is (at the personal and organizational level), then applying your curiosity to search for treasure won't be very useful.

Act for positive change

Organizations (re)act differently to the sustainability challenge. They can be either, inactive, reactive, active or pro-active, according to the model presented by Rob van Tilburg, one of the authors of the book Managing the Transition to a Sustainable Enterprise. Just like in a treasure hunt, nothing happens until someone takes action. Various models were provided to create strategies and action plans, including inspiring guidance on how to drive change by Peter Senge and an overview of the seven roles of sustainability managers.

Fail fast

"Adventure is uncertain", said our guide for the day in his closing comments, "so prepare for failure." Several of the other speakers also highlighted failure as a key step along the way. We simply don't have the time to develop the one and only perfect solution. They, therefore, urged us to test different ideas at a small scale. And then to fail fast and learn from these failures to scale up the stronger ideas. And to share those learnings, within the organization and with peers in other organizations.

Collaborate for sustainable impact

Today's societal challenges are too complex to be solved by just one person or even one company. Therefore, collaboration is a key factor to succeed. The treasure hunter not only engaged many to fund the project but also engaged many people to contribute their expertise. Peter Senge highlighted that successful collaboration depends on the goal setting; finding a balance between the big, stretch aspirational goal and the practical, immediate goals that give people a sense of fulfillment along the way. He also highlighted the importance of relationships, trust, and empathy. Without these, collaboration is usually a waste of time as people are then unwilling to yield their own short-term interests to the larger, shared, long-term interest.

Celebrate your treasure

With many people involved and short-term goals in place, there are many ways to celebrate achievements and learnings along the way. The treasure hunter celebrated the outcomes of his expedition with his partners and funders. Sustainability leaders celebrate milestones along the journey of integrating sustainability into the strategy. And at the end of the "Sustainable MBA in One Day" workshop? We threw our graduation caps up in the air and toasted to all we learned and the people we met!


Top tips for greenwashing: communicating sustainability in horticulture

In October 2017, The Terrace was invited by the MPS-group to lead a workshop for and with leading growers of flowers and flowering plants from the Netherlands. This was part of event in preparation for an international horticulture trade fair. The focus of the workshop was on how to best communicate on sustainability in the horticulture sector. Here's what I had to say about conviction, focus, collaboration and... greenwashing.

Tip #1: Start from your personal conviction

The trouble with sustainability is the lack of a common definition. It may include topics like environmental protection, labor conditions, community engagement, economic impacts and/or governance. There are so many terms floating around, like CSR, responsible business conduct, future-proof, thriveability... Whatever term you prefer, it needs to be relevant to your core business and your key stakeholders. Most likely, this will be a function of the industry, the cultural/national context and the conviction and focus of senior leadership. So before communicating your sustainability efforts externally, first consider what sustainability means to you. For which parts of sustainability do you care most deeply? Why did you get started with organic flowers? What made you integrate sustainability into your business model?

Tip #2: Focus on what matters

Sustainability is multi-faceted, so your sustainability strategy probably is as well. But while all those facets may be relevant and understood by people within the industry, they won't all be equally relevant for different stakeholders. So when communicating your sustainability strategy, think first and foremost from the perspective of your audience. For different target audiences, focus your sustainability story in different ways. While keeping the overall story the same, differentiate the key topics to highlight for different audiences. Not everyone knows as much about sustainability issues in horticulture - or whatever sector you're in - as you do.

Unilever uses a very powerful analogy to further strengthen its sustainability communications: the sword and the shield. The sword is a strong message that you pro-actively want to share with your target audience. And which is very relevant for that target audience. The shield contains other topics which you are working on in your sustainability strategy, but which are less relevant to your audience, or less easy to talk about as an individual brand or company.

For example, for Lipton's sustainability strategy includes both social and environmental elements. In consumer communication, the social elements are emphasized like a sword. Most consumers realize that picking tea leaves is hard work in tough locations, so this context helps Lipton tell its story about the programs it has in place to make life easier for tea pluckers. The improvements Lipton is making to reduce pesticides is more like a shield. Something to work on very actively, but as most consumers are unaware that nearly all tea in the world contains pesticides, communicating about this as an individual brand is more challenging. So while this may be a great topic for a sustainability website or report, we'd not recommend putting that same story on the pack.

Tip #3: Some stories are better told together

Some topics are difficult to raise, even if you feel it is high time the world knew about the issues and your solutions. This is where sector-wide collaboration and communications may be needed. Just like for tea, for the horticulture sector, pesticides might be such a topic. As an individual grower of flowers, this is a topic you might be able to raise with expert buyers in retail. But with consumers, this is not so easy. If you try to mention this on your packaging, consumers might just link your name to pesticides in general, rather than the reduction you've achieved. To raise awareness of the issues around pesticides, it would be better to collaborate. With industry bodies and certification providers, but potentially also with NGOs and consumer organizations.

Tip #4: Always be honest

Good communications about your sustainability efforts and performance can build trust in your organization and its products. But even if you're selling plants and flowers, and you'd like to make the world a greener place, what you're communicating has to be true. Only balanced communications - sharing both successes and challenges - builds trust. If what you're sharing is not true, then it's merely greenwashing. That word might have a nicer connotation for the horticulture sector than for others, but it will simply erode trust.


Ready to scale-up? Do you have Category Leadership potential?

Having a social start-up means you want to change the world. Your product or service has the potential to create positive change for many. But to have real impact you need to scale-up.

How do you know if your brand is ready for the next step? That is an interesting question. Luckily The Terrace has developed a tool to assess the health of your social brand and it makes clear what you need to do to reach your goal.

A fundamental aspect you need to look at is the so called ‘’Power in the mind’’ of your brand. We have identified two critical checks to see if you are able to get a positive and prominent position in your market.

How single minded is your story?

To get your proposition across you need an extremely clear and simple story. Too many startups lose traction when their fundamental story becomes blurry. A simple but highly effective test is to check if your message can come from one type of personality.

Likewise, a defined corporate culture and a simple and clearly communicated strategy is necessary. You will be amazed by the high rotation of employees at social enterprises. Many times, this is due to unsatisfied employees, having different expectations of the brand and the company. They are disappointed that it was not clear enough how they could help the brand to have more impact.

Important questions you can ask yourself are: How focused is the brand story and sales pitch? How clear are the company values?

Do you have Category Leadership potential?

  • Most social enterprises are too polite. To have impact, you need to shoot for the stars. You must claim some sort of category leadership and act on it.
  • We loved it when Urgenda was the first social enterprise ever to sue the state. It was bold, it was right, and it was a 100% on brand. The same for the bid of VANDEBRON on the Hemkade.
  • Having a clear definition of your category is mandatory. A short cut to get attention is to point out the deadlock in the development of your category and show what you are doing about it.
  • Two important questions you can ask yourself: How many real category leadership actions have been executed? How fit is the company leadership to climb on the stage?

Keep an eye on our website and soon you’ll learn more about how to assess if you’re ready to scale-up! 


Top tips for reading sustainability reports

To mark International Literacy Day, this post is about reading sustainability reports. In 2016, the theme for International Literacy Day actually was “Reading the Past, Writing the Future”. Which is quite similar to our recent blog about transforming sustainability reporting to a tool for positive change. But that's a different story, as this blog is not about writing reports, but rather about reading them.

An ever increasing number of companies publish a sustainability report. Or integrate sustainability into their annual reporting process.  The question is, who reads these reports? And are the readers finding any use for the sustainability data and stories presented in the reports?

Who's reading?

In 2015, the Global Reporting Initiative, creators of the most widely-used sustainability reporting standards, co-authored a report with Oxfam, Informing decisions, driving change, about how different stakeholders read and use sustainability data captured in sustainability reports. It offers a comprehensive view of the key users of sustainability data, such as civil society organizations, investors, business, governments, market regulators, and media.

Some would argue that consumers also belong on that list, as well as prospective employees. Very different stakeholders with very different objectives. Yet all trying to get insights from reading the same sustainability report! Besides a few reporting geeks, many people may wonder how to best read or assess a sustainability report. So here are some tips to guide your reading!

Commitment or compliance?

The fact that a company has a sustainability report, doesn't always guarantee a real commitment to making their company more sustainable. A company may simply report only to comply with regulations. So a key thing to look for when reading a sustainability report is commitment. Is top management involved and engaged? What are they committed to exactly? How are decisions made regarding sustainability topics? The introduction to the report by the CEO or chairman is the best place to look for "commitment" signals. A great way to test the depth of this commitment is to cross-check the introduction of the financial report. If there is no mention of relevant sustainability topics there, then that commitment may not run so deep.

Connected context

The selection of topics for the sustainability strategy and report generally shows how connected a company is to its environment. So the next thing to look for in a sustainability report is a clear understanding of the company's context. Is the sustainability strategy linked to the vision and mission of the company, or is it focused on totally different topics? Are environmental and social risks and opportunities explored in relation to the business model? If you are less familiar with a specific industry, this may be hard to assess. In that case, reading parts of the sustainability reports of companies in the same industry will generate insights on the key topics.

Large companies are expected to act according to the OECD Guidelines and adhere to the UN Guiding Principles on Business and Human Rights. And all companies can use the Sustainable Development Goals as a framework to assess how their business contributes to a better world. So when reading a sustainability report, check whether and how the company references these frameworks.

When done well, companies select their so-called material topics after engaging relevant stakeholders, such as employees, clients, investors, NGOs, and communities. Through a materiality matrix, many companies plot the interests of their stakeholders against the interests or impacts of the company. That matrix and the accompanying text are my favorite parts of any sustainability report.

Completing the cycle

Sustainability is all about the future, yet reports tend to look back in time. So when reading a sustainability report, check whether the report on past performance is in function of the future. Are the long-term objectives clear, as well as the strategies and policies to reach them? Are they closely linked to the material topics identified? Does the report share relevant results for the past year as well as previous years as a benchmark? How do these results stack up against the goals for this reporting year?

Are the results balanced? Not just sharing what went well, but also the learnings from things that did not go as well? And does the report provide insight into the specific goals and action plans for the year ahead? These kinds of questions help you assess whether there is a structured, full circle approach to sustainability for the company. In which reporting is a key instrument to fuel improvement, rather than a goal in itself.

Consistency

The GRI Sustainability Reporting Standards (and Guidelines) help companies to prepare their sustainability report, but they also help the readers. Especially the GRI Content Index, which lists the standard set of disclosures for all companies and includes the material topics selected by the company. With it, the reader can easily find the pages for each topic.

And just like it's useful to scan the sustainability report of a company's peers and the financial report, it can be tremendously useful to have a look at previous reports by the same company. Is the company consistently reporting on the same material topics? If not, are there good reasons to change the scope of the strategy and report due to changes in context? Or is the company cherry picking its stories and KPIs from one year to the other, to always have good news to show?

And last, but not least, is the sustainability report itself consistent with the materiality analysis? Are the topics in the report - and the space they are given - in line with the materiality analysis? If not, it may be time to look for the page that highlights how to get in touch with the company about their report!


Transform your sustainability reporting to a tool for a positive future

Let's talk about how to transform reporting from a burden into a tool to build a better future. Our earlier posts zoomed in on materiality, but in the end, it's all about creating that better future. Here's our take on how to get more out of your reporting efforts. Just in time for the people in the midst of planning the next sustainability reporting cycle for their organization.

Every year, the reporting cycle returns and, every year, it turns out to be a lot of work. So it should raise questions around whether it’s worth the investment. Does the report itself add value to the company’s strategy and the sustainability efforts for a better future? Does it serve a strategic purpose beyond compliance with regulations and the accountability expectations of our stakeholders? For a strictly “by-the-book” type of reporting process, the answer to these questions is probably no.

Why? First, sustainability reporting suffers from a strange dichotomy. While sustainability is all about the future and long-term thinking, most corporate reporting is all about the past and has a horizon of just one year. Second, most companies do not use the reporting process to really connect the present performance to the future they to build and be part of. With our tips below, you can overcome this dichotomy and transform the reporting process into a powerful tool. So here we go!

Report the past in the context of the future

Start from the world you want in the future! In what kind of world does the company want to operate five to ten years from now? Instead of only looking back, we strongly recommend starting your sustainability report from the long-term vision and mission of the company. The report then gives an account of where the company is on your envisioned path

What does your company have to do to achieve that vision? How are your efforts to get there evolving? When you start from the vision and these questions, you report in the context of the future. This is a much more useful perspective for the company and for the report readers.

Focus on what's material for the future

Take your materiality analysis beyond the report! Most reporting frameworks include a so-called materiality analysis to identify the sustainability topics to be included in the report. The “by the book” analysis is mostly about what stakeholders want to know or what the company considers key risks, based on past performance and fears for the future.

To raise sustainability to a higher level, go beyond and ask: “what are the key topics we need to manage strategically to create value for the company and society?” Involve senior management in this analysis. Not only will the materiality analysis then inform the sustainability report content, but it will also provoke a strategic discussion and add a new perspective on what matters. That's the moment for sustainability (reporting) to enter to the board room.

Focus on what's material for the future

Involve your stakeholders in value creation! Stakeholders are vital to really create value for the company and society, so don't just engage them for selecting material topics for the sustainability report (as most reporting guidance recommends). Again, frame this step in the reporting cycle at a strategic level rather than the limited scope of reporting. And then continue the conversation from there.

Don’t limit the role of stakeholders to helping you choose your material topics. Really listen to what matters to them, what their goals are and jointly explore the world you want to build and the path you envision to get there. Only then can you find opportunities to collaborate and co-create on joint goals to make both your company and society stronger.

With these tips, we trust you can make your report a tool for positive change in the future, rather than just a report on positive change in the past. Let us know which of the tips you found most useful!

This blog post is part of a series on sustainability reporting and materiality. It is co-authored by Marjolein Baghuis of The Terrace and Nelmara Arbex of Arbex & Company. At GRI, they worked together on the creation and stakeholder engagement around GRI’s G4 Sustainability Reporting Guidelines. They now collaborate to support companies with strategic sustainability challenges, materiality analysis, and communications.