Sustainability reporting is about identifying the company's own efforts to create long-term and sustainable development. The sustainability report itself should therefore contain information that helps the company's stakeholders to understand how the business affects and is affected by the world around it, and what efforts it is making to counteract any negative consequences. There are also certain requirements for a sustainability report, which are important to include in order for the sustainability report to be considered accurate.
Since 2017, a new law came into force, which imposes stricter requirements for reporting on sustainability and diversity policies. The law obliges medium-sized and large Swedish companies to present a sustainability report in conjunction with their annual report. The law requires a sustainability report to cover the following 5 areas:
A sustainability report should therefore provide information on how the company's activities affect these areas, both positively and negatively, and how it is working to achieve better results in these areas.
The objective of a sustainability report is to provide sufficient information to understand the company's development, performance, position and the impact of its activities on the above-mentioned issues(environment, social and human conditions, respect for human rights and the fight against corruption and bribery). In view of this, the disclosures or information should therefore include:
1. A brief description of the company's business model.
2. a description of the policy followed by the company in these matters.
3. Results and outcomes of this policy
4. the material risks related to these matters that are associated with the company's activities, and how the company manages these risks.
5. non-financial key performance indicators that are relevant to the business in question and for making comparisons to understand how the company is performing in the different areas over time.
It happens that companies do not always have a given policy on one or more of the issues, and that in itself is not necessarily wrong. However, if this is the case for you and your company, you will need to clearly justify and explain the reason for this in order for your sustainability report to be accepted.
The guidelines and directives contained in the Annual Accounts Act (ÅRL) on sustainability reporting can sometimes appear somewhat vague. The five areas that one is required to report on are themselves very broad and it can be difficult to know where to start. Fortunately, there are also other guidelines and reporting tools developed to facilitate the writing of a sustainability report and, by extension, sustainable business.
An example of such guidelines is the one developed by the GRI organisation. The GRI is an independent, non-profit organisation with a stated aim of promoting corporate reporting on sustainability issues. In other words, it is the perfect body to draw inspiration from and help you with your sustainability reporting. The GRI Sustainability Reporting Framework describes how different types of companies and organisations, regardless of size, sector or geography, can and should think about reporting on issues related to their economic, social and environmental impacts.
As mentioned earlier, all medium-sized and large Swedish companies are required to report on sustainability in connection with their annual report. Medium-sized and large Swedish companies may not be a super-specific measure. But if we look at the text of the law, we can see that companies that meet more than one of the following conditions are obliged to submit a sustainability report.
In other words, you must prepare a sustainability report if your company meets two of the above conditions.
The basic idea of the sustainability report is really very simple. It's about promoting long-term sustainable development that benefits everyone, both socially and environmentally. Legalising sustainability reporting not only increases transparency, but also makes it easier to compare companies. Stakeholders of larger companies will have a completely different view of their operations when they are required to report on sustainability issues. The Swedish Law Council sees transparency and openness as key building blocks in the process of building a more sustainable society.