What is sustainability reporting?
Startups that want to sell to big companies need to meet certain sustainability reporting requirements. These requirements can vary depending on the industry and the specific company that the startup wants to sell to. Here are some general guidelines that startups should follow:
1. Identify the relevant sustainability standards and frameworks
The first step for startups is to identify the relevant sustainability standards and frameworks that apply to their industry and the companies they want to sell to. Some of the most common sustainability reporting frameworks used by companies in the EU include the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-related Financial Disclosures (TCFD). Such requirements are usually publicly accessible on the company’s websites. Novartis, for example, expects from its suppliers that products and services are carbon neutral by 2030. Further, water must be used in a responsible manner and without negative impact on water quality. Novartis also requires allowance to report the anonymized sustainability data to third parties.
2. Conduct a sustainability assessment
Once startups have identified the relevant sustainability standards and frameworks, they need to conduct a sustainability assessment. This assessment should include an evaluation of the startup’s ESG performance: What’s your environmental impact, e.g. how high is the energy use, how do you save water, do you use renewable energy? Social practices can include ethical standards regarding employee wellbeing or relations towards suppliers and partners. Good governance means you are accountable, your board is competent and you pursue diversity and integrity within your organization. Be accurate and honest in your assessment. Your startup probably doesn’t excel in all departments (yet): The assessment should also identify any areas where the startup can improve its sustainability performance, e.g. the amount of waste your startup produces. It’s just as important to calculate your sustainability risk – it will help you improve down the road. Don’t rush through this part – it’s crucial. You will probably find that numbers and data are not so easy to get, but it’s worth persevering.
3. Develop a sustainability report
Based on the results of the sustainability assessment, startups should develop a sustainability report that provides an overview of their sustainability performance. The report should include information about the startup’s ESG practices, as well as any initiatives or projects it has undertaken to improve its sustainability performance. You don’t have to reinvent the wheel. There are many online tools that can help you with templates and tools that combine Assessment and reporting.
4. Implement sustainability policies and practices
To ensure ongoing sustainability performance, startups need to implement sustainability policies and practices. This may include implementing a sustainability management system, setting sustainability targets and goals, and regularly monitoring and reporting on sustainability performance.
Benefits of sustainability reporting for startups
While meeting sustainability reporting requirements can be a challenge for startups, there are also many benefits. Some of the benefits of sustainability reporting for startups include:
– Meeting customer requirements: By meeting sustainability reporting requirements, startups can expand their customer base and sell to big companies.
– Improving sustainability performance: Sustainability reporting can help startups identify areas where they can improve their sustainability performance, improve their business model and decrease also financial risks.
– Enhancing reputation: Sustainability reporting can help startups enhance their reputation as a socially responsible and environmentally conscious organization. Besides marketing value this is relevant to attract talent.
– Attract investors: Startups that are transparent about their sustainability efforts improve their chances of securing investment by companies.
Sustainability reporting is becoming increasingly important for startups that want to sell to big companies implementing bold sustainability goals. By identifying relevant sustainability standards and frameworks, conducting a sustainability assessment, developing a report, and implementing sustainability policies and practices, startups can meet the requirements of their customers. While meeting sustainability reporting requirements can be a challenge, providing the needed transparency already is a success factor.
That’s why Basel Area Business & Innovation is supporting local startups to build sustainable businesses right from the start. Together with Levo Frameworks we make sure that entrepreneurs perform all four steps according to the maturity of the company.