How to Read a Sustainability Report

Good morning, I wish you all a happy and productive Monday! Let’s dive into today’s guidance, but first, allow me to share a short personal story.

When I applied for my first-ever sustainability position (sustainability intern), I was, as you would expect, stressed. It was an intern position, but I wasn’t a fresh graduate—I was an engineer with three years of experience, shifting my career. Therefore, I wanted to be perfect for the interview. The first thing that came to mind was starting with the sustainability report. This way, I could understand their ambitions, what they were trying to achieve, and how sustainability affected them.

I remember downloading the company’s sustainability report and going through it, page by page. It was exactly as I expected: all their goals, targets, actions, metrics, and, above all, the standards they used to report. That gave me not only confidence but also the tools to ace the interview.

However, sustainability reports are long and can feel overwhelming. As a student, I had the luxury of time to do this. But as a busy professional, time is the most precious commodity. That’s why I’ve written this article: to help you efficiently read a sustainability report, whether you’re applying for a job, benchmarking your company, or seeking best practices. Let’s dive in.

Why You Should Know How to Read a Sustainability Report

Sustainability reports are goldmines of information. Whether you’re a sustainability professional or just starting out, understanding how to extract insights from these reports can benefit you in several ways:

1. Job Applications: Learn about a company’s culture, priorities, and ESG performance to prepare for interviews or assess if they align with your values.

2. Benchmarking: Compare your organization’s sustainability performance with industry peers to identify gaps and opportunities.

3. Best Practices: Discover innovative strategies and actions implemented by leaders in the field.

What is a Sustainability Report?

Similar to a company’s financial report, which provides insights into its performance, health, and risks, a sustainability report offers a comprehensive view of a company’s environmental, social, and governance (ESG) performance. While financial reports show how well a company is managing its finances and profitability, sustainability reports reveal the company’s impact on people and the planet, along with its efforts to mitigate risks and seize opportunities in the sustainability space.

• Highlight a company’s goals and progress.

• Share metrics to demonstrate accountability.

• Follow frameworks like GRI (Global Reporting Initiative), SASB (Sustainability Accounting Standards Board), or ESRS (European Sustainability Reporting Standards).

Understanding the structure of these reports will help you navigate them effectively.

How to Read a Sustainability Report: A Step-by-Step Guide

Step 1: Don’t Skip the Introduction

Let’s be honest—most of us tend to breeze past introductions, thinking they’re just formalities. And you’re not alone if you’ve caught yourself skimming over the CEO’s letter. But here’s the thing: this section is far more important than it seems.

The CEO’s letter, in particular, is like a window into the company’s soul. It reveals how the leadership views sustainability, what they’re prioritizing, and their aspirations for the future. It’s not just words; it’s a reflection of how engaged and committed the leadership really is.

So next time you’re tempted to skip it, pause and dive in—it’s worth your time!

Step 2: Check Out the Materiality Assessment

This section is where the company lays out what matters most to them and their stakeholders. Think of it as their “priority list” for ESG (Environmental, Social, and Governance).

Here’s what you’ll learn:

• What’s critical: The areas they’re focusing on—climate change, diversity, community impact, etc.

• How it aligns: Are they keeping up with what the industry and their stakeholders expect?

• What’s coming: Emerging risks and trends they’re preparing for.

This part gives you the big picture of what they care about and how they’re positioning themselves in their industry.

Step 3: Analyze ESG Metrics

Metrics are the backbone of a sustainability report, providing tangible data to evaluate performance. Focus on:

• Environmental: Examine carbon emissions (Scope 1, 2, and 3), water usage, and waste management. Distinguish between absolute and intensity metrics, such as emissions per revenue or product. Comparing these metrics to industry benchmarks can provide context.

• Social: Look for data on workforce safety, community engagement, and human rights initiatives. This indicates how well the company is managing its social responsibilities.

• Governance: Review board diversity, ethical practices, and compliance measures to understand the company’s accountability and transparency.

Pro Tip: Metrics reveal priorities. Use them to pinpoint strengths, weaknesses, and how the company stacks up against its peers.