Closing the Loop: Linking Sustainability Data and Strategy

Sustainability reporting is now a regular part of the corporate agenda, but its value cannot be maximised unless companies use the information to set priorities for operational improvement. Shankar Venkateswaran explained how companies can use the NGRBC and BRSR to support implementation and decision-making. The session explored how organisations can identify their most important sustainability issues, determine where action is needed, assign responsibility and incorporate sustainability considerations into business decisions.

Keeping Disclosure Connected to Business Conduct A sustainability report is useful only when it reflects how a company manages its responsibilities towards society and the environment. Sustainability frame works help define these responsibilities, while reporting frameworks allow companies to assess and communicate their performance. The triple bottom line, for instance, extends the assessment of business success beyond profit to include environmental and social outcomes, which GRI helps companies report on. Similarly, the UN Global Compact’s Communication on Progress links disclosure to the implementation of its principles.

Faced with numerous disclosure requirements, companies can become so focused on what information to collect and how to present it that reporting starts to dictate the sustainability agenda itself. The connection with business conduct weakens when activities are chosen primarily to answer disclosure questions, without first considering which issues the company needs to address. Efforts to harmonise standards can make reporting more consistent, but companies still need a strategy that gives the information a purpose.

Double materiality, reflected in the European Sustainability Reporting Standards, considers both: the implications of sustainability issues for the business and the consequences of its activities for people and the environment.

How NGRBC and BRSR Link Responsibility with Performance India’s National Guidelines on Responsible Business Conduct (NGRBC) and the Business Responsibility and Sustainability Report (BRSR) were designed to preserve the connection between business implications on the one hand, and people/environmental-related consequences on the other. The Ministry of Corporate Affairs sought guidance reflecting Indian cultural, legal and operating conditions while remaining aligned with global developments. The design envisaged voluntary guidelines, mandatory disclosures and sector-specific guidance. Disclosure would help companies reflect on their performance while being transparent with stakeholders.

The NGRBC’s nine principles address governance, environmental and social responsibilities across business activities and the value chain. Each combines a statement of responsibility, an explanation of its meaning and core elements identifying the actions required. For example, the principle on safe and sustainable goods and services extends from resource-efficient production to information on product impacts and responsibility for collection, reuse and recycling.

BRSR translates these expectations into three connected sets of disclosures:

Section A describes the business: Disclosures cover activities, size, locations and workforce, including proximity of operations to environmentally and socially sensitive sites.

Section B covers management systems: Policies and processes show how leadership, governance and stakeholder engagement support responsible conduct.

Section C reports performance: Annual disclosures record actions and outcomes against NGRBC’s principles and core elements.

Section C combines mandatory essential indicators with voluntary leadership indicators, allowing more mature companies to report their impacts and outcomes. The leadership indicators signal a potential transition towards broader disclosure requirements.

Using Materiality to Decide Where to Act A company may identify 20-40 sustainability topics through peer analysis, internal workshops, business strategy, emerging issues and established frameworks. However, giving every issue equal attention would make it difficult to direct effort effectively. Materiality narrows the focus by examining both the financial implications for the business and its impacts on society and the environment.

The assessment combines internal analysis of risks and opportunities with stakeholder engagement. Financial materiality considers how each topic affects the business; stakeholder engagement informs the assessment of impact materiality. Plotting the two dimensions helps distinguish issues requiring different responses. The resultant materiality map provides a practical basis for prioritisation:

High financial and impact materiality: Build a strategy supported by key performance indicators, targets, action plans and disclosure.

High impact but lower financial materiality: Give particular attention to reporting and disclosure of the issue.

High financial but lower impact materiality: Focus on investment in response to its business significance.

Lower materiality on both dimensions: Acknowledge the issue while directing strategic attention to higher priorities.

These distinctions explain why materiality is central to both strategy and reporting. Issues important to stakeholders may require disclosure even where their financial implications are limited. Issues that are significant on both dimensions need a clear connection between the company’s priorities, the actions it takes and the performance it reports. The assessment therefore needs to be rigorous enough to guide decisions rather than simply populate a report.

Making Reporting Part of the Strategy Cycle A sustainability strategy begins by identifying relevant topics and establishing their materiality. The company then sets its ambition and goals, determines performance indicators and targets, and develops action plans and roadmaps. Monitoring, review and disclosure complete the six-step process. Reporting captures the results of implementation and provides the information needed to revisit earlier decisions.

The report should serve as a mirror for management’s own assessment while also providing a window for external stakeholders. Internal reporting helps establish whether the sustainability strategy is working, where performance is falling short and what corrective action is needed. External disclosures, meanwhile, communicate details about the company’s performance. Both purposes depend on tracking the issues most relevant to the business and its stakeholders.

The value of sustainability reporting lies in what a company does with the findings. Unless these lead to action on its material priorities, successive reports are unlikely to show meaningful progress, however well the information is presented. Using the results to assess what is working and where change is needed makes reporting part of how the business improves, with each cycle informing the decisions that follow.