If you’re part of a small business, you probably think that you can’t afford or don’t need to publish an annual report. If it’s your first few years in business then we would agree with that thinking. But if you’ve been around longer than that or you're seeing rapid growth very early then we think it’s worth putting a basic report together. In our experience, there are a few ways to make these early sustainability reports stand out while also avoiding many of the costly mistakes that even seasoned reporters can make.

Here’s a summary of our recommendations for smaller companies:

1. Identify your priorities, establish goals, and define quantitative metrics.

2. Secure buy-in for new commitments or aspirational elements early.

3. A little planning will go a long way.

We dig into each of these and provide examples in the following sections.

Our first recommendation is to be clear about what impacts your company is choosing to prioritize, why they are important, and how you measure progress on them. Set smart goals related to your top 1-2 priority impacts. Another way of thinking about this is to make sure that you have a solid sustainability strategy in place. Consider a strategy to be a prerequisite for credible reporting. It can be basic and it doesn’t need to be perfect.

We see too many companies that spend lots of time and money on reports when they clearly don’t have a strategy in place. Lacking the solid foundation that a sustainability strategy provides makes it really difficult to include the kind of information and content that is meaningful to your audiences. Do the hard work first. Then it will be much easier to craft credible content.

A note on metrics: We think it’s okay to start with some qualitative or binary measures at first. For example, even if you’re not able to complete a full inventory of your climate pollution you could still say something like: “We will complete a comprehensive greenhouse gas emissions inventory, including our Scope 3 emissions, for the coming fiscal year. That inventory will help us establish a baseline for measuring emissions reductions in the future. We will publish that inventory in our next annual report.”

However, we think it’s helpful to compliment those task or output-based measures with information about the kinds of quantitative metrics your company will use moving forward. Building on our first example: “We intend to measure changes in our annual emissions using both intensity and absolute reductions as recommended by the Science Based Targets Initiative.”

Being able to provide quantitative measures of performance or metrics will require data. Learn more about how to master your sustainability data in this article.

Since this may be one of your first reports it makes sense to expect that your content may be lighter on established goals and metrics. That’s okay. Your report is a great place to communicate about your ambitions and goals moving forward. Start by acknowledging that there are important impacts that you have yet to take action on. Then talk about how you plan to address them and when.

Here’s a simple example: “We know that the production and processing of some of the raw materials used in our products, including palm oil, may have negative impacts on people and nature. We plan to publish a supplier code of conduct as part of a larger responsible sourcing program to help address these impacts by the end of the next calendar year. See our website for additional information about our progress on this issue.”  

If you plan on publicly announcing new commitments, partnerships, or similar kinds of sustainability-related initiatives, be sure that you have secured permission from leadership and external partners prior to including it in the report. Getting everyone on the same page often takes much longer than you expect so budget plenty of time prior to your publish date.

Put your annual report on the company operating plan, roadmap, etc. for the coming year. That means making the case for why it’s a priority, how it adds value, and the level of effort needed from your colleagues to make it happen. In our experience, we like to strategically plant seeds about the idea of publishing an annual report before we even raise it as an option for the company. Those seeds could be as simple as sharing strong examples from competitors, discussing the idea with key stakeholders to identify potential barriers and champions, etc.

Successfully getting your annual report on cross-functional work plans for the coming year will also likely require you to have some knowledge about what topics and content will be included. Our first two recommendations are designed to help give you some details about what will be included in the report. That info will come in handy when you’re trying to secure buy-in.

From a practical standpoint, you’ll want to give yourself at least 9 months of lead time before the date that you want to publish your report. Make sure it’s on team calendars for relevant functions or people who manage marketing & brand, creative, and tech. You can do the work of reporting entirely internally (I.e. no external contractors) if you plan well. This can eliminate the need to add a line to your budget for reporting.

We think even a modest report is better than no report. That said, there are some important things you want to avoid even in your early reports. Here are some pitfalls to avoid.

• Lack of relevant data that quantify the company’s impacts
• No discussion of trade-offs or complexity
• Lack of detail about governance and integration
• Disproportionate emphasis on philanthropy and charitable giving

For more detail about these red flags, check out this article. If you don’t think you can avoid any of these red flags then it’s probably worth reconsidering if your company is ready to publish a sustainability report.