What’s Impact Reporting?
One year ago, Project Hive Pet Company joined the community of over 7,000 certified B Corps companies. (See this blog post to find out why we think B Corps are the savior of capitalism.) Becoming a Certified B Corp is a process that requires transparency and authenticity, so as part of that, we are proud to release our first annual Impact Report.
I believe we are in a transformative era where businesses are still profit-driven while operating with a heightened awareness of their impact on society and the planet. For companies striving to be a force for good, an impact report is a testament to their commitment to social responsibility and sustainable practices.
What is an Impact Report?
If you think about it, every decision—and action—has an impact. Regarding Project Hive Pet Company's dog toys and treats, our primary impact could be as simple as making a dog happy. But the impact of sourcing materials, manufacturing the products to our specifications, packaging the products, distributing them to a retailer or to a home, and even what happens to toys at the end of their useful life: all of these components impact people and their communities, as well as the environment.
The Evolution of ESG Reporting
The roots of impact reporting can be traced back to the rise of Environmental, Social, and Governance (ESG) criteria, which gained traction in the late 1990s when socially responsible investing began to take shape. Investors sought not only financial returns but also information about a company's impact on the environment, society, and its governance structure. This led to the development of frameworks and standards for reporting non-financial performance. (For a recent commentary, see this article from the International Society of Sustainability Professionals: Is ESG dead? Or just in the Middle of a Reinvention?)
IS ESG DEAD? OR JUST IN THE MIDDLE OF A REINVENTION?
What Does an Impact Report Cover?
An impact report, sometimes called a sustainability report or CSR (Corporate Social Responsibility) report, is a comprehensive document outlining a company's performance in various ESG areas. It goes beyond financial metrics and delves into how a company contributes positively or negatively to society, the environment, and its governance practices.
Typically, three broad areas are covered:
- Environmental Impact: This section assesses a company's environmental footprint. It might include data on carbon emissions, water usage, waste generation, and efforts towards renewable energy and conservation.
- Social Impact: Companies detail their social initiatives, such as community engagement, diversity and inclusion efforts, labor practices, employee well-being programs, and philanthropic activities.
- Governance Practices: This section highlights the company's leadership structure, ethics, compliance, and corporate governance standards. It often includes information about board diversity, executive compensation, and policies to prevent corruption and unethical behavior.
What is the Framework of an Impact Report?
This is the exciting part! According to research, 95% of large global companies issue ESG reports annually. However, so far, the reports are voluntary and inconsistent concerning what data and other information is included. A few frameworks have emerged:
- The Global Reporting Initiative (GRI). As someone who became a GRI Certified Sustainability Professional a decade ago, I've helped write annual GRI-compliant corporate sustainability reports for a logistics company. While GRI standards are robust, the framework and process could be overwhelming for some, particularly smaller businesses that don't have the staff or resources to tackle this.
- The United Nations Sustainable Development Goals, adopted in 1992 at the Earth Summit in Brazil, "provides a shared blueprint for peace and prosperity for people and the planet," with 17 Sustainable Development Goals to guide countries towards improving our world. Though it is not a framework for impact reporting, it's a great starting point for understanding what a more "sustainable" future means, and the website has excellent resources.
- The International Sustainability Standards Board is developing global sustainability disclosure standards that are "cost-effective, decision-useful and market informed." But they are still in progress; as of the end of 2023, nothing has been published.
- LEED Certification. I became a LEED Accredited Professional in 2011 and have helped LEED certify several million square feet of residential and commercial properties. While LEED is focused on buildings and the campus or landscape surrounding it, I've found it a handy (and in some cases overlooked and undervalued) framework for organizations to begin talking about their impact.
- I've saved the B Impact Assessment for last because most of Project Hive's Impact Report uses this as an outline. The B Impact Assessment covers five impact areas:
- Governance: Practices about mission, ethics, accountability, and transparency
- Workers: Employees' financial, physical, professional, and social well-being
- Community: The economic and social well-being of the communities in which we operate
- Environment: How operations impact air, climate, water, land, and biodiversity
- Customers: Stewardship of customers through the quality of products, positive marketing, data privacy and security
Outside of this framework, we've included three additional components we think are necessary for a thorough report:
- Letter from our Founders (that's me and my husband Jim) provides a personal touch (after all, there are people running businesses).
- Making an Impact, which focuses on the beneficial impacts of:
- Our donations to establish pollinator habitat as part of our mission to save the bees
- Having Non-GMO Project Verified Treats, in alignment with our dedication to avoid agricultural practices that may harm bees
- Manufacturing our products in the US, which supports local economies and reduces our carbon footprint, and
- Carbon Neutrality—a section that may soon be required of all organizations to address global climate change.
- Moving Forward, which outlines our intentions of what's on the docket for the years ahead.
Why Publish an Impact Report?
- Transparency and Accountability: By publishing an impact report, companies demonstrate transparency in their operations. It holds them accountable for their actions and decisions, fostering stakeholder trust.
- Attracting Investors: Investors increasingly consider ESG factors when making investment decisions. A robust impact report can attract socially responsible investors who prioritize sustainable and ethical practices.
- Building Reputation and Brand Value: Consumers are becoming more conscious of the impact of their purchases. A positive impact report can enhance a company's reputation and attract customers who align with its values.
In today's business landscape, an impact report serves as a compass guiding companies toward responsible practices. For for-profit businesses like Project Hive Pet Company aiming to be a force for good, an impact report is not just a statement; it's a roadmap to creating a better, more sustainable future for all.