What is an Impact Report?
Climate change, environmental damage, and corporate responsibility are growing concerns for millions of people around the world. As we all become more aware of the impact of the things we buy, businesses are under pressure to demonstrate their commitment to sustainable practices.
One way a company can show it means business when it comes to sustainability is through Impact Reports. But what exactly are Impact Reports, why are they important, and how can you decipher them effectively?
We’ve just published our report for 2023 so we’re particularly aware of the thinking that goes into these reports, and the ways that they can clarify, as well as confuse, our understanding of a company. Let’s get into it.
What is an Impact Report?
An Impact Report is a document (often published online as a pdf) that outlines the achievements of an organisation in terms of their social and environmental performance, rather than just their finances. It provides a place for a business to describe its sustainability initiatives, achievements, and areas for improvement. You can think of it as a travel log or road map that describes a company’s journey towards creating positive change.
Why do some businesses have Impact Reports?
An Impact Report is a good sign that an organisation is proud of its environmental or ethical credentials. You can normally find a report on the website of most charities and many businesses with a sustainable or “eco” brand.
There is no legal requirement to publish a report like this, and you might be surprised by some of the larger brands that don’t. But having an Impact Report helps a brand to build credibility in their environmental credentials, and also stand out among more traditional brands in their sector.
They also provide a useful opportunity to stop and take stock for the company themselves. When we’ve written our Impact Reports we’ve found that taking the time to analyse our performance metrics and set targets for the next year has helped us to see even more places where we can improve our processes and give back to our community.
At their best, Impact Reports aren't just a place for companies to brag about their achievements - they build a culture of accountability and innovation.
How to spot a good Impact Report
So that’s the idea behind Impact Reports - and why they are a good sign that a company is trying to be more sustainable. But not all reports are created equal, and there are some issues to be aware of when we settle down to read one.
The key thing to understand is that there’s no set format or assessment criteria for an Impact Report. A company will write their report themselves, as we have done at Naked Sprout, or they will commission an agency to write it for them. Either way, they are free to present information about their company and processes in any way they choose.
So if we have a glowing report, how do we know it’s an accurate picture of an environmentally-conscious team, and not just a bit of self-congratulatory fluff? Here are some key things to look out for:
Clear metrics: A good Impact Report should clearly outline the company's sustainability goals and the metrics used to measure progress towards those goals. Look for specific targets rather than vague statements. In our last report (for 2022) we said that we wanted to double our donations to our charity partner Just a Drop. In our 2023 report we’ve been able to confirm that we’ve done it, and next year we plan to double our donations yet again.
Transparency: An Impact Report ought to be an exercise in transparency, so it’s reasonable to expect evidence to back up the claims made. Companies should openly disclose their methodologies and data sources, and avoid vague language and unsubstantiated claims wherever possible. One good tip is to check for references in the document itself. Our report has extensive footnotes, providing all of our sources and calculations, to show exactly where and how we are getting our numbers. If you want to see all of our evidence at once, you can find it on our evidence page.
A holistic approach: Sustainable businesses should be trying to reduce their environmental impact across their supply chain, provide good jobs for workers, and benefit their wider community. A good Impact Report will address all of these aspects of the business, providing details of production methods, wages, and charity work.
External accreditation: A company who is really walking the walk won’t be going it alone. They will be engaging with respected organisations who can provide accreditation and guidance. And if they’re doing this, it should be easy enough to spot from the logos in their report! The FSC, Living Wage Foundation, and B Corp logos in our report show that we aren’t just meeting our own standards of sustainable business, we’re accountable to external bodies.
The long-term view: Sustainability is a long-term commitment. An Impact Report should say exactly why the company is doing better than their industry standard today, and it should say how they plan to do even better tomorrow. In our 2023 report, for example, we have said that we will reduce our transport emissions over the next year by through incorporating environmentally friendly forms of transit. This is a clear goal, and in our report next year we'll be able to describe exactly how we've done it (sneak peek here).
In conclusion
As we grow more aware of the urgency of action for our planet, brands are more motivated to appear eco-conscious and socially responsible. Companies that claim the higher ground should provide more in the way of transparency and accountability, and Impact Reports can be a helpful tool. But there’s many different ways that companies choose to present their reporting, and the lack of an agreed-upon format means they come in all shapes and sizes, from the detailed and exhaustive, to the detail-light and picture heavy.
So, the next time you come across an Impact Report take the time to have a critical read. Are there any obvious gaps or vague statements? Can you see where they're getting their numbers? Have they outlined, using clear examples, the positive change they are making right now and how they’ll keep making changes in future?
If their team has taken time over it, they’ll appreciate the attention, and if they haven’t, you should be able to tell! Our Naked Sprout Impact report, covering January to December 2023, is up on our website now.
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