Many businesses produce and file annual reports (it’s a legal requirement for listed companies), detailing activity and financial performance for the benefit of shareholders. But, what is an impact report, why should your business write one, and how do you make it as accessible and engaging as possible?
We are moving from the 20th century system of shareholder capitalism (concerned only with financial growth) to a 21st century system of stakeholder capitalism where a business is responsible to all of the people with a vested interest in the company (and on whom the success of the business depends), and the environment that it operates in. An impact report is a 21st century document that covers people and planet, as well as traditional financial performance.
Why Produce an Annual Impact Report?
More and more businesses and organisations are coming to the realisation that sustainability and ethics are increasingly critical considerations for many consumers and clients. For businesses trying their hardest to do the right things, being successful businesses across the board as well as at the bank, an annual impact report is a great way to communicate their efforts and achievements in more detail than is possible through their regular marketing channels. In short, it’s your opportunity to showcase the good that your business does, and to do so in a vibrant and eye-catching way that will make people want to read and absorb it, whether they need to or not.
The Positive Impacts of Impact Reports
An annual impact report is a public document that shows that it is possible to do good whilst doing good business, and share how it has been achieved. It demonstrates a business’ commitment to transparency and to being accountable to stakeholders rather than just shareholders for its social and environmental impact, past and planned, and facilitates conversations between all involved. The more businesses that switch from traditional annual reporting to impact reporting, the greater the case for responsible stakeholder-based business becomes. Together they demonstrate that businesses that do right by people and planet don’t just survive in the modern world of awareness and empowered consumers, they thrive.
B Corps’ Legal Requirement
We believe that impact reporting is beneficial to all businesses, but it is a legal requirement for businesses that are registered B Corps. In order to gain certification an organisation must measure its social and environmental impact against the five sections of the B Impact Assessment (governance, community, workers, environment, customers). B Corps need to re-certify every three years and prove that they have improved upon their previous scores, but in the intervening two years they are also legally required to write and publish an annual impact report (section 2.5 of the B Corp Legal Agreement) for every financial year whilst certified. These impact reports don’t just measure and showcase impact over the past year, but they also state how a business intends to improve its impact in the future in “a way that is proportionate to the size and complexity of the company”. They cover “the now” and “the next”, and include a statement on how a business plans to tackle the issues surrounding the climate crisis. We designed B Corp UK’s B Lab Guide Writing An Annual Impact Report, so we’re deeply familiar with the whats, whys and hows of engaging impact reports.
Making Grey Engaging
Annual company reports are usually considered “grey literature”; dry, semi-internal documents. They don’t need to be! When you have performance data that you are proud of and want to share, beyond the board of directors or a shareholder AGM, then the design of your impact report and how you present data is crucial. They are an opportunity to use compelling infographics to tell stories and integrate financials with the engaging people-based stories that many of your stakeholders will gravitate towards.