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Sustainability reporting has a broader purpose than just informing and communicating with

stakeholders. It serves as an instrument of trust and relationships building, as well as for fostering
internal improvements in organizations (GRI, United Nations Global Compact & WBSCD, 2015,
p. 26).

Even though a large number of firms reports on SDGs in their sustainability reports, SDG reporting
still poses a challenge for firms, since it is often unbalanced and disconnected from business
goals, meaning that certain SDG goals, such as climate change, economic growth and
responsible consumption are more prioritized in comparison to biodiversity protection (KPMG,
2020, p. 6). In addition, there are firms that are struggling on how to most effectively report their
successes. Appropriate reporting on sustainability can help firms make changes in their business
models while simultaneously responding to stakeholder demands (World Business Council for

Sustainable Development & Radley Yeldar, 2021).

Sustainability reporting framework and standards

In sustainability reporting and communication field, difficulties exists regarding indicators used at
different levels of analysis and reporting (global, national and corporate) that are often not directly
comparable, which significantly hinders comparative analysis (Adams, 2017, p. 15). Currently

there are various applicable ESG reporting standards present, which adds to complexity and
sometimes even differences regarding reporting comparison and disclosure (EY & Oxford
Analytica, 2021, p. 4). Hence, lawmakers are mandating and trying to make sustainability
reporting more unified, comparable and specific (World Business Council for Sustainable
Development & Radley Yeldar, 2021, pp. 4-5). For instance, The European Commission through
its European Financial Reporting Advisory Group (EFRAG) is developing a nonfinancial reporting

standards for the European Union which will become mandatory from 2023. for certain groups of
firms (EY & Oxford Analytica, 2021, p. 15). Since various different sustainability reporting
frameworks and standards exist, there is a growing need for establishment of global sustainability
reporting framework.
Firms should align their sustainability strategies in line with the changes in environment and

society, as well as their stakeholders expectations (Adams, 2017, p. 28). Accordingly, each firm
should identify and assess the activities and initiatives that contribute to attainment of SDGs.
Firms can have positive contribution to one or more SDGs, and very seldom will firms contribute
to all 17 SDGs, as some SDGs targets are not relevant, or not material to certain firms. Relevance
of firm’s impact and possibilities to contribute are affected through materiality assessment

conducted with stakeholders (Adams, 2017, pp. 24-26). Therefore, firms should report on SDGs
attained results in comparison to set targets that affect value creation (Adams, 2017, pp. 31-32).
Firms should continuously strive to improve their practices in order to contribute to a more
sustainable, responsible and just world. Businesses have a key role in attaining stated goals. One
of the tools in that regard is the SDG Compass developed by following organizations- GRI,

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