A Dual Reporting Future: the Strategic Advantage of Voluntary Reporting

Think of mandatory and voluntary reporting as complementary colors in your communication palette — each has its purpose, and together they create a complete picture. As the regulatory landscape continues to evolve, smart companies are asking not whether to continue voluntary reporting, but how to make it work harder. 

With uncertainty in the US around mandatory disclosures, European requirements in force (but delayed or reduced), and an evolving political reality in the US — companies must adapt.  

You must do what’s required, of course. But is that enough? With the mandatory reporting on the path to becoming reality, companies need to think strategically about how their voluntary reporting can complement and enhance their required disclosures, and build the business case beyond compliance. Voluntary reporting can be more focused on meeting internal needs rather than external compliance. (And use other communications as well.) What’s the opportunity? How can you maximize the value of both? 

Build a Strong Data Foundation

Quality data supports both mandatory and voluntary reporting. This minimizes the risk of errors, creates efficiencies, and supports richer narrative disclosures. 

Let Materiality Be Your Guide

Start with a Materiality Assessment — double materiality if you can (both impact materiality and financial materiality) — so you understand which priority issues are most relevant to your business and stakeholders. With materiality as the backbone, prioritize aspects of your operations that have the most significant impact on stakeholders, rather than trying to include everything. Your voluntary report can contextualize the hard numbers provided in mandatory reports, explain your long-term strategy, risk management approach, and innovation trajectory. And, done right, it can humanize the company too. 

Connect Sustainably to Business Strategy 

Your voluntary reporting should clearly demonstrate how sustainability connects to your broader business objectives and value creation. You need a rigorous control process so you can successfully navigate the conflicting pressures of greenwashing concerns, anti-ESG movements and increasing demand for rigorous, comparable, and consistent information. Reinforcing integration with the business shows real commitment and supports the idea that sustainability efforts are not merely a compliance exercise but a key part of your long-term value creation.

Build Trust Through Transparency

Investors and other stakeholders continue to demand transparency beyond the numbers. Voluntary reporting helps companies meet this demand, providing a richer narrative, deeper insights, and more granular information. And, as always, building trust with your stakeholders, analysts, and shareholders is crucial as the regulatory frameworks, and the political environment, evolve. Be upfront about both positive and negative aspects of your company’s operations, acknowledge limitations and areas where improvement is needed. 

BUT, don’t go overboard

While increasing transparency through reporting is generally considered positive, it can have downsides. It may expose the company to public scrutiny, create a minefield of potential controversies, encourage greenwashing, or lead to backlash from activists if you don’t meet overly high expectations set by your public statements. (See the work of Alison Taylor on this subject). And, if your voluntary disclosures are not well-aligned with your mandatory reporting, you can send conflicting messages, undermine trust, and potentially put the company at risk.  

The Takeaway

Leveraging voluntary reporting as a strategic advantage means not only meeting the requirements, but using the opportunity to signal leadership, communicate your culture, build stakeholder trust, and demonstrate how sustainability is embedded your business. The opportunity is to tell your story in “full color,” not just metrics. You want to keep up the momentum of progress, reporting is one tool. Help people understand the ‘why’ and the ‘how’ of your company, not just the ‘what’.  

Get Expert Guidance: IOP Can Help

Need help developing an effective communication or reporting strategy? For over 25 years, IOP has helped companies navigate the evolving reporting landscape while creating impactful communications that resonate with stakeholders. Email us to discuss how we can help you maximize the value of your reporting efforts. 

February 2025
Photo by Josh Massey on Unsplash