Sustainability reporting is the new reality

Focus on Materiality
PostedMay 14, 2014, in  Step 8: sustainable society
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Sustainability is gaining momentum. As the support for it increases, not committing to it becomes less acceptable. It is no longer enough to say that you 'are' sustainable; you must also accept to be accountable for it. Sustainability reporting is maturing and developing from a trend to a precondition. In the short term, no one can escape it anymore.

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Sustainability reporting, source: http://www.thegreenmarketoracle.com
 

Lucrative

Sustainability reporting means that companies not only communicate about their financial performance, but also report on their non-financial performance (for instance regarding their social, societal and environmental impacts). This is necessary if we want to create a sustainable planet, but economically it also is a good idea, because sustainability can be quite lucrative.

'A great day'

The importance of sustainability has become widely acknowledged, but up to now taking the initiative was voluntary. Soon however regulations will make it obligatory. On 15 April 2014, the European Parliament decided that large companies (> 500 employees) are now required to report on their non-financial performance. A milestone, says Teresa Fogelberg on behalf of the Global Reporting Initiative (GRI): ‘This vote is a victory for transparency and this is a great day for the future of sustainability reporting.’

U.S. guidelines

In the United States, a similar development is taking place. The Sustainability Accounting Standards Board (SASB) rapidly is developing industry-specific accounting standards for non-financial data. To create transparency in various sustainability issues, corporations publicly listed in the United States will be required to report also non-financial information to the Securities and Exchange Commission (SEC).

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Link between financial and non-financial performance, source: SAP Integrated Report 2013

Ignorance

Slowly but surely sustainability reporting is becoming the new reality. That is important, because in the foreseeable future we will be talking about Integrated Reporting and transparency in the relationship between the financial and non-financial results. We are going in the right direction, but not without resistance. For a large part, this stems from ignorance: reporting on non-financial performance is often seen as a far-reaching process and a very big change. Yet, in reality it is not so bad, as Paul Druckman, CEO of the International Integrated Reporting Council (IIRC), likes to emphasize: ‘It’s less of a change than people realize. So most companies are not starting from scratch. It’s just bringing some structure and rigour to it.’

Materiality

Although GRI, SASB and IIRC have a different focus, they clearly agree one thing: the report should focus on materiality. Identifying the material aspects related to all activities of the organisation is a crucial prerequisite to identify the most important non-financial results to report to the stakeholders. For those who are unsure about the correct interpretation, GRI has put practical guidance online.

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Added value of sustainability reporting for SMEs, source: GRI

Opportunities for SMEs

Sustainability reporting is not only for large multinationals; there are also opportunities for SMEs. Especially for this group, GRI recently published a booklet; with: Ready to Report? Introducing Sustainability Reporting for SMEs, SMEs can now take their first steps towards sustainability reporting relatively easy. 

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PostedMay 14, 2014, in Step 8: sustainable society
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