GRI and CMA launch new sustainable reporting guidelines in Sri Lanka
Tuesday, 10 September 2013 00:01
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By Kinita Shenoy
Conducted by the Global Reporting Initiative, Focal Point India in association with the Institute of Certified Management Accountants of Sri Lanka and the South Asian Federation of Accountants, the New Standards Workshop covered the national launch of the G4 guidelines as well as an overview of integrated reporting and sustainability reporting.
The session was opened by CMA Sri Lanka President Prof. Lakshman R. Watawala. He introduced the audience to basic G4 standards, terming them a powerful framework including integrated reports. Watawala described it as a sustainability reporting framework to measure and benefit from the transparency movement.
Aligning profitability and sustainability
GRI Focal Point India Director Dr. Aditi Haldar introduced participants to the main features of the G4 guidelines. She mentioned that the GRI doesn’t just create the guidelines and framework for reporting, but also shares global trends. The objective of sustainable reporting is to create accountability and trust for stakeholders. Thus there is a global sustainability challenge; how can business be profitable and contribute to solutions at the same time? Haldar stressed that contrary to popular belief, profitability and sustainability are actually aligned. However, even if an organisation has long term vision, do they have the commitment to carry it through? Sustainability cannot be simply understood in a theoretical sense and the concept around reporting is not just data collection of tangible assets and liabilities, but immeasurable things too. She stated: “What you can’t measure you can’t manage, and what you can’t manage you can’t change. What gets communicated gets understood.”
The behind the scenes aspect of reporting is a lot more profound and has a greater impact than what is on the surface. The credibility of measurement, management and change needs to be communicated in a trustworthy manner to both internal and external stakeholders. Sustainability reporting is about disclosure on economic, environmental, social and governance performance, and is stakeholder focused. Relevancy of information can only happen when it is stakeholder focused. Performance must bridge financial and other aspects, while experiencing continuous improvement.
The strategic context of sustainability reporting can begin by questioning who, what, where, when, why, and how? The business case shows that more investors and the financial market are rising and pushing organisations to get into sustainable reporting. Thus the GRI intends on supplying stakeholders of different constituencies with a framework. Sustainable reporting provides a slew of benefits, such as information for governments, help for improvement of management processes, reduction of waste and water usage, attraction and retention of talent, stakeholder engagement, competitive advantage to attract investors, and enhanced reputation and loyalty.
Haldar went on to outline a few ongoing trends involving GRI. As of 2011, 95% of the world’s top 250 companies based on market capitalisation used sustainable reporting. There is also an increase in reports from emerging markets and SMEs, including online reporting and online verification, integrated reporting, and supply chain focus as companies are looking to influence their suppliers via transparency and sustainability. While the majority of reports with 45% are from Europe, the largest absolute growth since 2010 is within Africa.
GRI’s mission is “to make sustainability reporting standard practice by providing guidance and support to organisations” as it is a network organisation and not a consulting body. The network includes the OECD, the global compact, UNEP and ISO as well as other governance bodies, focal points and ambassadors, organisational stakeholders, governmental advisory groups, training partners and strategic alliances. GRI’s core supporters are over 600 diverse organisations from over 65 countries. GRI India provides guidance and support to local organisations, driving GRI’s mission to make sustainability reporting standard practice. Unless the world moves towards further transparency, the closed-room method of reporting will no longer work with stakeholders.
Haldar mentioned that the complete G4 reporting principles and standard disclosures are available on the site for further perusal.
GRI’s technical aspects
The G4 helps with measurements which enable organisations change the way they manage their impacts. It is about promoting change, via a focus to promote significant change that will actually contribute to the local, regional or global sustainable development path.
When G4 started, GRI anticipated continued strong growth in sustainability reporting, increased interest in what organisational leadership identifies as critical sustainability topics and how they can be addressed. The GRI also noticed increasing interest from report users for clearly presented and accessible information, harmonisation between reporting systems and increased integration of financial and sustainable reporting.
G4 objectives were to be user-friendly for both beginner and experienced reports, improve technical quality with clearer definitions, align with other international reporting references and frameworks and lead to reports that focus on material topics. Haldar succinctly termed it “more relevance, less bulk.” Other objectives included offering guidance on how to link sustainability and integrated reporting, aligned with the IIRC, and improve data accessibility via XBRL taxonomy.
G4 development took over 2.5 years of activities, with over 80 workshops with over 2500 participants globally. All steps of the due process were checked and implemented, after approval by the Board in April 2013.
The G4 aims to focus on what matters, where it matters. Thus it is vital to identify what is critical to be managed and changed, even if the organisation is not ready to measure or manage it. Therefore, the standards should facilitate identification of issues. The report is focused on material topics, and is not about each and every sustainability-related topic that the organisation monitors.
Haldar went on to reiterate that materiality is key. Emphasis on what is material encourages organisations to provide only that information which is critical to their business and stakeholders. Organisations and report users can then concentrate on sustainability impacts that matter, resulting in reports that are more strategic, more focused, more credible and easier to navigate. G4 provides guidance on how to select material topics and explain the boundaries of where these occur.
The general standard disclosures consist of identified material aspects and boundaries. This is essentially reporting and standard disclosure plus implementation guidance. There are two accordance options, the core and comprehensive and no application levels. Both accordance options have focus on process.
There is also a list of required specific standard disclosures; strategy and analysis, organisation profile, identified material aspects and boundaries, stakeholder engagement, report profile, governance, ethics and integrity, generic disclosures on management approach, indicators, as well as specific standard disclosures of sectors.
New and revised disclosures include ethics and integrity, governance, GHG emissions and energy, anti-corruption and public policy. Generic DMA requires reporting of why the aspect is material, and reporting of the impacts that make this aspect material, along with how the organisation manages the material aspect or its impacts and the evaluation of the management approach. Haldar also mentioned that the G4 is aligned with other frameworks such as OECD guidelines for multinational enterprises, which eases the workload of the organisation as there is just one report submitted for all.
New structures and new sections are also in play. Haldar stated that using the G4 guidelines available, organisations need to simply obtain an overview, choose the preferred “in accordance” option, and prepare the General Disclosure standards and Specific Disclosure standards detailed. The G4 is designed to provide guidance on how to provide guidance on how to best present sustainability disclosures in different report formats. All reports published after 31 December 2015 will mandatorily use G4 guidelines.
