Climate change

Sustainability Reporting – Future directions

  • 11 November 2016

ICC proposes an eight point approach with key considerations we believe each business should reflect as they determine how to advance their corporate sustainability reporting.

Sustainability reporting has become a key way for corporations to disclose information relevant to their sustainability, in a way that complements and adds nuance to standard reports on financial performance. Indeed, sustainability reporting has become a mainstream practice among the world’s largest and leading companies, who view it as a way to enhance stakeholders’ understanding of their operations and underscore their social license to operate.

To accelerate the expansion of such reporting and improve the quality of data provided, different organizations have initiated sustainability indices and assessments, which attempt to rate companies based on their perceived sustainability performance and disclosure. Non-governmental and advocacy organizations have also stepped up their efforts to examine companies’ performance on specific issues tied to their interests. Investors have established formal and informal disclosure mechanisms to consolidate sustainability information most relevant to their analyses. And, lastly, in some countries, governments and stock exchanges have begun to mandate certain types of nonfinancial disclosure.

The proliferation of reporting frameworks and mechanisms reflects firstly that the current level of disclosure by companies has not met the high degree of interest in the topic. On the one hand, mandatory disclosure guidelines are still evolving, perhaps rightly so given that such rules cannot be uniformly applied over companies that vary widely in terms of size, risk, ownership and industry. In lieu, sustainability reporting should develop in a bottom-up manner which takes into account a highly heterogeneous corporate sector, and which allows the articulation of such difference.

This is precisely why the time is right for the global corporate community to advance sustainability reporting with an agenda that is varied and flexible enough to mirror the diversity of the business community – in terms of size, sector and nationality – while meeting, and guiding, the growing interest and expectations for corporate sustainability. This enhanced agenda would be relevant to the current voluntary reporting frameworks under the Global Reporting Initiative (GRI) and the International Integrated Reporting Council (IIRC), by recognizing that corporate sustainability reporting is core to building trust and engaging with the public. In other words, the current effort is not about whether to report on sustainability, but rather how to do so in a way that is relevant and practical.