Sustainability reporting
Background
Company boards, executives, and management are investing more and more time and resources on issues of sustainability - such as carbon (greenhouse gas emissions), energy efficient technology, water use, cleantech, and biodiversity, to name just a few. An important part of the global push towards sustainability practices involves a need to account for, and report on, sustainability - sometimes referred to as environmental, social, and governance (ESG) reporting.
On this page, we maintain a history of developments in sustainability reporting requirements and practices, tracking its gradual adoption on both a voluntary and mandatory basis. This page also considers the wider integrated reporting initiative being led by the International Integrated Reporting Council (IIRC), as indicated below.
Integrated Reporting
After a consultation process, the IIRC published the first version of its 'International Integrated Reporting <IR> Framework' (<IR> Framework) in December 2013.
Integrated reporting (stylised by the IIRC as '<IR>') is seen by the IIRC as the basis for a fundamental change in the way in which organisations are managed and report to stakeholders. A stated aim of <IR> is to support integrated thinking and decision-making. Integrated thinking is described in the <IR> Framework as "the active consideration by an organization of the relationships between its various operating and functional units and the capitals that the organization uses or affects".
The objectives for integrated reporting include:
- To improve the quality of information available to providers of financial capital to enable a more efficient and productive allocation of capital
- Provide a more cohesive and efficient approach to corporate reporting that draws on different reporting strands and communicates the full range of factors that materially affect the ability of an organisation to create value over time
- Enhance accountability and stewardship for the broad base of capitals (financial, manufactured, intellectual, human, social and relationship, and natural) and promote understanding of their interdependencies
- Support integrated thinking, decision-making and actions that focus on the creation of value over the short, medium and long term
There are three fundamental concepts underpinning <IR>:
- Value creation for the organisation and for others. An organisation’s activities, its interactions and relationships, its outputs and the outcomes for the various capitals it uses and affects influence its ability to continue to draw on these capitals in a continuous cycle.
- The capitals. The capitals are the resources and the relationships used and affected by the organisation, which are identified in the <IR> Framework as financial, manufactured, intellectual, human, social and relationship, and natural capital. However, these categories of capital are not required to be adopted in preparing an entity’s integrated report , and an integrated report may not cover all capitals – the focus is on capitals that are relevant to the entity
- The value creation process. At the core of the value creation process is an entity’s business model, which draws on various capitals and inputs, and by using the entity’s business activities, creates outputs (products, services, by-products, waste) and outcomes (internal and external consequences for the capitals).
The ‘building blocks’ of an integrated report are:
- Guiding principles – these underpin the preparation of an integrated report, informing the content of the report and how information is presented
- Content elements – the key categories of information required to be included in an integrated report under the Framework, presented as a series of questions rather than a prescriptive list of disclosures.
Further information on Integrated Reporting and the Integrated Report can be found on the dedicated page for the IIRC.
Organisations involved in sustainability and integrated reporting
Global Reporting Initiative (GRI)
The Global Reporting Initiative (GRI) promotes the use of sustainability reporting as a way for organisations to become more sustainable and contribute to a sustainable global economy. It is an international not-for-profit organisation, with a network-based structure.
GRI’s mission is to make sustainability reporting standard practice. To enable all companies and organizations to report their economic, environmental, social and governance performance, GRI produces free Sustainability Reporting Guidelines.
We have a dedicated page for the GRI.
International Integrated Reporting Council (IIRC)
The International Integrated Reporting Council (IIRC) (previously the International Integrated Reporting Committee) was formed in August 2010 and aims to create a globally accepted framework for accounting for sustainability, bringing together financial, environmental, social and governance information in an "integrated" format.
We have a dedicated page for the IIRC.
United Nations Environment Programme Finance Initiative (UNEP FI)
The United Nations Environment Programme Finance Initiative (UNEP FI) is a global partnership between the United Nations Environment Programme (UNEP) and the financial sector. Over 190 institutions, including banks, insurers and fund managers, work with UNEP to understand the impacts of environmental and social considerations on financial performance. Through its Climate Change Working Group (CCWG), UNEP FI identifies the roles of the finance sector in addressing climate change, and advances the integration of climate change factors - both risks and opportunities - into financial decision-making. This is done through a work programme encompassing research, training, events and regional activities.
The UNEP FI website can be accessed at www.unepfi.org.
Deloitte sustainability and climate change resources
Deloitte maintains a global website dealing with sustainability and climate change resources, including specific resources on sustainability reporting, assurance and compliance. Industry perspectives and member firm resources are also available. Click for Deloitte global sustainability and climate change resources.
