Global standard-setters unite on sustainability reporting

Five leading global reporting standard-setters have agreed to work together to develop a comprehensive sustainability reporting regime for companies.

The breakthrough was announced on 11 September in a joint statement from the CDP, the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB).

The quintet has pledged to collaborate with each other and other international bodies, including IOSCO and the IFRS, to develop a globally relevant method of reporting sustainability measures within corporate reports and accounts.

In a new paper, the organisations set out a “shared vision” of how “integrated reporting” can help corporations disclose their exposure to sustainability-related themes and risks, as well as how they are mitigating them and taking positive action – and how investors can quantify all these elements.

“This year we have witnessed businesses around the world having to pivot their business models overnight to prioritize the health and safety of their employees and customers above the immediate financial success of the business,” said Charles Tilley, chief executive officer of the IIRC.

The group noted that the “connectivity between sustainability-related factors and immediate financial viability is clearer than ever before”.

Tilly said the group knew that businesses globally were using a mixture of their frameworks and standards to provide stakeholders with robust, effective information to drive better decision making and capital allocation via their integrated report.

“This document provides further clarity on how to do this effectively,” he added.

The framework centres on “multi-stakeholder standard setting”. The collaboration between the group of organisations that all produce their own reporting standards and guidelines should help reduce the burden on reporting companies “while facilitating analysis, interpretation and action by users of information”, according to the statement.

The quality of data related to companies’ performance on environmental, social and governance criteria has long been a problem for investors focused on sustainability issues. While some companies now publish regular sustainability reports, interpreting these from an investment viewpoint remains difficult, despite the significance of these criteria on the long-term viability of business models.

The organisations emphasised the importance of “structured information” around agreed terminology and definitions, that then can be easily compared to other companies and benchmarks.

The full paper is available here and is open to stakeholder feedback.