Transparent measurement and disclosure of sustainability performance is now considered to be a fundamental part of effective business management, and essential for preserving trust in business as a force for good.
Yet, the complexity surrounding sustainability disclosure has made it
difficult to develop the comprehensive solution for corporate reporting
that is urgently needed.
In response to this, five framework- and standard-setting institutions of international significance, 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),
have co-published a shared vision of the elements necessary for more
comprehensive corporate reporting and a joint statement of intent to
drive towards this goal – by working together and by each committing to
engage with key actors, including IOSCO and the IFRS, the European
Commission, and the World Economic Forum’s International Business
Council.
GRI, SASB, CDP and CDSB set the frameworks and standards for
sustainability disclosure, including climate-related reporting, along
with the TCFD recommendations. The IIRC provides the integrated
reporting framework that connects sustainability disclosure to reporting
on financial and other capitals. Taken together, these organisations
guide the overwhelming majority of sustainability and integrated
reporting.
Through this paper, the five organisations outline a shared
vision that includes both financial accounting and sustainability
disclosure, connected via integrated reporting. As Charles Tilley, CEO
of the IIRC, says, “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. The connectivity between
sustainability-related factors and immediate financial-viability is
clearer than ever before. It is why we are committed to working with our
partners to drive a holistic system for reporting across the value
chain. We know that businesses globally are already using a mixture of
our 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.”
Foundational to this vision is multi-stakeholder standard-setting
that greatly reduces the burden on reporting organisations while
facilitating analysis, interpretation and action by users of
information. As Eric Hespenheide, Chair of the GRI Board, says: “We are
pleased to be collaborating with our peers in the sustainability
frameworks and standard setting community, and see this joint statement
as a powerful interim step. As GRI, we believe strongly in a vision of a
single, coherent global set of reporting standards, and will be working
with others to achieve this outcome. We look forward to continuing to
work together with all interested organizations in achieving greater
transparency through disclosure in the weeks and months to come.”
Users of sustainability disclosures have many various needs,
which sustainability disclosure standards are designed to facilitate. In
addition to understanding the impacts on society and the environment
associated with an organisation’s activities, many users need to
understand how these issues affect the organisation’s financial
performance and long-term enterprise value creation. As Janine Guillot,
CEO of SASB says, “SASB’s unique role in this system is to surface the
subset of environmental, social, and governance issues reasonably likely
to materially impact financial performance of the typical company in
each of 77 industries. SASB Standards are designed to improve the
quality and comparability of a core subset of financially material
sustainability information, serving as an important complement to
information that is already reflected in the financial accounts
according to Financial GAAP.”
Acknowledging the importance of structured information to enable
comparison, the standard-setters emphasise the importance of data being
structured around agreed taxonomies and being democratised via a public
data platform, as CDP provides for thousands of companies. Paul Simpson,
CEO of CDP explains, “We are delighted to work with these peer
organisations to develop this statement. Over the past 20 years at CDP,
we have seen environmental disclosure move from being almost
non-existent to fully mainstream. The 8,400 companies, representing over
50% of global market capitalisation, who disclosed through our platform
last year demonstrate this and provide a structured data set to the
market. With the world's largest corporate environmental disclosure
repository, CDP is uniquely placed to showcase which data points align
with which standards and taxonomies, and to continue to help companies,
cities, states and regions to measure their environmental risks,
opportunities and progress.”
The joint statement from this group shows a commitment to engage
with all stakeholders to achieve the globally accepted comprehensive
corporate reporting system that is urgently needed. Through the various
initiatives and calls for action from many players, including policy
makers, there is a groundswell of support for a system change. As Mardi
Mcbrien, Managing Director of CDSB, says, "the CDSB Framework is
industry agnostic and designed to facilitate effective disclosure of a
company’s natural capital, environmental and climate-related risks and
opportunities, so it supports and enhances the work being done
elsewhere. This is more than just a statement of intent to work
together, it is a natural next step as we look to form a complete
picture of how these standards might complement Financial GAAP –
integrating with the TCFD. We are looking forward to developing this
picture further in the near future to meet the growing demands of
investors, governments and consumers globally."
The joint statement calls for feedback on the ideas expressed in
the paper; for engagement with the standard-setters on all parts of the
reporting eco-system to increase buy-in and urgent action for change;
and for active support and help to achieve and evolve the vision that is
set out.
Click here to view the joint statement
CDP
© CDP - Carbon Disclosure Project
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