Sustainability and Sustainability Reporting PDF

Sustainability and Sustainability Reporting THE MOST WIDELY USED DEFINITION WAS FIRST DEVELOPED IN 1987 BY THE WORLD COMMISSION ON ENVIRONMENT AND DEVELOPMENT -- ALSO KNOWN AS THE BRUNDTLAND COMMISSION — IN AN UN-SPONSORED STUDY ENTITLED OUR COMMON FUTURE, WHICH IS USED BY MANY GOVERNMENTS AND ORGAN...

Sustainability and Sustainability Reporting THE MOST WIDELY USED DEFINITION WAS FIRST DEVELOPED IN 1987 BY THE WORLD COMMISSION ON ENVIRONMENT AND DEVELOPMENT -- ALSO KNOWN AS THE BRUNDTLAND COMMISSION — IN AN UN-SPONSORED STUDY ENTITLED OUR COMMON FUTURE, WHICH IS USED BY MANY GOVERNMENTS AND ORGANIZATIONS: "SUSTAINABLE DEVELOPMENT IS DEVELOPMENT THAT MEETS THE NEEDS OF THE PRESENT WITHOUT COMPROMISING THE ABILITY OF FUTURE GENERATIONS TO MEET THEIR OWN NEEDS." IT CONTAINS WITHIN IT TWO KEY CONCEPTS: THE CONCEPT OF 'NEEDS', IN PARTICULAR THE ESSENTIAL NEEDS OF THE WORLD'S POOR, TO WHICH OVERRIDING PRIORITY SHOULD BE GIVEN; AND THE IDEA OF LIMITATION IMPOSED BY THE STATE OF TECHNOLOGY AND SOCIAL ORGANIZATION ON THE ENVIRONMENT'S ABILITY TO MEET PRESENT AND FUTURE NEEDS "SUSTAINABLE DEVELOPMENT IS NOT A FIXED STATE OF HARMONY, BUT RATHER A PROCESS OF CHANGE IN WHICH THE EXPLOITATION OF RESOURCES, THE DIRECTION OF INVESTMENTS, THE ORIENTATION OF TECHNOLOGICAL DEVELOPMENT, AND INSTITUTIONAL CHANGE ARE MADE CONSISTENT WITH FUTURE AS WELL AS PRESENT NEEDS." The World Business Council for Sustainable Development's three-pillar model of economic growth, ecological balance, and social progress is also a useful reference point for understanding sustainability. 1. SOCIAL 2. ENVIRONMENTAL 3. ECONOMIC Social social performance reflects an organization's impact on people and social issues, which include (a) health, skills, and motivation on the people side, and (b) human relationships and partnerships on the social side. Environmental environmental performance relates to the natural resources consumed in delivering products and services. Economic economic performance continues to include financial performance but will increasingly reflect an organization's wider impact on the economy. this allows organizations and stakeholders to recognize that profitability, growth, and job creation lead to compensation and benefits for families, and tax generation for governments. SUSTAINABILITY AND SUSTAINABLE DEVELOPMENT The notion of sustainability is rooted in the wider concept of sustainable development Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs." SUSTAINABILITY AND SUSTAINABLE DEVELOPMENT sustainability is thought of as a long-term goal while sustainable development refers to the many processes and pathways to achieve it. SUSTAINABILITY AND SUSTAINABLE DEVELOPMENT “Sustainable development is the pathway to sustainability” A holistic approach to business management, incorporating ESG alongside fi nancial ones, will serve as a sound business model that supports business continuity and competitiveness over the long term. Sustainability reporting Sustainability reporting is a term commonly used to describe a range of practices where organizations provide information on sustainability matters, in accordance with globally accepted standards. Such disclosures enable organizations to measure, understand and communicate their ESG performance and then set goals, and manage change more effectively. Sustainability reporting Sustainability reporting can relate to the reporting to stakeholders of an organization's strategies, priorities, policies and practices concerning sustainability issues, the sustainability performance of an organization and how sustainability impacts the operations. Sustainability reporting can also, among other things, discuss how an organization is dependent upon and manages the environment, society and governance, the risks and opportunities associated with these dependencies, as well as an organization's sustainability related responsibilities and accountabilities. Sustainability reporting Sustainability reporting has become a widespread feature across societies, and it is now a standard practice in many large organizations, particularly in the business world. Sustainability reporting practices are diverse as sustainability reporting remains largely a voluntary practice. Sustainability reporting differs substantially from traditional financial reporting which is based on strictly and largely mandatory frameworks and enforcement mechanism for non-compliance. Sustainability reporting The sustainability reporting landscape has also gone through substantial changes and continues to evolve. What started several decades ago with some pioneering companies preparing inexperienced attempts at environmental reports has over the years developed into a standard practice. Diff erent Names and Forms of Sustainability Reporting Environmental report Social or EHS-reports ( environmental, health and safety) ESG reports ( environment, social, governance ) Triple bottom line reports Corporate citizenship report Corporate responsibility report Accountability reports Responsible business report Creating shared value report Environmental report Corporate social reponsibility report PURPOSE OF SUSTAINABILITY REPORTING Sustainability reporting plays a role in accountability relationships as it is a means by which organizations communicate with a range of stakeholders. NATURE OF SUSTAINABILITY INFORMATION Financial information - has a direct link with the financial accounting system and is expressed in monetary units Non-financial information - means that it is not presented in monetary terms and is not based on an accounting standard -end DEVELOPMENT OF SUSTAINABILITY REPORTING In the late 1980s, the first voluntary environmental reports were published. 1996 - ISO 14001 standard-provides requirements for environmental management systems DEVELOPMENT OF SUSTAINABILITY REPORTING mid-1990s -corporate social responsibility (CSR) reporting -triple bottom line (TBL) reporting DEVELOPMENT OF SUSTAINABILITY REPORTING -global organizations supporting sustainability reporting were founded - Global Reporting Initiative (GRI) In addition, there are country-specific initiatives, such as Connected Reporting, developed in the United Kingdom, which aims to provide a new approach to corporate reporting and improve annual reports and accounts. DEVELOPMENT OF SUSTAINABILITY REPORTING launched at the turn of the millennium - UN'S GLOBAL COMPACT UN's Global Compact- It encourages businesses worldwide to adopt sustainable and socially responsible policies and to report on their implementation. DEVELOPMENT OF SUSTAINABILITY REPORTING The OECD also has Guidelines for Multinational Enterprises that are recommendations by to governments, aimed at providing voluntary principles for responsible business conduct. 2000 – update on OECD Guidelines for Multinational Enterprises, added recommendations on the elimination of child labor and forced labor, and new chapters on combating corruption and consumer protection DEVELOPMENT OF SUSTAINABILITY REPORTING 2004 - Another development was the launch of the ISO 26000 guidance for social responsibility. - It is voluntary guidance and is not used as a certification standard unlike other ISO standards. DEVELOPMENT OF SUSTAINABILITY REPORTING -According to the ISO 26000 guidance, the objective of social responsibility is to contribute to sustainable development DEVELOPMENT OF SUSTAINABILITY REPORTING 2011- update on OECD Guidelines for Multinational Enterprises, added new chapter on human rights. WHO ARE THE MARKET MAKERS DRIVING THE PRACTICE OF SUSTAINABILITY REPORTING? 1. Commitment Formers 2. Sustainability Reporting Framework Providers (Creating Structure) 3. ESG Rankings, Ratings, and Indexes (Comparing and Benchmarking) 4. ESG Research Providers 5. ESG Aggregators and Disseminators 6. Consultants, Auditors, and Data Management Providers WHO ARE THE MARKET MAKERS DRIVING THE PRACTICE OF SUSTAINABILITY REPORTING? 1.Commitment Formers  I-JN Principles for Responsible Investment (PRI) with more than 3,800 global signatories from over 60 countries.  UN PRI signatories collectively manage more than US$121.3 trillion in assets in management.  Natural Capital Finance Alliance- more than 90 global financial institutions and partners have joined  UNGC - "drive business awareness and action in support of" the UN Sustainable Development Goals (SDGs) for 2030 WHO ARE THE MARKET MAKERS DRIVING THE PRACTICE OF SUSTAINABILITY REPORTING? 2.Sustainability Reporting Framework Providers (Creating Structure)  The Global Reporting Initiative (GRI), established in 1997, is often referred to as the de facto guideline for sustainability reporting in the absence of mandated reporting.  CDP, formerly known as the Carbon Disclosure Project and established in 2000, is an independent body that develops and distributes annual information requests on behalf Of 827 investors representing US$IOO trillion in capital and approximately purchasing organizations  Climate Disclosure Standards Board (CDSB) - has developed two frameworks for disclosures in mainstream financial reports. The first CDSB framework is focused on climate change disclosures. The second CDSB framework has expanded beyond climate change to include environmental and natural capital information, namely water and forest commodities. WHO ARE THE MARKET MAKERS DRIVING THE PRACTICE OF SUSTAINABILITY REPORTING? 2.Sustainability Reporting Framework Providers (Creating Structure)  Climate Disclosure Standards Board (CDSB) - has developed two frameworks for disclosures in mainstream financial reports. The first CDSB framework is focused on climate change disclosures. The second CDSB framework has expanded beyond climate change to include environmental and natural capital information, namely water and forest commodities.  International Integrated Reporting Council (IIRC) is an entity consisting of international regulators, investors, companies, standards providers, accountants, and nongovernmental organizations whose mission is to enable integrated sustainability reporting to become a mainstream practice in both the public and private sectors. WHO ARE THE MARKET MAKERS DRIVING THE PRACTICE OF SUSTAINABILITY REPORTING? 2.Sustainability Reporting Framework Providers (Creating Structure)  UNITED NATION - Sustainable Development Goals ( SDG ) - become an unoffi cial reporting framework, as companies seek to map their sustainability strategies and programs to the 17 SDGs, 169 targets and global indicators for these targets. WHO ARE THE MARKET MAKERS DRIVING THE PRACTICE OF SUSTAINABILITY REPORTING? 3.ESG Rankings, Ratings, and Indexes (Comparing and Benchmarking)  With the proliferation of public ESG data and increased interest in using it to inform decision-making, many organizations rate and rank companies based on their ESG information. These include broad-based, holistic ESG rankings, such as the DJSI, FTSE4Good Indexes, and the Global 100 Most Sustainable Companies. Additionally, there are targeted environmental rankings, including the Newsweek Green Rankings and the CDP Leadership Index, in addition to social responsibility rankings, such as Ethisphere's World's Most Ethical Companies. Additionally, regional, local, and industry rankings, such as Brazil's Most Sustainable Companies ranking, exist. WHO ARE THE MARKET MAKERS DRIVING THE PRACTICE OF SUSTAINABILITY REPORTING? 3.ESG Rankings, Ratings, and Indexes (Comparing and Benchmarking)  To assist organizations in navigating the numerous publicly available ESG rankings, ratings, and indexes, The Global Initiative for Sustainability Ratings (GISR) has been established and has developed 12 principles from which the quality of ratings can be assessed. These principles include transparency, impartiality, continuous improvement, and assurability. WHO ARE THE MARKET MAKERS DRIVING THE PRACTICE OF SUSTAINABILITY REPORTING? 4.ESG Research Providers  In the background behind many leading ESG rankings, ratings, and indices, a set of specialized ESG research providers develop and apply the methodologies in addition to providing support and research products to investors and stakeholders.  Leading ESG research providers include SAM (supporting the Dow Jones Sustainability Index), MSCI (with a series of its own ESG Indexes), Sustainalytics (supporting seven investment indexes including the UNGC 100 Index and STOXX Global ESG Leaders Index), Trucost (supporting the Newsweek Green Rankings), and IW Financial (supporting Corporate Responsibility Magazine's annual 100 Best Corporate Citizens list). Some firms perform their own research in-house to produce their own ratings, as is the case of oekom research (developing proprietary country, sector, and corporate ratings in addition to publishing annual Corporate Responsibility Review reports). WHO ARE THE MARKET MAKERS DRIVING THE PRACTICE OF SUSTAINABILITY REPORTING? 5.ESG Aggregators and Disseminators  Another by-product of sustainability reporting is the aggregation and dissemination of information across platforms.  Examples include CSRHub, which houses data from more than 300 data sources and nearly 17,000 companies across 133 countries, and the Corporate Register, which is an online registry of sustainability reports. Additionally, ESG frameworks, including the GRI, CDP, UN PRI, and IJNGC provide repository for accessing sustainability reports. Other third party disseminators of information include Google, where companies' CDP Climate Change scores are posted as 'key statistics' on public companies' Google Finance pages. WHO ARE THE MARKET MAKERS DRIVING THE PRACTICE OF SUSTAINABILITY REPORTING? 6.Consultants, Auditors, and Data Management Providers  Consultants, auditors, and data management providers also play an important role in shaping markets. Consulting firms, including McKinsey, Bain, and Sustainability, regularly publish research that emphasizes the strategic importance of ESG issues and conduct studies to elucidate the business case and potential financial implications. Large accounting firms, including PwC, Deloitte, KPMG, and Ernst & Young, actively engage with standard providers to promote and emphasize the emerging practice of having ESG data assured.  Data management providers, including SAP, CRedit360, CSRware, and OneReport, also work to streamline and promote the practice of sustainability reporting. WHO ARE THE INTENDED USERS OF SUSTAINABILITY REPORTING? 1.Corporate Customers 2. Investors and Lenders 3. Employees 4. Communities 5. Advocacy Groups and Media 6. Regulators and Government Agencies 7. Suppliers and Business Partners 8. Industry Peers and Influencers WHO ARE THE INTENDED USERS OF SUSTAINABILITY REPORTING? 1.Corporate Customers 2. Investors and Lenders 3. Employees 4. Communities 5. Advocacy Groups and Media 6. Regulators and Government Agencies 7. Suppliers and Business Partners 8. Industry Peers and Influencers WHO ARE THE INTENDED USERS OF SUSTAINABILITY REPORTING? 1.Corporate Customers -Large corporate purchasers across nearly every sector now ask their suppliers to provide information on ESG policies, performance, and commitments. Notable examples include Walmart, which has expanded its sustainability questionnaires for suppliers from 15 to 100 questions, and Microsoft, which is specifically requesting that its Tier 1 suppliers produce GRI reports. Other large corporate purchasers that issue sustainability surveys to suppliers include IBM, Airbus, Siemens, Marathon Oil, British Telecom, Boeing, Volvo, BMW, and Johnson Controls. WHO ARE THE INTENDED USERS OF SUSTAINABILITY REPORTING? 2. Investors and Lenders  Investors are an important audience for sustainability reporting with the market size for "sustainable investments" estimated at 30% of professionally managed assets globally. WHO ARE THE INTENDED USERS OF SUSTAINABILITY REPORTING? 3. Employees  Sustainability is also now a leading topic of interest among the newest generation of employees entering the workforce, with research indicating that 96% of millennials look for an employer that is environmentally aware, and employees who are proud of their organization's socially responsible activities are more engaged, confident, and likely to stay with the company. WHO ARE THE INTENDED USERS OF SUSTAINABILITY REPORTING? 4. Communities . Community audiences are generally interested in knowing an organization is responsible and strives to make a positive impact in communities while also mitigating any potential negative impacts to communities. WHO ARE THE INTENDED USERS OF SUSTAINABILITY REPORTING? 5. Advocacy Groups and Media  These audiences generally seek to easily find information on management approach to the economic, environmental, and social topics about which they care the most. WHO ARE THE INTENDED USERS OF SUSTAINABILITY REPORTING? 6. Regulators and Government Agencies  A company's sustainability report provides the opportunity to demonstrate their commitment to compliance with laws and responsible business practices, and to describe their management approach in addition to key actions and/ or investments to comply with laws and regulations. A company's sustainability report also provides the opportunity to explain any challenges that the organization has experienced about compliance. WHO ARE THE INTENDED USERS OF SUSTAINABILITY REPORTING? 7. Suppliers and Business Partners WHO ARE THE INTENDED USERS OF SUSTAINABILITY REPORTING? 8. Industry Peers and Influencers  will view the information for competitive benchmarking purposes INTERNAL AND EXTERNAL BENEFITS OF SUSTAINABILITY REPORTING Internal Benefits 1. Eff ective management of sustainability risks and opportunities. a. Reducing exposures to sustainability-related risks b. Staying ahead of emerging sustainability risks and disclosure regulations c. Reducing the cost of capital through a lower risk profile 2. Sustainable vision, strategy and business plans. 3. Improved management systems. 4.Motivated workforce. INTERNAL AND EXTERNAL BENEFITS OF SUSTAINABILITY REPORTING External Benefits 1. Investor attractiveness. 2. Improved company reputation and brand value. 3. Stakeholder engagement. 4. Competitive advantage. -END-