Sustainabilty Reporting

8/9/2019 Sustainabilty Reporting

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Progress on Sustainability

Reporting

Professor Doug Cerf

Donald Bren Graduate School ofEnvironmental Science and Management

Corporate Environmental Management (ESM 281)

Winter 2009


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Printed on recycled paper-actually

better, not printed at all

Sustainable vs. financial reporting

What is the driver for various stakeholders? Financial reporting-related to investor direct financial impact

Non financial (sustainable reporting)-less direct financial impact to investors

Mandatory or voluntary

Guidelines for each type of reporting

Audit/assurance for each type of reporting Frequency of each type of reporting

Sustainability reporting is less regular than financial reporting

Disclosure, income management

Public relations component

Distribution system for each reporting system

Implications of including environmental disclosures in required financial reporting Both are evolving

Move to International Financial Reporting Standards for US Corporations


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Global Reporting Initiative (GRI)

a multi-stakeholder process

mission is to develop and disseminate globally applicablesustainability reporting guidelines.

voluntary use by organizations for reporting on... economic, environmental, and social dimensions of their activities,

products, and services.

717 organizations in 2008 from around the world reportusing the GRI

the world's de facto standard for reporting. 60 U S companies

List of companies reporting available on GRI website http://www.globalreporting.org/GRIReports/2008ReportsList/


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G3 categories

Defining Report Content

Defining Report Quality

S

etting the Report Boundary Profile Disclosures

Disclosure on Management Approach

Performance Indicators

SectorSupplements

G3 Link:http://www.globalreporting.org/ReportingFramework/G3Online/


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Reporting Boundaries of

Sustainability report Organizations may have

complex internal structures, multiple subsidiaries,

joint ventures, and/or foreign operations.

significant use of outsourcing Complicated supply chains

Distribution channels

Particular care should be taken to match the scope of thereport with the economic, environmental, and socialfootprint of the organization (i.e., the full extent of its

economic, environmental, and social impacts). Any differences should be explained.

Is this too much to ask of firms? Do the benefits of reporting outweigh the cost of the systems?


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Reporting Boundaries

Source: GRI boundaries exposure draft


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better, not printed at allS

ource:GRI-G3 online


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Technical protocols

GRI has developed reporting protocols for somereporting categories

Reporters should use GRI technical protocols ifthey are available

If an existing GRI protocol is not used, The reporting organization should clearly describe the

measurement rules and methodologies used for datacompilation.

If a GRI protocol is not yet available, reporting organizations should use their professional

judgment, drawing on international standards andconventions wherever possible.


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Required Sustainable reporting

Denmark, France, Hong Kong, the

Netherlands, Norway, South Africa and

UK.


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Integrated reports

Some firms are integrating their sustainability

report with their annual (financial) report

Examples: Novo Nordisk, Danish Pharmaceutical

Danisco, Danish producer of food ingredients

Dofasco Inc., Canadian Steel Company

Most important benefit of integrated reporting isthe sustainability metrics are part of the financial

reporting distribution system


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The trouble with most reports is that they

have no natural audience other than a

handful ofSRI analysts. Judy Kuszewski, SustainAbility Ltd.


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Legitimacy Theory

The role of environmental disclosures as tools oflegitimacy: A research note (Accounting Organizationsand Society, 2007)

In general, the findings provide additional support for the argumentthat companies use disclosure as a legitimizing tool

Our tests document that total environmental disclosure is higherfor worst environmental performers.

Such disclosure is also higher for firms operating in

environmentally sensitive industries. worse environmental performers made higher levels ofnon-

monetary environmental disclosures than their better performingcounterparts


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Are the firms producing

sustainable reports sustainable? The companies with the best sustainability

records produce sustainable reports

The companies with the worst sustainability

records produce the best reports

Discussion


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Earth in the Balance Sheet

CFO article

http://www.cfo.com/printable/article.cfm/10

234097/c_10234153?f=options


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Sustainability Reporting Project

Goal, obtain a solid understanding of:

scope (what portion of the entity is included in the

report) and why. geographic scope

impact of outsourced activities (if applicable)

the sustainable categories addressed

the technical protocols or other metrics used

assurance services used,

effectiveness of the report

Documents

Sustainabilty Reporting