Sustainability Reporting

Week 13 Accounting Theory and Practice

What is Sustainability Reporting?

Sustainability reporting, also called triple-bottomline business accountability, is the practice of expanding traditional business reporting to take into account environmental and social performance in addition to financial results.

Why do businesses and other organizations choose sustainability reporting?

For many organizations, financial reporting alone no longer satisfies the needs of shareholders, customers, communities, and other stakeholders who require or desire information about overall organizational performance.

What are the benefits of sustainability reporting?

Organizations choose sustainability reporting because it enhances and strengthens a companys brand and reputation, provides differentiation in the marketplace and establishes a foundation for the line between shortterm financial goals with longer term environmental and social objectives, open, positive communications between a company and its stakeholders. Perhaps more important, when done as a dynamic, interdependent discipline, sustainability reporting reinforces resulting in a situation where all three can coexist and benefit a global society.

The Catalysts for Sustainability Reporting

Ethical Consumerism Socially Responsible Investing Shareholder Activism Sophisticated use of internet

Examples of Other NonFinancial Reports

Environmental Social and Governance [ESG] Reports Corporate Social Responsibility Environmental Health and Safety Reporting Carbon Emission Reporting

Integrated Reporting
Combine the financial and non-financial reporting to steer companies to think
Strategically Integrate Strategy More Focus on Long Term Decisions Creating more sustainable business

Consider:
Environmental, Social, Governance aspects Must be embedded in core business strategies and fully integrated into its operations

Key Challenges of Integrated Reporting

Relevance Vs Completeness
Decision Usefulness;
Economic Decision Vs Wider Holistic Decisions

Long Term Vs Short Term Historical Vs Forward Looking

Understandability and Context

Key Challenges of Integrated Reporting

Comparability Vs Customised
Large Variety of Metrics or Core Metrics? Boundaries: Legal Entity Vs Full-Chains Presentations: Graphics Vs Text

Reliability and Uncertainty

Challenge of Integrated Reporting

No one set of standards Is there a problem? Arguments Market Vs Regulation International Integrated Reporting Committee [IIRC] is developing an integrated framework to report both financial performance and sustainability in a single report.

Integrated Reporting Requires:

An Integrated Strategy Embedding In Line Responsibility Corporate governance and internal control structures Leadership to set tone at the top Sound Information Systems Suitable Reporting Criteria [IIRC]

Integrated Reporting
Big Issue: Should it remain voluntary or mandated?