Business Sustainability reporting

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Securities and Exchange Commission (SEC) guidelines on sustainability Reporting In 2018, the SEC released its guidelines mandating all companies on the stock exchange to report on its social and environmental activities, whether in the annual report or a separate sustainability report. The SEC Sustainability Disclosure Guidelines cover economic, environmental, social and governance themes. The following nine principles have been used to guide the activities and actions of companies:

(a) Businesses should conduct and govern themselves with ethics, transparency and accountability

(b) Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner;

(c) Businesses should provide products and services that are safe and contribute to sustainability throughout their life cycle;

(d) Businesses should engage with and provide value to their customers and consumers in a responsible manner;

(e) Businesses should promote the wellbeing of all employees;

(f) Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalised;

(g) Businesses should respect and promote human rights;

(h) Businesses should support inclusive growth and equitable development; and (i) Business should respect, protect, and make efforts to restore the environment.

The guidelines also specified the following indicators across all themes, and companies are expected to report their performance in respect of these indicators:

 Economic indicators are around standards for selecting suppliers and purchasing, and the ethical impact of products and services on stakeholders;

 Social indicators are around workplace diversity (including management), inclusive work environment (e.g. fair remuneration, employability, etc., occupational health and safety, human rights, and company’s impact on society and local communities

 

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There is an acceptance that using traditional Financial Reporting as the sole measure of a company’s performance and financial standing is a flawed approach.

Financial reports are historical in nature, providing little information on the future potential of a company.

Corporate sustainability reports help to fill this gap, but are not often linked to a company’s strategy or financial performance, and provide insufficient information on value creation.

Businesses need a reporting environment that allows them to explain how their strategy drives performance and leads to the creation of value over time. This should make it easier to attract financial capital for investment.

 

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The International Integrated Reporting Council (IIRC) is an influential global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs who share the view that communication about value creation should be the next step in the evolution of Corporate Reporting.

The aims of the IIRC are as follows:

 to improve the quality of information available to providers of financial capital;

 to promote a more cohesive and efficient approach to Corporate Reporting;

 to enhance accountability and stewardship; and  to support integrated thinking, decision-making and actions that focus on the creation of value over the short, medium and long term