Sustainability reporting in Business

[Yakub02]

Sustainability reporting Organisations tend to communicate their sustainability activities through sustainability reports.

Many companies worldwide (over 3,000) issue annual reports on sustainability and corporate responsibility. These companies represent all sectors and industries across the globe. Sustainability reporting is largely voluntary although a few governments have introduced mandatory sustainability reporting. For example:  French law requires the annual reports of companies to include information on their environmental and social performance.

 All state-owned companies in Sweden must present a sustainability report using Global Reporting Initiative (GRI) guidelines on a ‘comply or explain’ basis. Furthermore some stock exchanges have sustainability reporting as a listing requirement.

One such stock exchange is the Johannesburg Stock Exchange in South Africa, which has been a leading light in this area. Greater transparency on sustainability and the consequent attention to sustainability issues is of benefit to both companies and their stakeholders. Experience has shown that the process of sustainability reporting can add value in a number of ways, including:  increased efficiency;  higher levels of employee retention; and  lower cost of capital.

A number of organisations have produced codes of practice and guidelines for companies to follow, but to date these are non-mandatory. This can lead to problems in comparability of the content of these reports, although having the information in the annual report is better than not disclosing at all.

 

[Yakub02]

SASB’s accounting standards provide companies with standardised activity metrics to account for performance on industry-level sustainability topics.

The aim is to help ensure that disclosure is standardised and therefore useful, relevant, comparable and auditable. Activity metrics disclosed should:  Convey contextual information that would not otherwise be apparent from SASB accounting metrics.

 Be deemed useful for users in performing their own calculations and creating their own ratios.

 Be explained and consistently disclosed from period to period to the extent they continue to be relevant. The following table shows activity metrics for the sustainability topic “water management” in the oil and gas (exploration and production) industry

 

[Yakub02]

The Institute of Social and Ethical Accountability The Institute of Social and Ethical Accountability (ISEA) has developed a series of principles-based standards that are intended to provide the basis for improving the sustainability performance of organisations.

These standards (which are called Accountability standards or the AA1000 Series) include standards on sustainability and social reporting.

On the GRI website, individual company sustainability reports are noted as complying with the GRI guidelines and the AA1000 series if that is the case. Some sustainability reports are referred to as ‘triple bottom line reporting’ because they report on performance and targets in three major areas: economic (financial), social and environmental.

 

[Yakub02]

Sustainability reporting guidelines in Nigeria Nigeria’s 2020 Voluntary National Review (VNR) on Sustainable Development Goals (SDGs) focuses on the key issues of poverty (SDG-1) and an inclusive economy (SDG-8), health and wellbeing (SDG-3), Education (SDG-4),

Gender equality (SDG-5), and the enabling environment of peace and security (SDG16), and partnerships (SDG-17). This focus is based on Nigeria’s current development priorities and the development objectives of President Muhammadu Buhari’s administration.

This VNR is being developed while facing huge challenges from the COVID-19 pandemic testing Nigeria’s public health systems, and of the collapse in oil prices, for an economy still getting 86% of public revenue from oil and gas