Standards for sustainability reporting

Since the 1992 Earth Summit in Rio de Janeiro a number of international standards and guidelines have been issued dealing with sustainability reporting. Subscribing to global ‘best practices’ allows good ideas to be understood and repeated; they also provide momentum for continued scrutiny and development.

A key question is whether sustainability reporting standards should be voluntary or mandatory. Many NGOs, trade unions and pressure groups argue that companies will not make complete and objective disclosures unless there are legal requirements to do so. Others argue that voluntary schemes are more likely to attract support from big businesses – and result in peer policing. Currently, there is a mixture of mandatory and voluntary requirements and it is likely to stay that way.

Some of the relevant standards and guidelines include:

The Global Reporting Initiative (GRI). Formed in 1997 in the US by Ceres and the Tellus Institute, the GRI provides a sustainability reporting framework. More than 1 300 companies have followed the GRI Framework, and hundreds of others produce sustainability reports using their criteria. The GRI Guidelines (now in the updated version, G3.1) are widely regarded as the de facto international standard for sustainability reporting. (See the GRI page in this section). www.globalreporting.org
The United Nations Global Compact (UNGC). The UNGC is a set of ten principles for businesses to follow covering environmental responsibility, human rights and workers rights. The principles are a central reference point for the GRI Guidelines. Companies that sign up for the UNGC must issue a Communication on Progress (COP) each year that informs stakeholders of their progress in implementing the ten principles in their business activities. The COP should be registered on the UNGC’s website. For a list of the ten principles click here. www.unglobalcompact.org

UN GLOBAL COMPACT GATHERING ENDS IN PLEDGE TO PURSUE MORE SUSTAINABLE WORLD ECONOMY
25 June 2010 Media Release. The United Nations Global Compact leaders’ summit concluded today in New York with a vow by the more than 1,200 corporate executives, government ministers and civil society representatives in attendance to strengthen their efforts to forge a more sustainable and inclusive world economy. To read the media release click here

The OECD Guidelines on Multinational Enterprises. First developed in 1976 and revised in 2000, the Guidelines relate to the disclosure of information, employment relations, environmental management, bribery, competition, consumer interests, and science and technology diffusion. Signatory governments commit themselves to establishing National Contact Points, which will investigate complaints relating to the Guidelines. www.oecd.org

The International Organization for Standardization (ISO) is a non-governmental network of national standards institutes of 161 countries that co-ordinates international standards for business and products. The 1SO 14000 Series of standards focus on corporate environmental management systems and ISO 26000 covers social responsibility. www.iso.org

The AA1000 Series developed by AccountAbility, promotes accountability for sustainability through social and ethical accounting, auditing and reporting. It is a global network of business, public and civil institutions. The AA1000 Framework is a series of five standards to assist and strengthen the credibility of organisations’ sustainability reporting, and the underlying processes, systems and competencies.

AA1000 APS (AccountAbility Principles Standard) sets out the foundation principles of inclusivity, materiality and responsiveness. AA1000SES (Stakeholder Engagement Standard) gives guidance to organizations on engaging with stakeholders. AA1000AS (Assurance Standard) sets out principles for sustainability assurance. The final draft is now public and available for final comments.

Many organizations use the AA standards in conjunction with the GRI Guidelines. www.accountability21.net
The Prince's Accounting for Sustainability Project (A4S). Launched by HRH the Prince of Wales, the Accounting for Sustainability Project promotes sustainability and develops tools and guidelines to assist organisations implement sustainability strategies and practices. A4S believes that it is only through the integration of environmental and social factors into business and management reporting that the fundamental connection between strategic direction, financial performance and sustainability impacts will be made clear. A4S has developed two sustainability management tools for organizations and a framework for a sustainability report. (See the Sustainability Tools page and the Integrated Reporting page on this site). www.accountingforsustainability.org

A4S works in collaboration with IFAC (International Federation of Accountants) to promote sustainable organizations. To read the media release click here.

The Carbon Disclosure Project (CDP) under the Climate Disclosure Standards Board (CDSB) is an independent non-profit organisation that coordinates an investor relationship between shareholders and corporations relating to climate change. The CDP, started in 2000, has become the global standard for carbon emission disclosure methodology and processes. The CDP website provides the largest repository of corporate greenhouse gas emissions data in the world. The data is obtained by sending out annual questionnaires to the chief executives of over 4 500 of the world’s largest companies with questions relating to awareness and management of carbon emissions, climate change, and more recently on water. The CDP sends out the questionnaires on behalf of institutional investors – it is backed by 534 investors representing US$64 trillion in assets under management.

The latest global report was issued in December 2011 and is available on www.cdproject.net

The Carbon Disclosure Leadership Index ranks companies according to the quality of their disclosure.

The CDP South Africa report was launched in 2007 by the National Business Initiative (NBI). The report assesses the disclosure quality of the top 100 companies listed on the JSE. The latest report was issued in December 2011 and is available on www.nbi.org.za .

SEC Guideline on climate change disclosure. The SEC (Securities and Exchange Commission) in the US issued an Interpretative Guideline to public companies on the Commission’s existing disclosure requirements on climate change matters. The effective date is February 8, 2010. The Guidance serves as a reminder to listed companies of their obligations under the existing regulations to consider climate change and its consequences in their disclosures to the Commission and to investors. Click here to download the Guideline
King Reports on Governance were developed in South Africa but have received international acclaim. The three Reports have had an increasing focus on sustainability reporting. Read more>>
The Institute of Directors Southern Africa (IoDSA) has a Sustainable Development Forum that researches and disseminates information on developments relating to sustainability issues. It has released two position papers to date.
- Position Paper 1: Implementing Sustainable Development as a Strategic Business Model (August 2009)
- Position Paper 2: South African Business & Climate Change (September 2010)
Industry-specific and issue-specific Guidelines Various industries, for example forestry, chemicals and diamonds, have developed their own self-regulated guidelines for responsible behavior. Read more>>

Who does what in sustainability reporting

For a comprehensive list of the voluntary and mandatory sustainability reporting guidelines in over 30 countries, take a look at KPMG’s latest “Carrots and Sticks” report. The report also covers international and national assurance standards. It outlines future trends in sustainability reporting, one of which is the move to integrated reporting.
>>Click here