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Sustainability reporting enables organizations to report on environmental and social performance.It is not just report generation from collected data; instead it is a method to internalize and improve an organization’s commitment to sustainable development in a way that can be demonstrated to both internal and external stakeholders.
Corporate sustainability reporting has a history going back to environmental reporting. The first environmental reports were published in the late 1980s by companies in the chemical industry which had serious image problems. The other group of early reporters was a group of committed small and medium-sized businesses with very advanced environmental management systems. Additionally, the tobacco industry adopted such reporting much earlier than the rest of the corporate world, in an attempt to attract new investors at a time when ethical investing was becoming increasingly popular.
Non-financial reporting, such as sustainability and CSR reporting, is a fairly recent trend which has expanded over the last twenty years. Many companies now produce an annual sustainability report and there are a wide array of ratings and standards around. There are a variety of reasons that companies choose to produce these reports, but at their core they are intended to be "vessels of transparency and accountability." Often they also intended to improve internal processes, engage stakeholders and persuade investors.
An issue in sustainability reporting is whether and how much data related to environmental, social and corporate governance practices and impacts must be disclosed.
As a matter of law, in the United States, the materiality principles controls whether a publicly traded corporation must disclose certain information, that is: “a fact is material if there is a substantial likelihood that the . . . fact would have been viewed by a reasonable investor as having significantly altered the ‘total mix’ of information available.” [ circular reference ]
In this case, some authors have examined and applied several factors (including the percentages of managed investment assets that are screened for ESG criteria, plus the fact that over 90% of large publicly traded companies publish ESG data) and concluded that ESG data qualifies as being material.It has also been suggested that other organizations that issue securities may also be well-advised to also engage in sustainability reporting.
In 2015, the United Nations set 17 Sustainable Development Goals (SDG) and SDG 12, Target 12.6 specifically encourages "companies to adopt sustainable practices and sustainability reporting".
Organizations can improve their sustainability performance by measuring (EthicalQuote (CEQ)), monitoring and reporting on it, helping them have a positive impact on society, the economy, and a sustainable future. The key drivers for the quality of sustainability reports are the guidelines of the Global Reporting Initiative (GRI),(ACCA) award schemes or rankings. The GRI Sustainability Reporting Guidelines enable all organizations worldwide to assess their sustainability performance and disclose the results in a similar way to financial reporting. The largest database of corporate sustainability reports can be found on the website of the United Nations Global Compact initiative.
The triple bottom line is an accounting framework with three parts: social, environmental and financial. Some organizations have adopted the TBL framework to evaluate their performance in a broader perspective to create greater business value. Business writer John Elkington claims to have coined the phrase in 1994.
Corporate social responsibility (CSR) is a type of international private business self-regulation that aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethically-oriented practices. While once it was possible to describe CSR as an internal organisational policy or a corporate ethic strategy, that time has passed as various international laws have been developed and various organisations have used their authority to push it beyond individual or even industry-wide initiatives. While it has been considered a form of corporate self-regulation for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organisations, to mandatory schemes at regional, national and international levels.
The United Nations Global Compact is a non-binding United Nations pact to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation. The UN Global Compact is a principle-based framework for businesses, stating ten principles in the areas of human rights, labor, the environment and anti-corruption. Under the Global Compact, companies are brought together with UN agencies, labor groups and civil society. Cities can join the Global Compact through the Cities Programme.
Corporate Knights (CK) is a media, research and financial information products company based in Toronto, Canada, focused on promoting an economic system where prices fully incorporate social, economic and ecological costs and benefits, and market participants are clearly aware of the consequences of their actions. The company calls such a system "clean capitalism". Founded in 2002, Corporate Knights has a media and research division, which includes the award-winning sustainable business magazine Corporate Knights, and a research division which produces corporate rankings, research reports and financial product ratings based on corporate sustainability performance. Its best-known rankings include the Best 50 Corporate Citizens in Canada and the Global 100 Most Sustainable Corporations. In June 2013, Corporate Knights was named "Magazine of the Year" by Canada's National Magazine Awards Foundation.
The Global Reporting Initiative is an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption.
Socially responsible investing (SRI), social investment, sustainable socially conscious, "green" or ethical investing, is any investment strategy which seeks to consider both financial return and social/environmental good to bring about social change regarded as positive by proponents.
The King Report on Corporate Governance is a booklet of guidelines for the governance structures and operation of companies in South Africa. It is issued by the King Committee on Corporate Governance. Three reports were issued in 1994, 2002, and 2009 and a fourth revision in 2016. The Institute of Directors in Southern Africa (IoDSA) owns the copyright of the King Report on Corporate Governance and the King Code of Corporate Governance. Compliance with the King Reports is a requirement for companies listed on the Johannesburg Stock Exchange. The King Report on Corporate Governance has been cited as "the most effective summary of the best international practices in corporate governance".
Sustainability accounting was originated about 20 years ago and is considered a subcategory of financial accounting that focuses on the disclosure of non-financial information about a firm's performance to external stakeholders, such as capital holders, creditors, and other authorities. Sustainability accounting represents the activities that have a direct impact on society, environment, and economic performance of an organisation. Sustainability accounting in managerial accounting contrasts with financial accounting in that managerial accounting is used for internal decision making and the creation of new policies that will have an effect on the organisation's performance at economic, ecological, and social level. Sustainability accounting is often used to generate value creation within an organisation.
Stakeholder engagement is the process by which an organization involves people who may be affected by the decisions it makes or can influence the implementation of its decisions. They may support or oppose the decisions, be influential in the organization or within the community in which it operates, hold relevant official positions or be affected in the long term.
Integrated reporting in corporate communication is a "process that results in communication, most visibly a periodic “integrated report”, about value creation over time. An integrated report is a concise communication about how an organization's strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term."
The Amsterdam Global Conference on Sustainability and Transparency was held for the third time in May 2010. Over the years, the conference has seen the world’s largest gathering of leaders, thinkers and doers in the field of sustainability reporting, with debates being convened on how reporting can be used to help build a better future. Thought leaders from business, finance, government and civil society have been brought together to debate the political, strategic and practical choices confronting the world and expert practitioners have led workshops and interactive sessions to define the building blocks of more effective reporting.
Environmental, Social, and Corporate Governance (ESG) refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business.
RobecoSAM is an international investment company with a specific focus on sustainability investments. The company is based in Zurich, Switzerland, and considers economic, environmental and social criteria in its investment strategies. In addition to asset management, the company has an indexes and private equity portion of the business. RobecoSAM has a series of products based on themes such as water, energy, climate, agriculture, and healthy living. In 2006 RobecoSAM introduced a division called sustainability services that provides sustainability benchmarking reports to companies. In 2001, RobecoSAM became the first carbon neutral company in Switzerland.
The Sustainability Accounting Standards Board (SASB) is a non-profit organization, founded in 2011 by Jean Rogers to develop sustainability accounting standards. Investors, lenders, insurance underwriters, and other providers of financial capital are increasingly attuned to the impact of environmental, social, and governance (ESG) factors on the financial performance of companies, driving the need for standardized reporting of ESG data. Just as the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have established International Financial Reporting Standards and Generally Accepted Accounting Principles (GAAP), respectively, which are currently used in the financial statements, SASB's stated mission “is to establish industry-specific disclosure standards across ESG topics that facilitate communication between companies and investors about financially material, decision-useful information. Such information should be relevant, reliable and comparable across companies on a global basis.”
The Climate Disclosure Standards Board (CDSB) is a non-profit organization working to provide material information for investors and financial markets through the integration of climate change-related information into mainstream financial reporting. CDSB operates on the premise that investors and financial institutions can make better and informed decisions if companies are open, transparent and analyse the risks and opportunities associated with climate change-related information. To this end, CDSB acts as a forum for collaboration on how existing standards and practices can be used to link financial and climate change-related information using its Framework for reporting environmental information, natural capital and associated business impacts.
India's National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) were released by the Ministry of Corporate Affairs (MCA) in July 2011 by Mr. Murli Deora, the former Honourable Minister for Corporate Affairs. The national framework on Business Responsibility is essentially a set of nine principles that offer businesses an Indian understanding and approach to inculcating responsible business conduct.
Social accounting is the process of communicating the social and environmental effects of organizations' economic actions to particular interest groups within society and to society at large. Social Accounting is different from public interest accounting as well as from critical accounting.
RepRisk AG is an environmental, social, and corporate governance (ESG) data science company based in Zurich, Switzerland, specializing in ESG and business-conduct risk research and quantitative solutions.
ESG Quant is an investment strategy, developed by Arabesque Partners, which involves quantitative equity investing while utilizing ESG information, often referred to as "non-financial" information. ESG Quant strategies are implemented within systematic trading or quantitative trading approaches that leverage a large and growing collection of commercial ESG, alternative and non-profit or academic datasets. As such there is no human judgment or discretionary buy-sell decision making; rather “in a pure quant model the final decision to buy or sell is made by the model” or through the “utilization of an expert system that replicates previously captured actions of real traders.”
The Islamic Reporting Initiative (IRI) is an independent not-for-profit organization leading the creation of the IRI standard; the guiding integrated Corporate Sustainability and Social Responsibility (CSR) reporting standard based on Islamic principles and values that works towards achieving international standards of best practice. The framework will enable organizations to inclusively assess, report, verify and certify their CSR and philanthropic programs supporting the United Nations Sustainable Development Goals.