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The role of sustainability reporting in enhancing valuations continues to grow.
Two key events in the last month have highlighted the importance of detailing the investments made in business sustainability, and the need for clarity of disclosure.
First, the UN affiliated Global Reporting Initiative GRI held a conference in Amsterdam, attended by global3digital, at which two important announcements were made.
GRI announced that it would be pressing for mandatory disclosures of sustainability data by 2015. Given the number of countries where this is already underway (SEC guidance in the US, UK Acts, the inclusion of mandatory disclosures on sustainability in the revised Transparency Directive...) there is a good potential of this coming through.
GRI also said that it aims to see integrated reporting fully adopted by public companies by 2020. What is integrated reporting? It has been defined as “single document combining an organisation’s financial and nonfinancial (environmental, social and governance) performance illuminating the relationship between the two “. This would imply a complete rethink of the role of reporting, and indeed the corporate strategy, placing ‘sustainability’ at the heart of that strategy.
GRI has created a standard for reporting, which is already being used by many companies.
Second, two important groups of analysts have conspired to produce a set of Key Performance Indicators for companies to use in reporting their sustainability. EFFAS and the DVFA has produced A Guideline for the Integration of ESG into Key Performance Indicators for Environmental, Social & Governance Issues. You can get a copy here.
