Five of the leading framework- and standard-setting institutions have jointly published a report promoting a more comprehensive framework for corporate sustainability performance, and have pledged to work together to further this goal.
Recognizing the current complexity surrounding the numerous current emerging sustainability reporting tools, the organizations, CDP, the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB), have outlined a shared vision that includes both financial accounting and sustainability disclosure, connected via integrated reporting. The organizations have also committed to engage with key actors, including IOSCO and the IFRS, the European Commission, and the World Economic Forum’s International Business Council on these efforts.
Charles Tilley, CEO of the IIRC, said:
“This year we have witnessed businesses around the world having to pivot their business models overnight, to prioritize the health and safety of their employees and customers above the immediate financial success of the business. The connectivity between sustainability-related factors and immediate financial-viability is clearer than ever before. It is why we are committed to working with our partners to drive a holistic system for reporting across the value chain. We know that businesses globally are already using a mixture of our frameworks and standards to provide stakeholders with robust, effective information to drive better decision-making and capital allocation via their integrated report. This document provides further clarity on how to do this effectively.”
According to the organizations, the key goal of the initiative is the establishment of multi-stakeholder standard-setting that greatly reduces the burden on reporting organisations while facilitating analysis, interpretation and action by users of information.
Eric Hespenheide, Chair of the GRI Board, said:
“We are pleased to be collaborating with our peers in the sustainability frameworks and standard setting community, and see this joint statement as a powerful interim step. As GRI, we believe strongly in a vision of a single, coherent global set of reporting standards, and will be working with others to achieve this outcome. We look forward to continuing to work together with all interested organizations in achieving greater transparency through disclosure in the weeks and months to come.”
One of the primary challenges for companies to navigate the universe of emerging sustainability reporting standards is the varying needs of the users of the data, from assessing an enterprise’s impact on the environment to determining the impact of sustainability issues on financial performance and risk. Similarly, the emergence of disparate standards can make it difficult for users of the data to compare the performance of companies to their peers, or compare industry to industry. The organizations acknowledged the importance of structured information to enable comparison, the standard-setters emphasise the importance of data being structured around agreed taxonomies and being democratised via a public data platform, such as that provided by CDP.
Paul Simpson, CEO of CDP said:
“We are delighted to work with these peer organisations to develop this statement. Over the past 20 years at CDP, we have seen environmental disclosure move from being almost non-existent to fully mainstream. The 8,400 companies, representing over 50% of global market capitalisation, who disclosed through our platform last year demonstrate this and provide a structured data set to the market. With the world’s largest corporate environmental disclosure repository, CDP is uniquely placed to showcase which data points align with which standards and taxonomies, and to continue to help companies, cities, states and regions to measure their environmental risks, opportunities and progress.”
Janine Guillot, CEO of SASB said:
“SASB’s unique role in this system is to surface the subset of environmental, social, and governance issues reasonably likely to materially impact financial performance of the typical company in each of 77 industries. SASB Standards are designed to improve the quality and comparability of a core subset of financially material sustainability information, serving as an important complement to information that is already reflected in the financial accounts according to Financial GAAP.”
Mardi Mcbrien, Managing Director of CDSB, added:
“The CDSB Framework is industry agnostic and designed to facilitate effective disclosure of a company’s natural capital, environmental and climate-related risks and opportunities, so it supports and enhances the work being done elsewhere. This is more than just a statement of intent to work together, it is a natural next step as we look to form a complete picture of how these standards might complement Financial GAAP – integrating with the TCFD. We are looking forward to developing this picture further in the near future to meet the growing demands of investors, governments and consumers globally.”