Five global sustainability leaders to work on common corporate reporting standard

15 Sep, 2020 01:23
source: Singularity Financial

Singularity Financial Hong Kong September 15, 2020 – Five global organisations, whose frameworks, standards and platforms guide the majority of sustainability and integrated reporting, announce a shared vision of what is needed for progress towards comprehensive corporate reporting – and the intent to work together to achieve it.

The lack of consistent sustainability disclosures has made assessing companies confusing and difficult, according to a joint report released from the environmental nonprofit CDP (formerly the Carbon Disclosure Project), the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards Board (SASB). Together, the organizations set the majority of ESG reporting in the industry.

GRI, SASB, CDP and CDSB set the frameworks and standards for sustainability disclosure, including climate-related reporting, along with the TCFD recommendations. The IIRC provides the integrated reporting framework that connects sustainability disclosure to reporting on financial and other capitals. Taken together, these organisations guide the overwhelming majority of sustainability and integrated reporting.

“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.” Charles Tilley, CEO of the IIRC, said in a statement. “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.”

The firms are also working with the International Organization of Securities Commissions (IOSCO) and the International Financial Reporting Standards (IFRS), the European Commission, and the World Economic Forum’s International Business Council.

More investors than ever before are trying to incorporate ESG considerations into their investments, but standards around sustainability disclosures are still in early stages. While traditional credit rating agencies broadly assess companies based on the likelihood that they will default, it’s far less clear how to judge a company’s ESG performance.

Foundational to this vision is multi-stakeholder standard-setting that greatly reduces the burden on reporting organisations while facilitating analysis, interpretation and action by users of information.

As Eric Hespenheide, Chair of the GRI Board, says: “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.”

That discrepancy has attracted criticism from regulators in the US and Europe. In February, a top European Union regulator said ESG rating agencies and financial products need better supervision to prevent “greenwashing.” In June, the US Department of Labor (DOL) proposed a rule to chill ESG investments that are not focused solely on returns.