Corporate reporting frameworks, guidelines and standards have undoubtedly helped to raise the bar with respect to companies’ management of sustainability, their approach to transparency, and the alignment between financial and non-financial disclosures. Their proliferation reflects the evolution and maturity of corporate sustainability, changing audience needs, and increasing pressure on companies to be accountable for their social, environmental and economic impacts. But the misalignment between these various requirements has led to a confusing, time consuming and resource intensive reporting process for many organisations.
Two weeks ago I was in Singapore for the World Business Council for Sustainable Development (WBCSD)’s annual Council Meeting. Attended by senior business leaders from global organisations, the agenda was varied and engaging, covering a broad range of topics, from the integration of sustainability with risk, finance and compliance, to more specific issues such as human rights, food supply chains and plastics. In almost every session, I was struck by the extent to which the conversation was dominated by the need to better align the alphabet soup of frameworks, standards, guidelines and regulations. My fellow delegates valued the progressive intentions of these initiatives, but were unanimously frustrated by the duplication, overlaps and lack of consistency. This echoes the perspective I hear from clients, too.
So, I was delighted to hear about the launch of the Better Alignment Project from the Corporate Reporting Dialogue last week. Over the next two years, member organisations including the Climate Disclosure Standards Board (CDSB), International Integrated Reporting Council (IIRC), Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), International Accounting Standards Board (IASB) and CDP will focus on aligning their standards with the recommendations published by the Task Force on Climate-related Financial Disclosure (TCFD). The first step will involve mapping the six sustainability standards and frameworks to the TCFD requirements to identify similarities and differences, before jointly refining and constantly improving the overlaps and data requirements, to achieve better alignment. A key objective will be to assess how non-financial metrics relate to financial outcomes, and to improve the integration of non-financial and financial information.
Here at Radley Yeldar, we hope this renewed effort to harmonise corporate reporting practices will lead to more effective, consistent and comparable reporting that paves the way for meaningful integration of financial and non-financial information.
Whilst this exercise is unlikely to create a single one-size-fits-all framework for corporate reporting, we do anticipate a reduction in number and greater distinction between the purpose and requirements of each one. And if we could be granted one wish? We’d like this evolution in reporting disclosure to emphasise the need to supplement comparable data and information with a more engaging and tailored narrative about its relevance to the organisation. Data and disclosure are all about context. Rather than being a hindrance, reporting needs to become a valuable tool to catalyse change, spark stakeholder interest and drive accountability.
Louise Ayling, Stakeholder Engagement Director.