Archives For GRI

Jarlath Molloy

Dr Jarlath Molloy CPhys, CDSB Technical Manager

A wide range of voluntary and mandatory external drivers influence reporting in the environment and sustainability domain. For example, many organisations may prepare and publish a range of information requested by CDP, Global Reporting Initiative, International Organization for Standardization, OECD guidelines for multinational enterprises, Principles for Responsible Investment, UN Global Compact, Water Accounting Standards Board (WASB) and this list may soon include CEO Water Mandate, International Integrated Reporting Council and Sustainability Accounting Standards Board (SASB). A question you could legitimately ask is whether there is a need for yet another Framework?

The Climate Disclosure Standards Board (CDSB) is a consortium of business and environmental organisations formed at the World Economic Forum’s annual Davos meeting in 2007 and has been chaired by the managing director of WEF since. CDP has kindly provided secretariat support to us since our inception. We are supported by a group of leading industrial and financial services companies together with governmental and non-governmental representatives, who act in an advisory capacity to CDSB. A Technical Working Group formed of representatives of the major accounting firms and professional bodies, including ACCA, coordinates CDSB’s work program with expert input from academics and specialist collaborators.

We are committed to the integration of climate change-related information into mainstream corporate reporting. The Framework is designed to allow investors to assess the relationship between environmental performance and risks, and the organisation’s strategy and prospects. Moreover, it will encourage analysis and decisions which recognise the dependence of economic and financial stability on a healthy environment.

With the inclusion of this information in a mainstream report, the organisation’s environmental performance and risk is subject to the same International Financial Reporting Standards and assurance requirements as financial information. This information is centrally deposited with the competent national authority in a timely fashion and is publically available. We are working with regulators, CDP and the Fujitsu Research Institute to develop an eXtensible Business Reporting Language (XBRL) taxonomy to enable digital, structured communication and exchange of this information and closer alignment with financials in mainstream reports.

What sets CDSB apart from the chorus is that we set out to specifically harmonise reporting of environmental and sustainability risk. We have identified how the other reporting requirements link to each other and to our updated Framework. With the addition of cross-references to CDP, CEO Water Mandate, GRI, IIRC, OECD, PRI, UNGC, WASB and others we compliment their work, adding value by drawing it together in a meaningful narrative for responsible investors.

Our focus to date has been on risks and opportunities that climate change presents to an organisation’s strategy, financial performance and condition. The consultation we have just launched expands that scope into forest commodity risks (i.e. the drivers of deforestation) and water. The public consultation for the updated CDSB Framework opened on 17 February and will run until 19 May 2014. We invite you to comment on the draft and tell us if and how we can do more to address your needs and expectations. Visit for more information and to sign up for our consultation briefing webinars on 19 March 2014.


ACCA heads-6084

By Gordon Hewitt, sustainability advisor, ACCA

“We use our Earth as if we have a planet and a half; we have a deficit relation with our natural resources. The biggest challenge facing not just business, society and government, but humanity is the question of our sustainability. And business as usual will do nothing to solve it.”

These are the words of the Global Reporting Initiative’s (GRI) chief executive Ernst Ligteringen at its global conference in Amsterdam last month, underlining the raison d’etre of the sustainability reporting standard-setting body’s work as he unveiled the latest generation of reporting guidelines, known as G4, to a 1,500-strong audience of business leaders and finance professionals.

The launch of the G4 guidelines marks the culmination of two years of consultation involving 120 specialists and two consultation periods to which more than 2,500 responses were received. The new guidelines demand greater transparency from the organisations that use them. It is about creating better companies, a better market, a better world with more social justice and business managed in a responsible way.

Key features of G4

The G4 guidelines aim to help companies produce clear, concise sustainability reports that are of high relevance to an organisation’s stakeholders. The guidelines aim to be more user friendly than previous versions, helping reporters to focus on and manage what really matters.

Some key features of the new guidelines are as follows:

  • Materiality: This is certainly not a new concept to the GRI, but the G4 places greater emphasis on the subject. The new guidelines aim to help organisations to produce reports that are concise and include information and KPIs on material impacts only. Reporters must define materiality and provide full disclosure on the topics that are material to them.
  • Value chain: A major difference between the G4 and previous iterations of the GRI guidelines is the focus on an organization’s value chain. Reporters must assess their complete value chain, and disclose where their impacts are most material. This will present significant challenges to many companies, as such supply chain transparency is complicated and expensive to attain, and will often involve the impacts of suppliers over which they have little control.
  • Application levels: The G4 no longer has a system of application levels (A, B, C), which many believed drove companies to take a checklist approach to sustainability reporting. The GRI have introduced an “in accordance” system, with two tracks – core and comprehensive – for reporters.
  • Disclosure on management approach: The new guidelines will require organisations to report on how they identify and manage their actual or potentially material impacts. This kind of narrative disclosure will provide report users with a better idea of how companies are managing their impacts, which will provide greater context to the KPIs included within a report.
  • Assurance: In previous iterations of the GRI guidelines, reporters would indicate whether they had some form of external assurance over their reports by adding a + after their application level (e.g. A+). This did not provide any information over how much of the report was assured, which was clearly an issue. This has been removed from the G4 guidelines, which instead has an additional column in the organisation’s GRI index table where reporters can indicate which elements of the report has been assured, thus providing greater transparency on the extent of external assurance.

GRI and Integrated Reporting

A recurrent question that emerged from the GRI conference was how the G4 guidelines will fit in with the integrated reporting. The International Integrated Reporting Council (IIRC) recently published a Consultation Draft of the International <IR> Framework, and is due to launch its framework later on this year. The IIRC draft framework aims to allow companies to report on material information about an organisation’s strategy, governance and performance that reflects the commercial, social and environmental context within which it operates.

According to the IIRC, integrated reporting is not simply about combining existing financial and non-financial disclosure, but will certainly draw on elements of a company’s financial and sustainability reports to the extent that the information is material to how an organisation’s strategy creates and preserves value.  With this in mind, the GRI will be looking to offer guidance on how to link the sustainability reporting process to the preparation of an integrated report.

Whilst there is still an element of uncertainty of the future of corporate reporting, the G4 guidelines are certainly a step in the right direction.

By Robert Bruce, Accounting and Business commentator and journalist

Accountants might not be stereotypical superheroes but if they can channel their enthusiasm for non-financial reporting into one roadmap, they could help rescue the planet.

It is said that it is hard to get accountants up on their feet a ta conference, let alone exhibiting exuberance. At the September conference of the International Integrated Reporting Council (IIRC) all this changed. Peter Bakker, president of the World Business Council For Sustainable Development, and now the deputy chair of the IIRC, called for all accountants present to stand up. They did. Bakker swept a hand around the room. ‘Ladies and gentlemen’ he said. ‘These are the people who are going to save the world’. It was a bold gesture and a galvanising one.

But as the conference heard from one after another of the companies working in the IIRC pilot programme, which captures the experience of implementing integrated reporting, the more it made sense. The finance function is becoming the engine room for a form of reporting which in the world of the IIRC, ‘aims to communicate the “integrated thinking” through which management applies a collective understanding of the full complexity of value creation to investors and other stakeholders’. And the more investors and stakeholders understand the part that things other than the narrow financials play in driving strategy, the more influence the non-financials will have.

A week later the bandwagon arrived in London at the first Non-Financial Reporting conference, hosted by Deloitte and in association with ACCA and the Global Reporting Initiative (GRI). Referring to the Amsterdam conference, Jenny Harrison, UK lead for the carbon and integrated reporting at Deloitte, described it as ‘invigorating’. ‘You felt these people would go back to their organisations and show the markets that this style of reporting can be concise, relevant and about integrating the thinking throughout their organisation,’ she said.

But it is also clear there is a wide range of views, inputs and attitudes from all the interested parties involved in making this process work. And there is the political difficulty in deciding upon a preferred system for putting all this together. Both the work of the GRI and the IIRC came in for criticism for, in case of the GRI, being too complex and resistant to change, and, in the case of the IIRC, being perceived as a bit of a closed shop. Much of this is the inevitable squabbling that happens when more than one model exists.

‘Some scepticism about the value of lengthy and complex GRI-style reports was expressed’, says Roger Adams, director, special assignments at ACCA, ‘but the lack of obvious widespread support for integrated reports seemed to indicate that preparers and users alike need more time with, and exposure to, integrated reports in order to see whether or not the emerging integrated reporting model represents a real step forward in terms of improved corporate reporting. Whichever reporting model is used, it is the issue of what to report and to whom that remains crucial. Reporters can construct complex risk matrices internally, but it is still of utmost importance to engage with the key stakeholder groups in order to understand how their concerns can be turned into meaningful reporting and enhance accountability.;

At the Amsterdam conference, Paul Druckman chief executive of the IIRC, made this a central point. He described the IIRC community as ‘a growing global community of businesses and investors who recognise that corporate reporting is as much about effective communication as it is about compliance with rigid rules’. And this is why integrated reporting has a transformative quality. ‘Corporate reporting,’ he said, ‘ is more than a good communications tool. It influences behaviour, within organisations and by investors, and it underpins the efficiency and productivity of our capital markets. So when governments, regulators and policy-makers talk about creating the conditions for a more responsible and responsive capitalism, rooted in activity that creates and sustains value, this is the business we are in.’

In the end, the Non-Financial Reporting conference, with all its many disparate contributions, suggested that corralling the different strands into a recognisable business-led movement was probably the answer.

“We need to gather all this enthusiasm into one roadmap,’ says Harrison, ‘Regulation is not the answer to improving corporate reporting. What are needed are examples of how this allows you to manage your business better. It needs to be more widespread. The IIRC is doing a great job, but it is the companies taking part in the pilot programme, and indeed those beyond that will make the difference.’

This post first appeared in Accounting and Business UK November 2012.

Towards Integrated Reporting

accawebmaster —  14 September 2011 — 1 Comment

By Helen Brand, chief executive, ACCA

They run into the hundreds of pages, they take months to prepare, and they are required by law, but are corporate reports actually of any value to businesses and those that use them?

Well, yes, is the short answer, but there’s certainly a case to be made that they aren’t valuable enough.

The information contained within corporate reports is there in response to some kind of stakeholder demand, while the information also helps businesses assess their own performance, so there’s some value there.

However, in today’s corporate world, where we have so many inter-connected risks and opportunities, and so many different reports to tell us about them, something seems to be missing. What we don’t have to match the inter-connected corporate world, is an inter-connected corporate report.

If we look at just two types of corporate report – the Corporate and Social Responsibility (CSR) report, and the annual report and accounts – it’s clear why this matters.

Given the increasing pressure on natural resources and given our increasingly changeable climate, the natural world will have a significant impact on any business. However, most business’ mechanism for reporting on climate risks, the CSR report, is published as a stand-alone report. Some companies don’t even publish the CSR report and the financial statements, or the annual report, at the same time.

Presenting the information separately, in silos, makes it difficult to build up an overall picture of a business’ long-term value. Each report only takes one set of factors into account, meaning it could well have different conclusions to those that could have been made if the information in other reports was built into that report’s assumptions.

To take all the necessary factors into account when presenting information, to put the finances in the context of sustainability, long-term objectives, and the business model, needs a new approach to reporting. We need an integrated approach to reporting.

This is easier said than done, but this week has seen some significant steps towards the arrival of integrated reporting, with the launch of the International Integrated Reporting Committee (IIRC) discussion paper. The IIRC brings together all the key players needed to make such a complex and far-reaching project work, from global business, to investor groups, and accountancy bodies.

The IIRC has a long way to go before it can achieve even a small part of what it has set out to do: Integrated Reporting needs to result in reports that are of increased relevance to their users, and it needs to embed sustainability at the heart of corporate reporting.

Despite these challenges, Integrated Reporting remains a great opportunity to help us make a fully-informed assessment of the long-term value of any business.

Playing catch-up

accawebmaster —  6 August 2010 — Leave a comment

by Helen Brand, chief executive, ACCA

If you missed the Global Virtual Conference at the end of last month, then you missed a couple of gems. Don’t worry though – the sessions are still available to view on demand.

One of my personal highlights was the interview with Professor Mervyn King. Professor King has a rather intimidating CV (Judge, South African Supreme Court Counsel, holder of numerous professorships, chairs, and directorships) and has had an almost unparalleled impact on corporate governance. He is the eponymous King of Kings I, II, and III. I thoroughly recommend you give his interview a look when you have the time.

One of Professor King’s current passions is the area of sustainability reporting (King is the chair of the Global Reporting Initiative), which is an area that ACCA takes a keen interest in too.

Sustainability matters, whether we like it or not. Even when the ramifications of the financial crisis die down, we’ll be left with the climate change crisis. According to the Global Footprint Network, 1.4 planet earths are needed to sustain the current population.

Everyone has responsibilities when it comes to combating climate change, and businesses are no different. In fact, given that enterprise is such a vast consumer of the world’s resources, you could argue that businesses had a bigger responsibility than others – many multinationals have bigger economies than some countries.

The key thing with responsibility is accountability. Businesses have long been required to report their financial activity to stakeholders in their annual reviews, but now sustainability reporting has to catch up.

There needs to be a universal standard that requires businesses to report in clear language the impact their activity has on the environment. Stakeholders need to be able to use the information to compare and contrast the sustainability performance of companies, just as they do with financial information.

As Professor King said in his interview, companies know their stakeholders and shareholders want this information and they want to give it to them, but the lack of clarity in the sustainability reporting requirements leads to caution and confusion.

Moving towards a clear and consistent method for businesses to report their sustainability impacts is the goal of the newly formed International Integrated Reporting Committee (IIRC), set up by the GRI and the Prince of Wales’ Accounting for Sustainability project (A4S). It’s a personal honour for me that I’ve been asked to sit on the steering committee of the IIRC, alongside representatives from (among others) the Big Four, IFAC, FASB, the IASB, and several multinational businesses.

United and focused action on sustainability is the answer. I’ll keep you posted.