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Delivering impact - The role of sustainability reporting today
Sustainability reporting today is recognised as a comprehensive and strategic response that not only supports disclosure but also promotes the overall corporate value chain through analysis of non-financial risk and opportunities.
For some perspective on sustainability reporting, as little as ten years ago, corporations rarely made direct statements about human rights and health and safety. Early iterations were sometimes mere glossy communications tools.
According to the Global Reporting Initiative (GRI), there are close to 8,500 reporters of sustainability performance today, from around 25 a decade ago. The rate of uptake is indicative of the changing landscape of business and the necessary stakeholder engagement that ensues.
However, making informed, value-enhancing investments and stakeholder backed decisions greatly depends on the robustness of sustainability data.
According to the GRI G4, sustainability reports must contain information on performance regarding the most material aspects.
The concept of materiality relates to disclosing on a defined issue - environmental, social and economic - that is significant enough to influence the decisions of both internal and external stakeholders.
The G4 is a principles-based approach towards reporting and heralds the new generation of sustainability reports that is being adapted widely in Asia.
While the progress is encouraging, there remains challenges as reporting is still largely voluntary, with limited levels of assurance on performance data.
In countries like Malaysia, Singapore and Hong Kong, where there is going to be regulatory push towards compulsory disclosure, corporations still tend to be transparent only to the extent that the stories are positive.
This is not to say that the negative side is omitted or toned down completely but they tend to manifest largely due to failure to understand the strategic role of sustainability reporting.
When done right, sustainability reporting helps align business operations with environment, social and governance (ESG) risks and stakeholders' interests - ultimately, complementing non-financial performance with the financial.
When there are clear targets and year-on-year tracking with analysis of failures and success, a culture of transparency is fostered. The increased transparency in turn builds long term trust and credibility.
In the light of the ever-evolving nature of the global trends that impact business in Asia, sustainability reporting cannot be a static agenda.
The journey will be different for every organisation, but the common thread that must link them is the constant pursuit of new ways to report progress and disclose sustainability-related information more comprehensively.
In time, those organisations that make the effort to communicate robustly will come to appreciate sustainability reporting as a value-adding tool as opposed to a painful data tracking exercise.
Dr Jayanthi Desan, jury member of ACES Awards and Managing Director, Synergio.