It is already the last quarter of 2016 and we have just wrapped up our third GRI certified training in Singapore of the year. As another batch of sustainability practitioners get to grips with the leading global framework for reporting, here in Singapore, the countdown has begun towards SGX’s Sustainability Reporting Ruling. SGX is mandating sustainability reporting for listed companies after 31 December 2017 through a comply or explain approach. Some seasoned reporters, such as Golden Agri-Resources, will have issued their latest report this year and are now beginning to think about planning and improvements for next year ahead of this ruling. For new reporters, the task ahead is more daunting.
Regardless of location, sustainability reporting and supporting tools like the GRI G4 Sustainability Reporting Guidelines (soon to become the GRI Standards) are met with confused faces by first time reporters the world over. They are vast mountains to climb. Being under-prepared or not having the right expertise on hand to help guide you on your journey can lead to problems along the way.
Unlike financial reporting, which offers a static disclosure of the economic health of the company and has very clear requirements, sustainability reporting covers a wide range of economic, environmental and social issues. It also leaves a lot of flexibility for companies to decide on what exactly they need to disclose and how they should communicate. Indeed the quality and richness of sustainability reporting comes from embracing this flexibility to best suit industry and operating contexts. However, with flexibility comes ambiguity. What information should be included in the report and to what level of detail?
For companies starting out, or looking to improve their reporting, it is important to keep the purpose of sustainability reporting in mind. A sustainability report should exist to build trust with stakeholders. A poorly produced report, that does not demonstrate an understanding of the strategic importance of sustainability or a good grasp on how to manage material sustainability issues, will erode investor and stakeholder confidence in the business. This is a huge risk – arguably an even bigger risk than not producing a report in the first place.
The quality of your sustainability report is a direct reflection on the quality of the management of the business. This is why SGX requires that the Board signs off a company’s sustainability report as part of its requirements. Given the importance of the document, companies cannot afford to do a last minute job. Planning and preparation must start early. So you if do need a hand with where to start, then get in touch with us.
Furthermore, to address the chasm of ambiguity, first time and early stage reporters often look to the GRI G4 Guidelines, but get scared off or confused by the vast amount of different aspects, indicators and other criteria set out in the implementation manual. To avoid this, simply understanding the reporting principles, which are the fundamentals of the guidelines, will help build the foundations for a decent report, even if a company hasn’t applied the guidelines in their entirety.
Using the principles as a starting point will help companies to build their reporting muscles and learn to walk before they run. They are split between those to be considered when defining what information to include in the report (Principles for Defining Report Content), and those to be considered when deciding how to collect, prepare and present information in the report (Principles for Defining Report Quality). To truly get value out of sustainability reporting, and avoid it becoming a tick box exercise, understanding the spirit behind these principles is just as important as understanding what specific indicators you should disclose in order to be ‘in-accordance’ with GRI’s requirements.