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De niet te stoppen opkomst van duurzaamheidsrapportage

11-09-2012 | Visie | Carola van Lamoen

Het feit dat duurzaamheidsverslaglegging steeds meer wordt geaccepteerd is niet alleen gunstig voor ondernemingen, maar ook voor beleggers. En hoewel ze enthousiast is over de volgende generatie GRI-richtlijnen, ziet Carola van Lamoen nog steeds ruimte voor verbetering. 

(Dit artikel is Engelstalig) 

The evidence that sustainability is becoming a core consideration for successful businesses around the world is ever more difficult to ignore. Companies are increasingly measuring and reporting their sustainability performance. Moreover, board-level involvement in sustainability-related topics is on the rise. One sign of this is the uptick in ESG-linked remuneration policies.

For many large multinational companies, sustainability reporting has become a mainstream phenomenon. An astonishing 95% of the largest global companies now report on their corporate responsibility. It isn’t too much to say that sustainability reporting has become the norm.

“The reach and depth of sustainability-related information has grown dramatically in recent years,” says Robeco Senior Engagement Specialist Carola van Lamoen. At the same time, she adds, interest in sustainability-related information has also risen, as has access to it.

Why is sustainability reporting important?
But what does sustainability reporting involve and why are companies doing it? The Global Reporting Initiative (GRI), which has pioneered and developed a widely used sustainability reporting framework, describes a sustainability report as “an organizational report that gives information about economic, environmental, social and governance performance.”

“An effective sustainability reporting set-up allows companies to report their sustainability data in a way that is akin to financial reporting,” notes Van Lamoen. On a day-to-day level, companies need to organize a reporting cycle that allows them to monitor their sustainability performance on an ongoing basis.

“International reporting standards are instrumental to improving the quality of sustainability reports”


Companies are stepping up their sustainability reporting because it plays a role in making their operations sustainable. It does so because establishing a sustainability report helps companies to set goals, measure performance and manage change. Sustainability reports become a key platform for communicating positive and negative sustainability impacts.

Of course, effective communication is aided when companies report in the same way. “International reporting standards are instrumental to improving the quality of sustainability reports,” says Van Lamoen, who adds that the GRI Framework has become the standard in sustainability reporting.

The increasing use of this framework, combined with the growing use of web-based applications for disclosure, is resulting in increased measurability and comparability of sustainable data, though there is still some way to go in this area. In an additional positive step, a growing number of companies are having their sustainability reports verified externally. Integrated reporting may enhance the uptake of sustainability reporting even further, she suggests.

It isn’t just companies who are being converted to the usefulness of sustainability reporting. The number of investors and other stakeholders who use sustainability reports to gather data has grown as well.

As Van Lamoen points out, non-financial information—such as disclosure on governance and environmental issues—has become an increasingly important consideration for investors and analysts. “Investors are increasingly integrating sustainability in their investment strategies,” she says.


Major trends in sustainability reporting
  • more online and more integrated reporting
  • growing external verification of reports
  • strong increase in reporting by emerging market companies and by SMEs
  • financial markets are becoming increasingly involved in GRI
Sustainability reporting in emerging markets is improving

While the growth of sustainability reporting in developed markets might have been expected, it is perhaps more of a surprise to discover its increasing foothold in emerging markets. Van Lamoen notes that Robeco has been at the forefront of this development, having engaged some 40 companies in recent years—primarily in Brazil, South Africa and South Korea—to improve their sustainability reporting.

The key objectives of the engagement were to persuade companies to develop and implement a sustainability strategy, to report in accordance with standards such as the GRI Framework, and to report on sustainable targets and priorities.

This engagement can be considered a success. “Almost 75% of the engaged companies considerably improved their sustainability reporting,” reports Van Lamoen. “Companies such as South African miner Sasol and the Brazilian steel producer Usiminas made significant progress during the engagement period.”
 
GRI’s proposed G4 guidelines are an improvement
The other main development in the sustainability reporting space is the roll-out of GRI’s new set of sustainability reporting guidelines—called G4—which will supersede the current G3 standards. A consultation process is taking place at present prior to G4’s planned launch in May 2013.

Van Lamoen, who recently participated in  a G4 consultation workshop, reports three major changes that will probably end up in the new guidelines.

  • G4 will no longer use the application levels—the A, B and C categories which demarcate the different levels of disclosure required—that are included in G3. Instead, an “in accordance” statement and an obligatory CEO sign-off on a so-called “balanced” report will be required.
  • The updated guidelines will require much more disclosure on governance and remuneration than G3.
  • G4 aims to improve the comparability of reports, as well as focusing on the materiality of reporting.

Further steps are necessary
This final point is certainly an area that Van Lamoen feels there is a good deal of room for improvement. She wants to see greater uniformity in reporting. “An increased comparability of reports is necessary to bring sustainability reporting to the next level and really make it a useful tool for investors,” she says.

Second, she’d like to see greater alignment between GRI and the IIRC (the Council on Integrated Reporting). GRI says that there is a good deal of contact between the two organizations, as well as a growing collaboration. Growing, perhaps, but not that strong yet: “Unfortunately, the two organizations did not manage to collaborate on a combined launch of G4 and the new IIRC framework,” she says.

Next, she argues that G4 should explicitly encourage the integration of a company’s strategy and its sustainability strategy.

Finally, she believes that the proper alignment of the publication of companies’ sustainability reports and their financial reports would upgrade the status of the sustainability report. The ultimate goal is to pull together the various kinds of reporting—including financial, remuneration, governance, sustainability, and so on—into a coherent whole that gives a better picture of the company’s ability to create sustainable value.

Overall, though, Van Lamoen is positive about the improvements of G4 compared with G3. In fact, she believes that the G4 framework and—later on—the IIRC framework would be good starting points for a new engagement on sustainability reporting. That, though, is for the future…

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Carola van Lamoen
Hoofd Governance & Active Ownership


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