New sustainability reporting guidelines gain credence - Ernst and Young

In the past decade, confidence in the corporate sector, globally, has taken a beating as a result of a slew of high profile financial scandals and bankruptcies.

In such an uncertain climate, companies discover that they need to work doubly hard to engage with stakeholders to convince them of their financial and non-financial health, while also demonstrating their corporate stewardship in a tangible manner.

But how exactly do companies succeed in convincing diverse stakeholders that their trust is well founded? More and more forward thinking companies are embarking on sustainability reporting as a tool for introspection and communication with stakeholders, reports Ernst and Young.

Country Managing Partner, Ernst and Young, Asite Talwatte said, "Sustainability reports are not mandatory, but savvy companies are opting to go in for sustainability reports as they rightly foresee far-reaching benefits of this decision.

More and more companies are embracing the Global Reporting Framework or GRI guidelines to develop a comprehensive Sustainability Reporting Framework not because it is a mandatory requirement, but because it serves as a 360-degree performance based measurement of the company's contribution to stakeholders."

"In the aftermath of the exercise, many companies report the unique value creation opportunities that emerged during the process of disclosure," he said.

Continually improving its guidelines to enhance the quality of reporting, GRI launched the fourth generation of its sustainability reporting guidelines in May 2013: the GRI G4 Sustainability Guidelines. The new GRI G4 Guidelines are effective for reports published after December 31, 2015, which gives reporters two reporting cycles to complete their transition to G4.

Offering flexibility, early adoption is permitted as even first-time reporters are encouraged to use the G4 guidelines, although they may be unable to claim compliance with them in their first reporting cycles.

Over the years, GRI has altered its guidelines to facilitate reporting for companies while making it simpler for stakeholders to understand the report. The guidelines are now presented in two parts to facilitate the identification of the reporting needs and related guidance: Reporting Principles and Standard Disclosures, in addition to containing the reporting principles and standard disclosures, also sets out the criteria to be applied by an organisation to prepare its sustainability report in accordance with the guidelines; Implementation Manual, contains reporting and interpretative guidance that an organisation should consult when preparing its sustainability report. G4 is significant mainly because it offers two standalone options to produce a sustainability report in compliance with the needs of the company, the Core and the Comprehensive options.

The Core option contains the essential elements of a sustainability report and provides the background against which an organisation communicates the impact of its economic, environmental, social and governance performance. On the other hand, the Comprehensive option builds on the Core option, by a number of additional disclosures about the organisation's strategy and analysis, governance, ethics and integrity.

Companies will welcome the fact that regardless of its size, sector or location, an organisation has the freedom to choose the option that best meets its reporting needs.

Partner, Ernst and Young, Buwanesh Wijesuriya said, "The guidelines introduce new and revised general standard disclosures in a number of areas. TExternal assurance is not needed for an organisation to claim that its sustainability report is in accordance with the guidelines. An organisation can indicate in the GRI content index which disclosures have been externally assured and insert a cross-reference to the external assurance statement included in the sustainability report.