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  !
 This discussion is on²

‡ how/where/why sustainable reporting is

done
‡ as opposed to«..
‡ determining the sustainable performance of
a firm through evaluation of sustainable
reports

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 Úustainable vs. financial reporting
‡ What is the driver for various stakeholders?
± Financial reporting-related to investor direct financial impact
± Non financial (sustainable reporting)-less direct financial impact to investors
‡ Mandatory or voluntary
‡ Guidelines for each type of reporting
‡ Audit/assurance for each type of reporting
‡ Frequency of each type of reporting
± Úustainability reporting is less regular than financial reporting
‡ Disclosure, income management
‡ Public relations component
‡ Distribution system for each reporting system
± Implications of including environmental disclosures in required financial reporting
‡ Both are evolving
± Move to International Financial Reporting Útandards for UÚ Corporations

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Global Reporting Initiative (GRI)
‡ a multi-stakeholder process
‡ mission is to develop and disseminate globally applicable
sustainability reporting guidelines.
‡ voluntary use by organizations for reporting on...
± economic, environmental, and social dimensions of their activities,
products, and services.
‡ 717 organizations in 2008 from around the world report
using the GRI
± the world's de facto standard for reporting.
± 60 UÚ companies
± List of companies reporting available on GRI website
‡ http://www.globalreporting.org/GRIReports/2008ReportsList/

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In October 2006 GRI released its second comprehensive set of reporting
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guidelines²called the G3 Reporting Framework
  
  


 G3 categories
‡ Defining Report Content
‡ Defining Report Quality
‡ Úetting the Report Boundary
‡ Profile Disclosures
‡ Disclosure on Management Approach
‡ Performance Indicators
‡ Úector Úupplements
± G3 Link:
http://www.globalreporting.org/ReportingFramework/G3Online/

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 Reporting Boundaries of
Úustainability report
‡ Organizations may have
± complex internal structures, multiple subsidiaries,
± joint ventures, and/or foreign operations.
± significant use of outsourcing
± Complicated supply chains
± Distribution channels
‡ Particular care should be taken to match the scope of the
report with the economic, environmental, and social
³footprint´ of the organization (i.e., the full extent of its
economic, environmental, and social impacts).
‡ Any differences should be explained.
‡ Is this too much to ask of firms?
± Do the benefits of reporting outweigh the cost of the systems?
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 Reporting Boundaries

Úource: GRI boundaries exposure draft

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Úource:GRI-G3 online   
  


 Technical protocols
‡ GRI has developed reporting protocols for some
reporting categories
‡ Reporters should use GRI technical protocols if
they are available
‡ If an existing GRI protocol is not used,
± The reporting organization should clearly describe the
measurement rules and methodologies used for data
compilation.
‡ If a GRI protocol is not yet available,
± reporting organizations should use their professional
judgment, drawing on international standards and
conventions wherever possible.
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 Required Úustainable reporting

‡ Denmark, France, Hong Kong, the

Netherlands, Norway, Úouth Africa and
UK.

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 Integrated reports

‡ Úome firms are integrating their sustainability

report with their annual (financial) report
± Examples:
‡ Novo Nordisk, Danish Pharmaceutical
‡ Danisco, Danish producer of food ingredients
‡ Dofasco Inc., Canadian Úteel Company
‡ Most important benefit of integrated reporting is
the sustainability metrics are part of the financial
reporting distribution system
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‡ ³The trouble with most reports is that they
have no natural audience other than a
handful of ÚRI analysts.´
» Judy Kuszewski, ÚustainAbility Ltd.

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 Legitimacy Theory
‡ The role of environmental disclosures as tools of
legitimacy: A research note (Accounting Organizations
and Úociety, 2007)
± In general, the findings provide additional support for the argument
that companies use disclosure as a legitimizing tool
± Our tests document that total environmental disclosure is higher
for worst environmental performers.
± Úuch disclosure is also higher for firms operating in
environmentally sensitive industries.
± worse environmental performers made higher levels of


"


 #environmental disclosures than their better performing
counterparts

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 Are the firms producing
sustainable reports sustainable?
‡ The companies with the best sustainability
records produce sustainable reports
‡ The companies with the worst sustainability
records produce the best reports
‡ Discussion

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 Earth in the Balance Úheet

‡ CFO article
‡ http://www.cfo.com/printable/article.cfm/10
234097/c_10234153?f=options

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 Úustainability Reporting Project

‡ Goal, obtain a solid understanding of:

‡ scope (what portion of the entity is included in the
report) and why.
‡ geographic scope
‡ impact of outsourced activities (if applicable)
‡ the sustainable categories addressed
‡ the technical protocols or other metrics used
‡ assurance services used,
‡ effectiveness of the report
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