Sustainability Reporting Changes Top EY’s 2014 Trends List
The forthcoming conflict minerals reporting deadlines and transition to the Global Reporting Initiative (GRI) G4 reporting are among the 2014 sustainability trends that Ernst & Young’s Climate Change and Sustainability Services group have identified for companies.
The top trends, according to EY, are:
- Meeting Dodd-Frank Act Section 1502’s approaching deadline. The first filing deadline to comply with the US Securities Exchange Commission’s (SEC) conflict minerals disclosure requirements covering calendar year 2013 is June 2. Per the legislation, companies must investigate their supply chains for conflict minerals and report on their source of origin.
- Managing the transition to G4 reporting. Leading sustainability reporting organizations are seeking to provide clarity and guidance on what’s material in non-financial reporting. Conducting a non-financial materiality assessment this year can provide a company and its stakeholders with valuable intelligence to better measure, manage and assess the business in the short- and long-term. Additionally, this exercise is critical to laying a proper foundation for future reporting, particularly in light of the GRI G4 sustainability reporting guidelines.
- Reducing supply chain risk by driving social compliance into the business. Supply chain management is complex and in the spotlight after recent tragedies like those in Bangladesh. To avoid such catastrophes, companies should take steps in 2014 to drive social compliance into their business, such as mapping the supply chain, integrating social compliance into the procurement process and systemizing collaboration between social compliance and internal audit.
- Understanding how environmental, social and governance disclosures impact companies listed on various stock exchanges. Stock exchanges around the world are beginning to recommend their listed companies report on select environmental and social indicators, or explain why they do not. This trend is likely to spread since the NASDAQ OMX and New York Stock Exchange are participating in the Investor Network on Climate Risk Sustainable Stock Exchanges Working Group, which is currently collaborating on a standards proposal. Now is the time for companies to establish systems for capturing key ESG metrics and develop a process for measuring non-financial data before such guidance becomes mandatory for listed companies on main US exchanges.
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