10 Trends in Sustainability Reporting

by | Feb 10, 2010

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SustainabilityReporting

Businesses face three key challenges when it comes to sustainability reporting, according to a new report. They include multiple metric frameworks, a lack of uniform definitions, and a lack of consistent applications, which have resulted in variable and unreliable measurement and disclosure results.

The CSR Insight Report, based on two years of research, covers sustainability issues for reporting, investment and regulation.

As a sneak peek to the report, here are 10 trends in sustainability reporting.

— Financial statements capture only a portion of corporate risks and value-creation potential, with the balance derived from intangible factors such as strategy, product innovation, brand and reputation management, energy/resource efficiency, commercial risk reduction, and environmental and social risk reduction.

— Sustainability reporting is largely voluntary worldwide.

— Sustainability reporting is now the norm among large companies globally, increasing from about 300 sustainability reports in 1996 to 3,100 (The Global Reporting Initiative reported more than 1,000 organizations worldwide that have registered sustainability reports in 2008 based on the GRI G3 Guidelines.)

— Sustainability reporting in the U.S. has been much slower to develop than in Europe.

— Most industrialized countries have long-standing environmental laws that restrict environmental-impact activities and require some form of environmental regulatory reporting.

— The evolution of metric frameworks for sustainability reporting is a major challenge for suppliers and users.

— Multiple metric frameworks, a lack of uniform definitions, and a lack of consistent applications are producing variable and unreliable measurement and disclosure results.

— The emergence of national and regional legislation and regulation, which have not been integrated and/or synchronized with multiple metric frameworks, is a major challenge.

— Synchronization of voluntary reporting frameworks with governmental and regulatory requirements may be driven in part by recent initiatives by the Global Reporting Initiative and the World Intellectual Capital Initiative to develop XBRL taxonomies for non-financial information, as well as by a new U.S. Securities and Exchange Commission rule requiring financial statements in a XBRL format as part of SEC filings.

— Governmental, regulatory, and audit oversight of sustainability issues will become the norm within five years, in both the developed and developing world, across all industries.

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