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10 Trends in Sustainability Reporting

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.

3 thoughts on “10 Trends in Sustainability Reporting

  1. Over the past five years, 55 percent of organizations have established policies to reduce energy consumption. However, only 19 percent of organizations have measurably reduced their energy costs and carbon emissions, according to the Economist.

    Organizations fail because more than 77 percent of executives surveyed report challenges in the identification and establishment of meaningful sustainability benchmarks and key performance reports necessary to achieve their reduction goals, according to the same report.

    Effective performance metrics must align with the corporate sustainability strategy and any external reporting requirements.

    At the highest level, environmental performance metrics divide into three broad categories: Environmental, Financial, and Portfolio.

    Environmental Metrics provide critical analysis to evaluate energy consumption, resource use, waste production and greenhouse gases emitted. Within each of these areas, intensity metrics facilitate comparative analysis between facilities. To accurately compare energy performance between facilities, metrics such as total energy used need to be normalized by a factor such as gross square feet or total building occupants.

    Financial Metrics provide vital information about the cost and risk associated with an organization’s environmental impact. Executives need to know the amount of money spent on energy and the revenue or operating expense available to mitigate pending environmental regulations.

    Portfolio Metrics provide crucial insights into the condition of individual facilities across an organization’s entire real estate portfolio. Executives use these metrics to prioritize scarce capital resources across environmental improvements.

    John Clark
    TRIRIGA Inc.

  2. I’d like to find the “CSR Insight Report,” but couldn’t find it on Google Scholar or at my school library. The author of this article doesn’t reference who authored the report or where it is published. Anyone know?

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