The Emergence Of Context-Based Sustainability Reporting
Given the demand for more transparency on environmental, social and governance (ESG) issues, sustainability reporting is increasingly adopted by corporations worldwide as a tool to engage with stakeholders. Although the Global Reporting Initiative (GRI) requires the inclusion of context within sustainability reports prepared in accordance with its guidelines yet not many corporations actually do so effectively. GRI guidelines in particular states that:
“Information on performance should be placed in context. The underlying question of sustainability reporting is how an organization contributes, or aims to contribute in the future, to the improvement or deterioration of economic, environmental, social conditions, developments, and trends at local, regional or global level. Reporting only on trends in individual performance (or the efficiency of the organization) will fail to respond to this question’.
Therefore, the expectation is not just for corporations to disclose simplistic efficiency indicators such as the percentage of water or waste reduction in a year but rather provide an in-depth discussion of the performance of the corporation in the context of limits and demands placed on environmental, or social resources at all levels (sectoral, local, regional or global). For example, a corporation may need to disclose not just its annual water consumption but discuss this in relation to available water supply in a particular location. Any initiatives run by corporations should ideally contribute to a wider agenda.
The term context-based sustainability (CBS) has thus been introduced to encourage corporations to rethink their strategy and approach when attempting to measure, manage and report on sustainability performance taking into account social, economic and environmental global thresholds instead of ignoring them. To do this effectively requires thorough thinking about who the stakeholders are and the type of capitals that a corporation has that can contribute to a wider objective. One way in which companies can do this is by linking their company initiatives to some of the sustainable development goals (SDGs).
SDGs were developed as an outcome of the Rio 20+ conference in 2012. They were set to replace the millennium development goals (MDGs) which expire in 2015. SDGs consist of 17 goals and 169 targets across broad areas such as poverty eradication, equitable quality education, building resilient cities and infrastructure as well as climate change among many others. Many of which have a close link to the private sector. For example, Goal 17 speaks about global partnerships which include the role of the private sector and the groups that represent them in the implementation of SDGs. Under Goal 12, large and transnational companies are encouraged to adopt sustainability practices and integrate sustainability information into their reporting cycle. It remains to be seen whether corporations would take up the challenge of aligning their sustainability initiatives to SDGs in the next few years.
Dr Renard Siew is a researcher based at the Centre for Energy and Environmental Markets (CEEM). His research interest lies in sustainability, integrated reporting, ESG research, socially responsible investment (across different asset classes: equities, infrastructure and property, real estate), climate change, sustainability strategy and green construction for the building/infrastructure sector. Renard did his PhD at UNSW with the support of the Australian Postgraduate Award (APA) Scholarship. He has published in international refereed journals on various sustainability issues in Asia.
