Sustainability Reporting

May 8, 2022
Reanda Biz Seeve
What is Sustainability Reporting

Sustainability is a concept related to meeting the human development goals while conserving and protecting the nature, environment, and social ecosystem on which the economy and society depend. The extraction or usage of the resources to meet the present human needs should simultaneously ensure that the availability of these resources for future generations to meet their own needs is not compromised.

In a broader term , Sustainability Reporting  deals with information concerning environmental, social , economic and governance issues of an organization. Sustainability reporting is the disclosure and communication of environmental, social, and governance (ESG) goals of an organization and its progress towards those goals.

Stakeholders nowadays are interested in understanding organization’s approach in managing sustainability issues along with potential for value creation. In the current scenario, the major institutional investors across the world review the non-financial data in order to take decisions on investment in any new venture. This development has increased the importance of preparing a sustainability report by the organization. Sustainability Reporting provides details on the competitive positioning of the business in the emerging sustainability space as well as an overview of business initiatives relating to ESG parameters. Such reporting provides various added benefits, namely highlighting organization culture, improving business performance along with the ESG dimensions, informing strategy, establishing accountability, engaging stakeholders and providing transparency.

As per the definition of the Global Reporting Initiative (GRI), “Sustainability Reporting is an overview of a company’s economic, environmental, and social impacts, caused by its everyday activities”. This is not merely presenting the data collected, but an approach to drive an organization’s commitment to sustainability, and demonstrate it to the interested parties in a transparent manner. It is intended to assist the organizations to assess, measure, analyze and present their performance in economic, social, environmental, and governance parameters, with an objective of setting challenging targets and goals.

Standards and Framework for Sustainability Reporting

A number of Standards and framework for sustainability reporting have been developed, however the most frequently used are:

1. Global Reporting Initiative (GRI) Standards

2. Sustainability Accounting Standards Board (SASB) Standards

3. Integrated Reporting (IR)Framework issued by IIRC

Recent Development in SAARC  Countries

As per the report “2020 Sustainability Reporting Trends in South Asia (Bangladesh, India, Sri Lanka)” based on the Research conducted internally by GRI South Asia  in India, Bangladesh and Sri Lanka, the sustainability reporting is on the rise in those countries.

The Key findings of the report include:

  • The GRI Standards are the most widely used for environmental, social and governance (ESG) reporting across all countries;
  • 64% of listed companies in Sri Lanka use the GRI Standards;
  • The number of sustainability reports in Bangladesh increased by 36% between 2018 and 2019;
  • In India, 99% of organizations analyzed as part of the study have integrated sustainability reporting into their management practices.

India is one of the early adopters of sustainability reporting for listed entities amongst its various other global peers. In 2012, requirement of Business Responsibility Report (BRR) containing ESG (Environment, Social and Governance) disclosures was introduced for adoption by the listed entities. Recently, in May 2021, Security Exchange Board of India (SEBI) has introduced new reporting requirement called the Business Responsibility and Sustainability Report (BRSR) with the intent towards having quantitative, qualitative and standardized disclosures on ESG parameters. The BRSR is a notable departure from the existing BRR and set a significant step towards bringing sustainability reporting at par with financial reporting. Further, companies will be able to better demonstrate their sustainability objectives, position and performance resulting into long term value creation.

Nepalese Scenario

So far the Sustainability reporting is concerned Nepal is yet to awake in this matter. Nepal cannot remain apart from all the developments happening in rest of the world for long. In the current scenario, the major institutional investors across the world review the non-financial data before taking decisions on investment in any new venture. Before making any investment, such investors ask for the sustainability reports . In order to attract FDI, its already been late to start  such reporting. The concerned regulators in Nepal must look into this matter and take initiation at the earliest. Initially listed companies may be targeted for the reporting. Necessary resources must be developed in due course for the reporting.

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