Sustainability Reporting - A New Dimension of a CA

Introduction:

Global warming, climate change, social degradation and economic crisis are posing serious threats for the organizations to survive. Day by day organizations are striving to be transparent and accountable to various stakeholders of the organization to preserve their reputation and brand image.  To curtail this problem Global Reporting Initiative (GRI) took initiative towards a better tomorrow. Global Reporting Initiative is a non-profit organization that works towards a sustainable global economy by providing sustainability reporting guidance. Global Reporting Initiative Guidelines defines Sustainability Reporting as “the practice of measuring, disclosing and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development”. The first environmental reports were published in 1980s by companies in chemical industry which had serious image problems. Sustainability Reporting is a recent trend forming part of the annual reports of many companies. These reports are intended to improve internal processes, engage stakeholders and influence investors

Role of CA in Sustainability Reporting:

A Sustainability Report is an organizational report that gives information about economic, environmental, social and governance performance. Sustainability Reporting is a vital element in Integrated Reporting that has evolved in the recent years portraying both financial and non-financial performance of the organization. GRI Focal Points are national offices that drive GRI activity in particular countries and regions. GRI currently has Focal Points in a number of strategic countries; Australia, Brazil, China, India and the USA. ​As we are aware about the supremacy of Institute of chartered Accountants of India in the Accounting and Assurance practices, to extend its wings ICAI joined GRI Focal point of India in 2011. Henceforth CA’s will venture in the administration of sustainability reporting practices of companies along with financial audit and assurance. According to a recent survey more than 50% of the sustainability reports in India are externally assured. So CA’s have a major role to play, not only to audit financials but to assure and monitor the sustainability reports of companies and save the bio-diversity of our nation.

Benefits of Sustainability Reporting:

According to Global Reporting Initiative, Sustainability Reporting benefits organizations in following ways:

· Increased understanding of risks and opportunities.

· Emphasizing the link between financial and non-financial performance.

· Influencing long term management strategy and business plans.

· Benchmarking and assessing sustainability performance with respect to laws, norms, codes and voluntary disclosures.

· Comparing performance internally and between organizations and sectors.

· Mitigating or reversing negative environmental and social impacts.

· Improves reputation and brand loyalty.

· Enabling stakeholders to understand company’s true value.

The GRI Five Phase Process: Following are the five phases in the development of Sustainability Reports:

Phase 1: Prepare 

· Defining the report scope, boundary and time period which will be company specific.

· Getting started: Linking business goals and sustainability impacts.

Phase 2: Connect

· Understanding the importance of stakeholder engagement in the reporting process.

· Stakeholder identification and prioritization.

· Effective stakeholder communication.

Phase 3: Define

· Identifying relevant sustainability issues for action and reporting.

· Evaluating existing monitoring systems.

· Setting goals and performance targets.

Phase 4: Monitor

· Adhering to GRI indicators and protocols.

· Checking processes and monitoring activities.

· Ensuring quality of information.

Phase 5: Communicate

· Maximizing internal and external report value.

· Incorporating sustainability reporting into traditional annual report.

· Designing report for clarity and readability

Conclusion: Sustainability Reporting according to me is just not compliance or a mandatory requirement by SEBI for all the top 100 listed companies, but an opportunity for a CA to show his responsibility towards the nation. So being CA,s let’s join hands and give our share in protecting the ecological balance.