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Sustainability disclosure 101

Frequently asked questions about sustainability disclosure & reporting

 Sustainability disclosure and reporting can be a complex topic. To enhance your performance, you need to improve your understanding of the issues and ideas at stake.

What is sustainability?

What is sustainability disclosure?

What does materiality mean within a sustainability context?

Who is the audience of sustainability disclosure?

How is sustainability communicated?

Why does sustainability disclosure matter?

What are the principles of high-quality disclosure?

 What is sustainability?
Sometimes called sustainable development or corporate responsibility, sustainability can be defined in many ways. It is an umbrella term describing the ways individuals, organizations and societies promote development that meets economic, environmental and social goals. A commonly accepted definition is “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” (source: United Nations Report of the World Commission on Environment and Development)

From an organizational perspective, sustainability refers to strategy and operations that generate stakeholder value and have a positive community influence—while minimizing adverse environmental impacts.

For more information on sustainability and its application to your organization, contact our Sustainability & climate change group.

What is sustainability disclosure?
Sustainability disclosure (also referred to as Environment Social Governance or ESG disclosure) is the act of communicating organizational performance on material matters relating to financial, environmental, social and governance activities. Financial performance here refers not just to an organization’s financial performance, but to its broader economic impact on society. Environmental performance refers to its impact on local habitats and global natural resources. Social performance refers to human and societal impacts, including on its own staff and the communities it serves. Finally, governance performance refers to the internal oversight, management and accountabilities that drive organizational financial, environmental and social performance.

 What does materiality mean within a sustainability context?
“Materiality” is the threshold at which a sustainability topic or key performance indicator (KPI) becomes significant enough to include in sustainability disclosures. Topics and KPIs should be based on their contribution to the organization’s economic, environmental and social impacts, and on their ability to influence the decisions of internal and external stakeholders.

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 Who is the audience of sustainability disclosure?
Sustainability disclosure should address both external and internal stakeholder needs. Stakeholders include shareholders and investors, insurance agencies and regulatory agencies, customers and suppliers, community and advocacy organizations, and employees and contractors. In other words, anyone interested in financial, environmental, social or governance performance may be part of an organization’s sustainability audience.

 How is sustainability communicated?
Sustainability is disclosed across different organizational communication channels, including external websites, social media channels, intranet sites, marketing materials, internal signage and postings, presentations and newsletters.

Disclosure can be either mandatory (i.e., required by law or regulation) or voluntary (i.e., per the organization’s own desire to disclose). Mandatory sustainability disclosures can occur within financial filings such as 10-Qs, Annual Reports and Management Disclosure & Analysis; or non-financial reports such as Health and Safety reports or Pollutant Release / Emissions reports. Voluntary disclosure often takes the form of corporate responsibility reports and responses to surveys or data requests.

The concept of integrating financial and non-financial reporting, sometimes called “integrated reporting,” continues to gain momentum around the world. Organizations such as the Global Reporting Initiative (GRI) and the Accounting for Sustainability Project (A4S), which recently formed the International Integrated Reporting Committee, are working to establish globally accepted reporting standards that meet both financial and non-financial reporting needs. Awareness of sustainability trends can help organizations align with stakeholder needs and expectations, both now and in the future. Additional resources are available at our Sustainability disclosure & reporting resource centre.

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 Why does sustainability disclosure matter?
In many regions of the world, organizations must report sustainability-related information. In regions where regulations have not been established, however, internal and external stakeholders continue to press for clearer, more accurate disclosures, as well as increased breadth and depth. Shareholders and analysts want to make informed investment decisions; regulatory agencies and governments demand accurate and timely compliance; customers and clients value enhanced purchasing information; employees and recruiters seek out responsible organizations; and activists and communities hope to maximize organizations’ positive impacts on their communities. Managing sustainability information to meet these varying needs, especially as disclosure channels converge, requires planning and governance. In short, smart organizations can capitalize on effective sustainability disclosure practices, enhancing brand, reputation and operational efficiencies.

 What are the principles of high-quality disclosure?
Credible, high-quality disclosure is guided by the following principles:

  • Relevance: Disclosure of company activities meets decision-making needs of internal and external stakeholders
  • Completeness: Disclosure, within the scope of material concerns, provides all relevant audiences with all relevant information
  • Consistency: Transparent methodologies stay the same to facilitate comparisons over time and across channels
  • Transparency: Facts are evident and backed by an audit trail of appropriate documentation
  • Accuracy: Audiences have reasonable assurance of the integrity of the report information
  • Reliability: Disclosed information has been obtained and analyzed in a manner that can be recreated and can withstand examination
  • Clarity: Information is understandable and accessible for stakeholders
  • Balance: Disclosure reflects positive and negative performance
  • Context: Disclosure reflects the organization’s broader economic, environmental and social contexts
  • Timeliness: Disclosure occurs within sufficient timelines and with sufficient frequency to allow stakeholders to make informed decisions

Want to learn more?
Whether you are getting started or taking disclosure to the next level, we encourage you to learn more. Visit the Sustainability disclosure & reporting resource centre to access information and resources, learn more about current trends, or access a list of related websites. For additional information on sustainability, please visit our Sustainability & climate change site.

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