Sustainable developments, reporting standards and setting a blueprint for the future

By Professor Carol Adams, January 2024

Carol Adams, Professor of Accounting and Chair of the Global Sustainability Standards Board (GSSB) at Global Reporting Initiative, on why reporting on organisations’ impacts is crucial to achieve real change. 

As the deadline for meeting climate pledges and reversing the consequences of climate change draws nearer, the pressure grows for organisations to make a positive contribution.  

To that end, there’s been a substantial amount of research into how frameworks, standards and other forms of reporting requirements can influence action aligned with sustainable development, by giving organisations a blueprint to follow. What they’re required to report on influences what gets attention and further action. 

A focus on action 

The Global Reporting Initiative (GRI) Standards which began as guidelines 26 years ago provide the most well-established blueprint so far. Now overseen by GRI’s Global Sustainability Standards Board (GSSB), they have progressively incorporated more disclosures that facilitate a transformation towards integrating sustainable development considerations into governance, strategy and policies. They also facilitate accountability for the most significant impacts of their activities upon the economy, the environment, and people, including their human rights. 

The three recently revised GRI Universal Standards, which became effective this year, facilitate reporting on contribution to sustainable development. They require disclosures on the process for identifying an organisation’s most significant impacts, responsibility for managing those impacts, engagement with stakeholders, governance oversight, the scope of external assurance and the incorporation of sustainable development considerations into strategy and policy commitments, including remuneration. These are all known drivers of change. After all, if you’re required to disclose something, you’re going to have to think about the issue and take appropriate action first. The GRI Standards offer guidance on the process of determining the organisation’s most significant impacts.  

The GRI Sector Standards set out the sustainable development context for different sectors, identify their most significant impacts and link them to the United Nations Sustainable Development Goals.  

A focus on the consequences of impacts 

An organisation’s most significant impacts and the cumulative impacts of many organisations over time have implications for the availability of natural resources and the relationships on which organisations depend. The consequences present risks and create opportunities for organisations and their stakeholders, including investors.  

The most significant impacts can be fed into an organisation’s Enterprise Risk Management System to identify actual and potential risks and financial consequences. The identification and management of these most significant impacts therefore makes good business sense.  

Stakeholders have always played a powerful role in influencing corporate behaviour and investor returns. Think apartheid, Barclays and Shell; labour rights issues in the supply chain, Nike; marketing campaigns with negative impacts, Nestlé and so on. GRI was formed in the wake of the Exxon Valdez Alaskan oil spill, but this wasn’t the first corporate-created disaster and there’ve been many more since. 

What’s next? 

To achieve faster change, identifying and reporting on an organisation’s most significant impacts would need to be mandatory. The European Union has mandated the European Sustainability Reporting Standards that align with GRI Standards. The Securities and Exchange Board of India has also mandated aligned reporting. Mandated requirements alone aren’t enough. They need to be enforced and capacity building and training needs attention. Critically, the scope of external assurance engagements needs to be extended and particularly to cover the approach to identifying an organisation’s most significant impacts.  

Just as I encourage the finance and sustainability functions of organisations to collaborate, I urge financial regulators to talk with areas of government responsible for economic, social and environmental matters in developing a reporting regime that benefits nations in a holistic way.  

The GRI Standards provide a globally accepted starting point for such an approach.