Assurance Readiness Review, Sustainability Reporting

More on Assurance

Assurance: Buckle up for safety!
Assurance: Buckle up for safety! Photo: Michael White

More on assurance!

Assurance on Sustainability Reports

Two weeks ago,  I attended a GRI sponsored event Enhancing credibility and trust of sustainability reporting hosted by Bloomberg in NYC. The purpose was to gather opinions on how to enhance the credibility of sustainability reports.

We had some interesting discussions! One topic in particular stood out for me.  Why would companies have their sustainability reports assured when in many countries the reporting is still voluntary? This a great question! Presumably, they would have their reports assured because they get something out of doing so. There is value added when reports are assured but what will it take to increase the assurance rate?

I read a recent article in Forbes by Cindy Lubbers of CERES about how to get more companies to provide environmental, social, and governance (ESG) disclosures.  The suggested solution was for stock exchanges to require more ESG disclosures. I think this is a great idea. The same would be true for assurance.

If stock exchanges can require more disclosures, they can surely require assurance of the information. This would definitely improve the information being provided to investors. If investors are relying on this information to make decisions, they should be able to have confidence that the information is reasonably accurate. Security exchanges are in a unique position such that they can set the standards for the companies that list with them. It is in their best interest to promote transparent and efficient capital markets. Adding a layer of assurance is a way to build trust and create long-term value.

In my next blog, I will talk about the qualities I think are needed by assurance providers.

 

Global Reporting Initiative (GRI), Sustainability Reporting

Global Reporting Initiative (GRI) Certified Training + Integrated Reporting

Indiana Memorial Union Fountain. Credit: Gwen White
Indiana Memorial Union Fountain. Credit: Gwen White

This is a reminder of an upcoming GRI + Integrated Reporting training offered by the ISOS Center for Social Responsibility in collaboration with the School of Public and Environmental Affairs (SPEA) . Please join us for the CSR Institute at Indiana University in Bloomington, Indiana, September 24-26.

During the three-day training, participants will learn about managing the sustainability reporting process, identifying critical risks and opportunities and communicating sustainability objectives. Participants will be given hands-on instruction on the most up-to-date GRI G4 sustainability reporting framework using sustainability reports from leading organizations as case studies.

Sustainability and integrated reporting practitioners and users of sustainability and integrated reports will find value in the integrated reporting workshop. For reporting practitioners, it should provide information about acquiring competitive advantage through implementing an integrated reporting process. For users of these reports, it should provide knowledge about integrated reporting from the users perspective.

I hope to see you there!

Global Reporting Initiative (GRI), Sustainability Reporting

Research on Assurance

One of SpaceX's "assurance" modes. Credit: SpaceX/Roger Gilbertson
One of SpaceX’s “assurance” modes. Credit: SpaceX/Roger Gilbertson

Assurance on sustainability reports – How is it perceived?

As companies start to invest in assurance for their sustainability reports, they have to wonder “is it worth it?” Academic studies can shed some light on this.

In a 2105 study, researchers at the University of New South Wales in Australia looked at whether assurance of environmental, social, and governance (ESG) indicators affected investors’ willingness to invest in a company.

Researchers presented a sustainability report with ESG indicators to graduate students in a master’s of financial analysis program. These were students who were “sophisticated” users of financial information. They were told that they had inherited some money (lucky for them) and were to indicate their willingness to invest the money in a company. The researchers varied which students were given sustainability reports with assurance vs. no assurance and whether the company’s strategy and ESG indicators were aligned. For example, assume a retail grocery’s strategy is aimed at supporting products that are based on environmental stewardship. A strategically aligned ESG indicator would be the percentage of animal products sold that are sourced from sustainable agricultural practices.

What did they do with their inheritance?  Study participants, aka, investors, were more willing to invest if the company had its ESG indicators assured. Assurance made a statistically significant difference! It also mattered to these investors if the ESG indicators had a high relevance to the companies’ strategy. This is an important result, especially as companies decide on what sustainability metrics to report. Just reporting for the sake of reporting does not mean as much as reporting what matters. This sounds very much like the essence of the GRI G4 Sustainability Reporting Guidelines.

This is just one study, but an interesting one that supports the role of assurance in giving credibility to sustainability reports. There are other assurance studies that I will talk about in future blogs.

Global Reporting Initiative (GRI), Sustainability Reporting

Assurance and the Global Reporting Initiative (GRI)

Late afternoon light on Lake Michigan, Evanston, IL
Late afternoon light on Lake Michigan, Evanston, IL

Having just finished revising my book, Sustainability Reporting: Getting Started, assurance and the Global Reporting Initiative (GRI) are on my mind.  In my previous post I wrote about why we need to have sustainability reports assured. We hope that we can believe what we read in sustainability reports; third party assurance may give us some level comfort about the accuracy of the information reported in them.  Accuracy is never guaranteed, but at least it is a step in the right direction.

Because the GRI Sustainability Reporting Guidelines is the most widely used framework for sustainability reporting, they figure prominently in the landscape of reporting.  GRI pronouncements about assurance have significant consequences for how assurance is provided  and reported in sustainability reports. Although the GRI 
recommends the use of external assurance, it is not a requirement to be ‘in accordance’ with the Guidelines
.

The Guidelines do have something to say about how assurance reports are disclosed. Organizations that want to be “in accordance with” the GRI guidelines are required to indicate whether they have an external assurance report. In addition, for each disclosure in the sustainability report, the organization has to say whether or not it has been assured. In essence, it is a checklist of what has and has not been assured by an external third party.

The GRI has issued a clarification and a change to the guidelines!

On August 5, 2015, the GRI Global Sustainability Standards Board (GSSB) issued an interpretation on how an organization should reference its external assurance reports. This interpretation acknowledges there is confusion about assurance reports because readers do not always understand the language in them. Assurance reports come in many different permutations so this statement rings true. The recently issued interpretation recommends that organizations explain the assurance standards used, the level of assurance obtained, and any limitations of the assurance process.

The GSSB decided that organizations are no longer required to indicate assurance for each disclosure.  Basically, the checklist is gone. Instead, reporters will provide readers with a summary of the assurance process and what the report means. This helps the reporters and the readers to understand more about what is being assured and how.

I think this change in how an organization reports its third party assurance is a positive step for reporters and readers. GRI’s stakeholders are seeking improvement to the guidelines and the GRI GSSB is responding in ways that are making the assurance of sustainability reports easier to understand.

 

 

Global Reporting Initiative (GRI), Sustainability Reporting

Global Reporting Initiative (GRI) + Integrated Reporting Training

Indiana University Memorial Union
Indiana University Memorial Union

GRI Sustainability Reporting + Integrated Training

I will be one of the trainers at this event on the beautiful campus of Indiana University in Bloomington, Indiana. Please take a look at this exciting training opportunity in September.

Global Reporting Initiative (GRI)/Integrated Reporting (IR) Training  is being offered by ISOS Center for Corporate Social Responsibility in collaboration with the School of Public and Environmental Affairs (SPEA). The training session will cover the Global Reporting Initiative (GRI) sustainability reporting framework and Integrated Reporting (IR) at the Indiana Memorial Union (900 East Seventh Street) from Thursday, 24 September to Saturday, 26 September. The training sessions will cover a wide variety of issues related to sustainability reporting.

Public Panel on “Who’s Responsible for Sustainability?” – Free Event!!

24 September 2015, 5:00 pm to 7:30 pm, University Club, Indiana Memorial Union
In conjunction with the Global Reporting Initiative (GRI)/Integrated Reporting (IR) Training, a panel discussion entitled “Who’s Responsible for Sustainability?” will be held at the Indiana Memorial Union’s University Club.  Indiana University has invited sustainability leaders from the public, private, and nonprofit sectors to highlight their efforts to address complex social, environmental, and economic challenges. Panelists will include:
· Bill Brown, Director of the IU Office of Sustainability;
· Jesse Kharbanda, Executive Director of the Hoosier Environmental Council;
· Karen Cecil, Director, Global Environmental Sustainability Environmental Strategy &    Compliance, Cummins Inc;
· Maria Koetter, Director of Sustainability, Louisville, KY, Metro Government

I hope to see you in Bloomington!