A call for change in the sustainability reporting landscape

THAT we live in a fast-paced world characterised by the dynamics of economic sustainability, irrespective of the company size and the services they provide is stating the obvious. In addition, are the significant amounts of time and resources  spent driving the sustainability agendas in their activities. Notably, these are done againstthe challenges of climate change, air and water pollution, loss of habitat, depletion of earth’s resources, socio-economic inequalities, poverty, anomie and insecurity.  But what matters most are the solutions to some of the gaps identified in the Sustainability Champions project, a study on the state of corporate sustainability,specifically in Nigeria conducted in 2015 and how in the time since, these gaps still remain. It is therefore, gratifying to have an expert beam a brilliant light on the globally topical issue. The erudite scholar is none other than Dr. Adun Okupe, who is a member of the Lagos Business School faculty, where she teaches sustainability. Good enough, is the recent access yours truly got to her insightful, profound and timely thoughts on the critical matter.

As she rightly asked: “How can we hope to meet the needs of the future when we are as yet unable to meet those of the present generation?” That incidentally,is the million-naira question she has provided credible answers to. To begin with, she has been able to identify the need for stronger and more meaningful collaboration, awareness and capacity-building initiatives. These willassist in the sustainability practices to incorporate small and medium-sized businesses and more effective reporting. Stated below are her valid takes, in her words on the right way forward.  The calls for a more sustainable world, to prevent us getting to the brink of a global catastrophe continue. Organisations, individuals and governments continue to seek innovative ways to address the challenges of climate change, air and water pollution, loss of habitat, depletion of earth’s resources, socioeconomic inequalities, poverty, anomie and insecurity. Admittedly, addressing these challenges whilst trying to run a profitable venture is not easy.

But the question on profitability needs to go beyond the short-term towards a long-term approach that incorporates the elements that contribute to what makes a society a better one. Looking towards the green economy, the circular economy, sustainable futures, and seeing the efforts by various bodies to grapple with these show that there still is a lot of work to do. How can we hope to meet the needs of the future when we are as yet unable to meet those of the present generation? In light of the increased awareness of the impacts of industries’ activities on the environment, there has been growing demand for organizations to take more responsibility in how they track the impact of their operations across the environment (planet) and social (people). The sustainability discourse seeks to identify the best ways to ensure that the economic (profit) includes the benefits/costs from the impact of activities on the environment and social pillars. This is hard.  One avenue that is perhaps relatively easier and more tangible is to track how we are doing in the bid to address these sustainability objectives. The sustainability reporting landscape needs to change, in general, globally, but also closer to home, within our operating contexts on the continent.

Sustainability reporting is a powerful strategic tool that goes beyond a box-ticking exercise for organizations to demonstrate how they meet certain regulatory and governance requirements. The sustainability report can be so much more. It can be a tool to demonstrate leadership and effective stakeholder engagement and , shaping the business  direction for the future. This Is why it is imperative for organizations to first develop a strategy, develop implementable action plans and set measurable targets which they can report progress on quantitatively or qualitatively in a transparent manner for accountability’s sake.     Understandably, the proliferation of frameworks, guidelines and standards for sustainability reporting – there are currently over 600 different industry sustainability reporting standards globally – has made the process complex and daunting, whilst confirming the importance of sustainability reporting to organizations who seek to answer the question of: how can we better report our activities?

According to the World Economic Forum (WEF), the lack of comparability across frameworks has led to inconsistencies in how businesses assess and communicate their shared and long-term values to investors and stakeholders. As a result, companies are struggling to navigate the various reporting requirements, with some opting to utilize multiple standards and metrics, increasing the reporting costs, high complexity risk, and limited effectiveness and impact. And then there are questions as to how sustainability benchmarks can be standardized across the board. And which ones should organizations generally adopt? Various international standard-setters such as the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), the Climate Disclosure Standards Board (CDSB), the Task Force on Climate-related Financial Disclosure (TCFD), the Sustainability Accounting Standard Board (SASB), and  WEF have released a wide range of sustainability reporting guidelines over the past 20 years, and these guidelines have grown in acceptance.

(See the rest on www.tribuneonlineng.com)

• Baje writes in via ayobaje@yahoo.co.uk

However, the lack of comparability and harmonization among the standards has led to mergers across standards, such as the Value Reporting Foundation (VRF), which was formed from a merger of the SASB and the IIRC in June 2021.

The race to harmonize the various standards also led to the creation of the International Sustainability Standards Board (ISSB) at COP26 in Glasgow in 2021 by the International Financial Reporting Standards (IFRS) Foundation. The ISSB, which consolidates the resources of the CDSB, VRF, TCFD and WEF, aims at “establishing a comprehensive global baseline of sustainability disclosures to satisfy the information needs of investors”. Overall, the aim of GRI, IFRS Foundation, and EFRAG is to improve interoperability and harmonization in reporting.

Let’s return home a bit and talk about sustainability reporting in Nigeria …

I would say that some organizations – most notably in financial services, energy and agro-allied industries – have demonstrated a commitment to sustainability. For example, the conversations on the green economy present opportunities for innovative solutions, if we go by attendee feedback  from the recently completed annual AVCA conference in Egypt. Yet, there is still a long way to go in understanding, tracking and reporting corporate sustainability effectively, even for these investor classes.

Whose responsibility is it to enforce sustainability in the organization? This goes back to leadership, organizational targets and policy documents that show a commitment to effective sustainability reporting.  Reports with no clearly stated targets, opaque progress and a disproportionate focus on the external (corporate sustainability responsibility), unsupported by internal sustainability considerations for the wellbeing of employees and customers, cannot be effective in driving the organizations of the future. The sustainability agenda, and the ESG metrics that guide long-term performance go beyond CSR.

…To be continued