The changing face and increased standardization of sustainability reporting

February 16th, 2016 by Dakota Software Staff Industry News

Corporate sustainability doesn't have the long history that, through tradition and best practices, guides businesses in assembling reports for various other areas of operation. Sustainability as a topic can also be much more complicated and involved at times than other forms of business accounting and reporting, be it sharing data about employee performance, profits or supply chain operations. Because sustainability reporting includes the efforts of a given company, the impact of such efforts on local communities and many other considerations involving a variety of stakeholders, reporting must take a different, broader and more inclusive approach.

Recent proposed updates to the SGX sustainability reporting rules, the format required in the business-heavy city-state of Singapore, are geared toward such realities.

Changes to the current structure
According to Eco-Business, the new regulations for Singaporean companies broadly address the connected, broad nature of sustainability reporting by emphasizing five concepts. These include identification of significant environmental, social and governmental factors; discussions of company actions and performance in relation to each material factor; goals set for the coming year; the use of a specific reporting framework to make sure relevant information is disclosed in a standardized fashion; and a statement of compliance or an outline of an alternative method used, from a company's executive board.

The comply-or-explain format to be used by businesses when annual reports are issued, starting in fiscal year 2017, is another recognition of the need for holistic sustainability reporting. Singapore newspaper The Straits Times reported the comply-or-explain system will force the hand of all businesses listed by the SGX - companies must either present a compliant sustainability report or a document that explains the failure to do so. The Straits Times said that while specifics haven't yet been divulged, SGX would use its current general non-compliance rules to penalize organizations that failed to follow the required procedure.

Making sustainability reporting more effective
Sustainability reporting isn't just a requirement in a growing number of industries and jurisdictions, it's a valuable tool that connects businesses to stakeholders and provides a number of positive returns. As the demand for sustainability reporting - and for clearer and more complete pictures of company actions and positions inside those reports - increases, it's vital that businesses take the right approach to them. Company leaders must consider the use of sustainability software to provide a solid, reliable and reputable reporting and information base to build such reports.