The vision of the Global Reporting Initiative (GRI) is that the disclosure of economic, environmental and social performance becomes as commonplace and comparable as financial reporting. Last week it took a step nearer to making the vision a reality with the formation of the International Integrated Reporting Committee (IIRC).
The other party to the formation is The Prince’s Trust’s Accounting for Sustainability Project (A4S). The A4S project was launched in 2004 by HRH The Prince of Wales to develop decision-making and reporting systems that take into account the sustainability challenges. It works with businesses, investors, governments, accounting bodies, civil society and academics to build a common view of an integrated reporting framework and to develop guidance and tools.
The remit of the new body formed by GRI and A4S is to create a globally accepted framework for accounting for sustainability, bringing together financial, environmental, social and governance information in an integrated format. In doing so, the IIRC is working with representatives from a variety of public and private sectors.
“To make our economy sustainable we have to relearn everything we have learnt from the past. That means making more from less and ensuring that governance, strategy and sustainability are inseparable" said Professor Mervyn King, Chairman of the GRI. "Integrated Reporting builds on the practice of Financial Reporting, and Environmental, Social and Governance - or ESG - Reporting, and equips companies to strategically manage their operations, brand and reputation to stakeholders and be better prepared to manage any risk that may compromise the long-term sustainability of the business."
Jane Diplock, Chairperson, Executive Committee of the International Organisation of Securities Commissions, said, “I believe we will look back on the creation of this Committee as a turning point in the development of corporate reporting.” That may be a little over the top, but certainly momentum is building around sustainability reporting. For example it was only a few weeks ago we reported that the GRI and CDP agreed to collaborate on their reporting standards.
It’s good news for those companies providing carbon management and other sustainability solutions, which will be in increasing demand if these collaborations are fruitful. But the IIRC can only hasten the integration of sustainability and financial reporting, which is pretty much an inevitable long-term development as carbon emissions carry a financial implication. That may not be so good for niche carbon management players. The well-entrenched financial solutions providers will have the upper hand if the two are integrated, potentially another reason for a shake-out in this booming green ICT sector.