UN Sustainable Development, Sustainable Development, Sustainable Development Goals, sustainable development definition- Nowadays the big problem is sustainable development, Sustainability is the buzz word of the moment. The evidence that global warming threatens the planet is terrifying. And it seems sustainability has its roots in a groundswell of desire to leave a survivable environment for our grandchildren. But sustainability means more than this. The United Nations Global Compact (UNGC) identifies five principles for sustainability and it’s worth taking a look because it is an eloquent framework:

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UN Sustainable Development | Goals  | Problems | Solutions

  • Principled business: Businesses should operate with integrity — respecting fundamental responsibilities in the areas of human rights, labor, environment, and anti-corruption.
  • Strengthening society: Sustainable companies look beyond their own walls and take actions to support the societies around them.
  • Leadership commitment: A public commitment by the chief executive, with support from the board of directors, is required to participate in the Global Compact.
  • Reporting progress: A Communication on Progress (COP), typically included as part of their sustainability or annual report, providing company stakeholders with an account of their efforts to operate responsibly and support society.
  • Local action: Companies should act within their local community to deliver on the above.

United Nations is a powerful bunch, with lots of money and clout. So it’s perhaps not surprising that 13,000 entities have signed up. Notice that the LINGC has this special report named the ‘COP’ But the granddaddy of sustainability reporting is the Global Reporting Initiative (GRI). These guys pioneered sustainability reporting in the 1990s when most of us were still coming to terms with global warming. Their moral authority means that 82% of the top 250 entities worldwide use GRI.

Another international consortium, the worthy Climate Disclosure Standards Board (CDSB), is attempting to advance its own sustainability reporting guidance. In the IJS, the Sustainability Accounting Standards Board (SASB) has issued standards that enable listed entities to comply with US Securities and Exchange Commission filing regulations. In 2014, the European Parliament passed a regulation that makes qualifying EIJ entities disclose sustainability information. In Japan, Singapore, and Taiwan, draft legislation is planned to 26 make sustainability reporting mandatory. And so the list goes on.

The problem

Problem? It is that all this legislation and regulation is clogging up the natural process of communication. A Singaporean business with substantial supplies from Taiwan and debt listed in the US has those three national bodies to think about in the context of sustainability even before the business looks at the alphabet soup of UNGC and GRI and CDSB.

This weight of rules has two effects. Reporting entities tend to report in order to fulfill the various rules instead of communicating and reporting entities to report huge volumes of information that users find difficult to manage. These problems each have a name. The first is called ‘boilerplate’, the second is called ‘clutter’, and they are dreadful for the underlying corporate reporting. The result is huge unmanageable annual reports with impenetrable legal language.

Scary thing is that much of the regulation is recent, but sustainability reporting has been developing for many years. To take a real example, Coca-Cola is a US entity and LIS reporting has a reputation for useless cluttered boilerplate. But Coca-Cola already had great things on sustainability before the regulation proliferated.

I remember seeing a lovely colorful page in their annual report a few years back showing where they get their water and how they dispose of waste so 2014/2015 as not to poison the environment. It was good public relations, sure. And there might have been a touch of enlightened self-interest in the storytelling. But the point is Coca-Cola was communicating sustainability information and the regulation may snuff this out.

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The solution

Solution? Integrated reporting. Well, that is one view anyway. Integrated reporting means two slightly different things.

  1. An idea. An entity should strive to deliver a single coherent annual report with clear messages that consistently resonate throughout the report by addressing the various divergent regulatory requirements with an eye to the big message throughout.
  2. Report. In order to deliver a single coherent message to the majority of users, the entity should produce a mini-report called the ‘integrated report’ that focuses on the key issues and allows the necessary legal clutter to be relegated to the annual report. That seems a sensible short-term solution for the reporting entities to use and is the spine of Coca-Cola’s solution. The long-term solution is that all the regulators should bang their collective heads together to produce a single body of guidelines — but I cannot see that happening any time soon.