Global perspectives

Lila Karbassi

IIRC Council Member

Chief, Programmes, United Nations Global Compact

There is an increasing demand for consistent, comparable and verifiable corporate sustainability data. Corporate sustainability reporting is gaining traction and importance for a range of actors, including corporations, investors, regulators and policymakers. Effective reporting on non-financial matters is key in building trust with all stakeholders and demonstrating contributions towards broader societal goals as defined under the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs).

The corporate sustainability reporting landscape has shown vast dynamism over the past decade, with an evolving set of reporting frameworks or standards and a multitude of actors providing sustainability data related services through analysis, rankings and ratings. This proliferation has been perceived by many as fragmentation, causing overburden for companies as emitters of corporate sustainability data.

Enhanced transparency, accountability and integrated thinking can help drive corporate sustainability.

An overwhelming number of studies show the positive correlation between the integration of environmental, social and governance (ESG) matters in decision-making and financial performance. This is an indication that companies that better manage sustainability-related issues are more resilient over the long-term and better prepared to face market disruptions.

A growing number of institutional investors and asset managers are calling for heightening scrutiny of ESG issues, putting analysis of financial performance on a par with non-financial assessments. While this currently applies by and large to the disclosure of climate risks, there is a need to expand the scope to other environmental and planetary considerations as well as societal and good governance matters.

Over the years, the IIRC has been instrumental in keeping the issues of transparency and disclosure high on the corporate agenda and has undeniably contributed to demonstrating interlinkages between financial performance and sustainability performance. The UN Global Compact wishes to congratulate the IIRC on its ten year anniversary mark and looks forward to continuing to work collaboratively with businesses to drive higher levels of accountability and transparency in corporate reporting.

Sustainability reporting has to evolve to drive transformational change by businesses.

The case for consistent, comparable and verifiable data has never been stronger. The UN Global Compact welcomes and supports current efforts by partner organizations such as the IIRC to drive alignment and convergence of corporate sustainability standards, frameworks and metrics. Further regulation of non-financial reporting, such as developments under the European Union and others, are expected to have a major impact in the field.

At the heart of the concept of accountability and transparency is a principles-based approach to sustainability and materiality. This entails identifying and addressing both positive and negative impacts from business operations and value chain to people and the environment, including salient human rights issues.

With these principles in mind and as we kick-start the Decade of Delivery for the SDGs against the backdrop of the fast-changing reporting landscape, the UN Global Compact is undertaking a comprehensive review of its own reporting framework, the Communication on Progress. Our aim is to strengthen transparency and accountability with a uniform approach for tracking progress, inspiring leadership, and fostering ambitious goal setting on the Ten Principles and the SDGs.