MBC3813

GREEN ACCOUNTING
AND REPORTING

CHAPTER 2:
BRIEF HISTORY OF SUSTAINABILITY
REPORTING
mhafiz@uts.edu.my
BRIEF HISTORY OF SUSTAINABILITY
REPORTING
2.1 Historical Perspectives
2.2 Recent Development and Initiatives
2.3 Status of Business Sustainability and Sustainability Reporting
2.4 Prospective Aspects of Sustainability Reporting
 LEARNING
OUTCOMES
At the end of the topic, students should be able to:
 To outline the history of sustainability reporting from 1960s to present.
 To discuss the progress made in sustainability reporting.
 To identify the status of business sustainability and sustainability
reporting and assurance.
 To list prospective aspects of sustainability reporting.
 LET’S WATCH!
https://www.youtube.com/watch?v=A7hfQ8mTVrU

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 2.1 HISTORICAL PERSPECTIVES
Year Details
1960s -1970s Europe Organization started to recognize their roles in the society above and
22 April 1970 United States beyond profit maximization.
(Earth Day)
France, Netherland, The acceptance of CSR in France and Netherlands encouraged the
Austria, Germany, introduction of Environmental reports in countries such as Austria,
Switzerland Germany and Switzerland.
1987 United States The movement gained momentum with a 1987 UN report, Our
Common Future (Brundtland Report) which promoted sustainability
as a means of balancing economic and environmental issues and
considering the tradeoff between short-term economic benefits and
long-term impacts on future generations.

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Year Details

1980s United The creation of U.S Environmental Protection Agency (EPA) and the
States passage of the Clean Air, Clean Water, and Endangered Species Acts
were big steps in the development of the environmental aspect of
sustainability reporting.

1980s US & UK Ethical Investment funds promoted ethical and social performance by
excluding the firms that operated in tobacco or alcohol industries.

1989 Boston Due to the 1989 Exxon Valdez disaster, the U.S.-based Coalition for
Environmentally Responsible Economies (Ceres), a Boston-based nonprofit
organization, establish the “Ceres/Valdez Principles”. The principles defined
a set of environmental reporting guidelines on behalf of the Social
Investment Forum (SIF).

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 Year Details

1990s Reporting on both financial and nonfinancial key performance indicators gained
some acceptance through the introduction of values reporting, with a primary focus
on social, environmental and animal protection issues.

1997 Ceres started a Global Reporting Initiative (GRI) aimed at developing a

sustainability information disclosure framework.

1997 Finland Finland was the first country that adopted a mandatory sustainability reporting law
in 1997. Other countries adopting similar laws are Australia, Austria, Canada,
China, Denmark, France, Germany, Greece, Indonesia, Italy, Malaysia,
Netherlands, Norway, Portugal, Sweden and the United Kingdom.

1999 UNEP joined with Ceres as a partner in the GRI project.

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Year Details

2000 The first GRI Sustainability Reporting Guidelines were issued and almost 50
companies issued sustainability report using the guidelines.

2001 • GRI became an independent organization and subsequently relocated at

Netherlands.
• GRI was launched to establish reporting guidelines for the triple bottom line:
economic, social and environmental performance.
• During this period, voluntary CSR reports gained momentum due to demands
by socially responsible investors as well as managerial initiatives on brand
reputation building and encouragements from policymakers, regulators and
standard-setters.

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2.2 DEVELOPMENT AND INITIATIVES
● Introduction of the sustainable stock exchanges initiative by United Nations Principles for
Responsible Investment (UNPRI).
 Facilitates dialogues between exchanges and investors, companies and regulators to
improve corporate transparency on sustainability performance by encouraging responsible
long term and sustainable approaches to investment. This type of interaction can support
sustainability initiatives.
 For example, in January 2011 a group of investors representing $1.6 trillion in assets under
management sent a letter to top 30 global stock exchange requesting them to demand better
internal corporate governance by their listed companies. The investors asked for disclosure
of how the boards address sustainability issues and also for exchanges to consult with listed
companies on how sustainability and integrated reporting can be infused into long term
strategic decision making and corporate reporting.

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● Global Reporting Initiative (GRI)
○ GRI was launched in 1997 to bring consistency and global standardization to sustainability
reporting.
○ GRI initially focused on incorporating environmental performance into corporate reporting
and with its “Sustainability Reporting Guidelines” which were published in 2000, 2002,
2006 and 2011.
○ GRI is now considered the sole global standard-setter in sustainability reporting.
○ The current version,G4 Guidelines released on 2013 which cover economic, governance,
social and environmental performance.

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● Securities and Exchange Commission (SEC) Report
 Feb 2010, SEC issued the report “Commission Guidance Regarding Disclosure Related to
Climate Change”.
 This report requires public companies to disclose material financial and reputational risks
associated with global climate change.
 This rule along with the BP Gulf of Mexico oil spill in April 2010, encourages regulators to
establish rules requiring more disclosure on sustainability performance.

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● The International Integrated Reporting Committee (IIRC)
○ IIRC was formed in August 2010
○ The primary goal is to establish a globally accepted integrated reporting framework to
standardize reporting on sustainability performance information.
○ The IIRC promotes integrated reporting which is intended to make the link between
sustainability and economic value by focusing on the interrelationships between all aspects
of business sustainability.

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● The International Organization for Standardization (ISO) – ISO 26000
○ In November 2010, ISO developed “ISO 26000”, guidelines for social responsibility reporting.
○ The guidelines focus primarily on relevance and the value of public reporting on social responsibility
performance to both internal and external users.
○ ISO 26000 is a globally accepted guidance document for social responsibility relevant to all types and
sizes of entities, from governmental to non-governmental organizations and private businesses to public
companies, small to large.
○ ISO 26000 also covers a broad range of activities, including economic, social, governance, ethical and
environmental issues.
○ ISO 26000 goes beyond profit maximization and social performance to cover all EGSEE dimensions of
sustainability.
○ Social responsibility performance, as promoted in ISO 26000 correlates to sustainability performance
because each requires the other.

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● The Singapore Exchange (SGX) – Sustainability Reporting Guidance
○ In July 2011, the Singapore Exchange (SGX) introduced a “Sustainability Reporting
Guidance” framework, requiring the listed companies to disclose accountability for their
operations and conduct business in a sustainable manner.
○ This framework provide the policy statement that sets out principles, questions and answers
to assist listed companies in expanding their conventional financial reports to
emerging EGSEE sustainability reports.

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● Adoption of sustainability reporting has made significant progress during the past decade.
● In 2000 about 44 organizations followed the GRI guidelines to report a range of sustainability
information. In 2010, the number of organizations disclosing sustainability reports grew to 1,973.
As of September 2011, more than 3,000 companies disclose sustainability information.
● The terms sustainability reporting, integrated reporting, environmental, social and governance
(ESG) reporting, corporate social reporting (CSR) reporting, and risk compliance and governance
(RCG) have been used interchangeably in the business literature to describe reports with a wide
range of coverage and different degrees of focus on risk, environmental, social or governance
issues.

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 2.3 STATUS OF BUSINESS SUSTAINABILITY AND
SUSTAINABILITY REPORTING AND ASSURANCE

● Reporting of sustainability performance has been for most part voluntary, as more than 3,000 business
organizations worldwide are now issuing stand alone sustainability reports. This trend is expected to continue
as investors demand more sustainability information.
● An overall and comprehensive sustainability performance report can be achieved when organizations focus on
satisfying the needs of all stakeholders, including employees, clients, the environment and society as well as
investors. Business should balance the priorities of all stakeholders and protect their interests.
● According to economic theory, the primary goal of business is to maximize profit to ensure value creation for
shareholders. As such any other activities that deviates from this goal (e.g. social, environmental) can damage
investment value unless they contribute to the promotion of the business.

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● Sustainability reporting enables companies to disclose their strategies, commitments and
performance in all EGSEE areas
○ therefore ensuring the achievement of long-term financial targets
○ while also mitigating negative social and environmental impacts.
○ The idea is that a company must extend its focus beyond making profits by considering the
impact of its operation on the community, society and environment.

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The 2011 annual sustainability global executive survey conducted by the MIT Sloan Management
Review and the Boston Consulting Group reports the following trends:
1. Sustainability is gaining in importance. Over 75% of more than 4,700 executives said
sustainability-related strategies are necessary to be competitive.
2. More than 68% of respondents stated that their commitment to sustainability has increased to
59% in 2010 (from 25% in 2009).
3. About 74% believe that their sustainability commitments will increase in the future.
4. Nearly 50% said that their sustainability commitments could influence their employment
choices.

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 ● A need for new reporting and accountability reporting
○ The widening focus on sustainable performance and long-term, value
adding strategies has driven the need for new reporting and
Sustainability accountability structures
Reporting ○ Which extend beyond financial statements into nonfinancial key
performance indicators based on environmental impact and social
responsibility
● GRI
○ GRI reporting process enables organizations to disclose sustainability
information based on one of three application levels (i.e., A,B or C)
depending on the extent of information provided.
○ GRI also recommends that external experts provide assurance which
Assurance can be designated with a + added to the application level declared.
○ Alternatively, GRI can examine the declared content of sustainability
reports and express an opinion on the extent of compliance with GRI
guidelines, but not comment on the quality or reliability of the
disclosed sustainability information.

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2.4 PROSPECTIVE ASPECTS OF
SUSTAINABILITY REPORTING
● sustainability reporting and assurance guidelines and practices should be advanced and
promoted to create consistency in reporting of sustainability information.
● disseminate high-quality financial and non-financial information regarding all five
EGSEE dimensions of sustainability performance to enable all corporate stakeholders
to make sound decisions.

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THE END
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 Class Activity!

You are given an article related to Sustainability Reporting. From your reading, come up
with a (mind map/slide/video) that consist of
i. Introduction
ii. Main points (depends on your article – Example: Status/Prospective of sustainability
reporting/Development or Initiatives/Events)
iii. Conclusion (Example: Summary/Recommendation/Expectation etc.)

You are given 1 week to discuss and explore the case study.
Each group will present their findings in 10 minutes presentation.

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