Disclose

Organisations disclose information about practice and performance to various external stakeholders

Last updated: November 23, 2021

Overview

Disclosure and reporting are a key form of communication between an organisation and its stakeholders on sustainability management practices and performance, and serves as an input into stakeholders’ own decisions.

The following sections distinguish an organisation’s sustainability-related financial disclosure — which pertains to reporting on sustainability matters to investors and other participants in financial markets – from its sustainability reporting, which encompasses reporting on sustainability matters to a broad range of stakeholders.

  • Sustainability-related financial disclosure provides insight into drivers of enterprise value. It aims to provide a sufficient basis for investors to assess the resources and relationships on which an organisation’s business model – and management’s strategy for sustaining and developing that model – depend.
  • Material sustainability-related financial disclosure therefore includes information that provides insights into factors that could reasonably be expected to influence investors’ assessment of the organisation’s enterprise value, including its ability to generate cash flows over the short-, medium- and long-term and the value attributed by investors to those cash flows.
  • For example, material information could include (but is not limited to) information about an organisation’s impacts on people and the natural environment, if those impacts could reasonably be expected to affect investors’ decisions, as well as events considered to have a low likelihood but a high potential impact on the entity’s future cash flows.
  • Some but not all sustainability matters that are relevant for investors’ assessment of an organisation’s enterprise value have already taken place at the reporting date (or are included in the projections of the cashflows that support valuations and estimates of future cash flows) and are therefore captured in existing financial accounting and related disclosures.
  • Analysis of an organisation’s significant impacts is a pre-requisite for identification of those sustainability matters that drive enterprise value.

Sustainability reporting

  • Sustainability reporting provides information about an organisation’s sustainability performance to a broad range of users. In sustainability reporting, sustainability matters are defined as “material” if they reflect significant impacts, as determined by the affected stakeholder.
  • Sustainability reporting is designed to inform assessments and decisions by a wide range of users who want to understand an organisation’s positive and negative contribution to sustainable development. Such users may include business partners, civil society organisations, consumers, customers, employees and other workers, governments, local communities, non-governmental organisations, shareholders, suppliers, trade unions, and vulnerable groups.
  • In sustainability reporting, organisations articulate their performance in the context of broader sustainable development conditions and goals.

Standards and frameworks differ as to how far they recommend organisations disclose the contextual information required to assess, value or benchmark performance. Most reporting standards include disclosures on the organisation’s management approach, governance, objectives and strategy. Similar disclosure requirements accompany some principles and standards of practice.

Figure 1: Reporting to meet the needs of all stakeholders

Sustainability reporting and sustainability-related financial disclosure should be seen as interrelated reporting concepts, with shared methodologies for the same disclosure requirements wherever appropriate.

The sustainability topics included in each report may change over reporting periods, as materiality is a dynamic concept and topics can become more or less relevant to an organisation’s stakeholders over time.

Figure 2: Different value perspectives: an example

Resources

CDSB Framework for Reporting Environmental and Climate Change Information

Last updated: 2019

Reporting Framework offers companies seven guiding principles and 12 reporting requirements to help prepare (financially) material and decision-useful environmental disclosures for the mainstream report. CDSB additionally offers topic-specific guidance for companies, such as on climate-related reporting and climate accounting.

Use this resource to:

  • Integrate and act: Follow CDSB’s guiding principles to understand how to prepare environmental and climate change information in a way that connects to mainstream financial information.
  • Disclose: Report on financially material environmental and climate change information.

Integrated Reporting Framework

Last updated: 2021

Reporting framework that provides principles-based guidance for organisations seeking to create an integrated report, containing both financial and non-financial information. The guidance is tailored specifically for private sector, for-profit companies, but the Framework can also be applied to the public sector and non-for-profit organisations.

Use this resource to:

  • Integrate and act: Follow integrated thinking principles to improve the organisation’s understanding of the connectivity and interdependencies between the range of factors that affect an organisation’s ability to create value over time.
  • Disclose: Report to providers of financial capital on sustainability topics that are likely to affect value creation over the short-, medium-, and long-term.

TCFD recommendations

Last updated: 2017

Guidance that contains disclosure recommendations for information on the material financial impacts of climate-related risks and opportunities, including those related to the global transition to a lower-carbon economy. The TCFD recommendations are structured around the four pillars of Governance, Strategy, Risk Management, and Metrics and Targets.

Use this resource to:

  • Disclose: Follow recommendations to structure climate-related financial disclosures. Other voluntary standards can be used in conjunction with TCFD recommendations.

SASB Standards

Last updated: n/a

Reporting standards that provide industry-specific disclosure topics and associated metrics that measure performance against 26 General Issue Categories (or sustainability topics). Management or mismanagement of performance on these sustainability topics may create, preserve or erode value for the typical company in a given industry over time.

Use this resource to:

  • Identify sustainability topics: Identify the relevant industry standard to find industry-specific topics and accounting metrics. These standards can be a useful input when identifying which sustainability topics to disclose.
  • Measure sustainability performance: Identify metrics from the standards. The standards themselves provide guidance on selecting metrics to report. Using standardised metrics helps the organisation and its stakeholders compare performance with others.
  • Estimate value created: SASB evaluates sustainability topics for inclusion in the Standards by assessing whether a given topic is reasonably likely to materially affect the financial condition, operating performance, or risk profile of a typical company within an industry. Collecting information on these metrics provides insight that can inform estimation of value to the organisation.
  • Disclose: Report to providers of financial capital on sustainability topics that are likely to affect how value is created, sustained or eroded for the organisation over the short-, medium-, and long-term.

Sustainability reporting standards

GRI Sector Standards

Last updated: n/a

GRI is developing standards for 40 sectors to compliment their current topic standards.

Use this resource to:

  • Identify sustainability topics: Use the list of topics listed for each Sector Standard as an input when identifying sustainability topics to measure.
  • Disclose: Report to all stakeholders on ‘material topics’ that reflect the organisation’s most significant impacts. The Sector Standards are a helpful starting point for identifying likely significant impacts.

GRI Topic-specific Standards

Last updated: n/a

Reporting standards designed to help organisations understand and disclose their impacts in a way that meets the needs of multiple stakeholders. These standards are arranged by a set of Universal Standards that apply to all organisations, and 35 Topic Standards that contain disclosures for impacts related to economic, environmental and social topics.

Use this resource to:

  • Measure sustainability performance: Identify metrics to measure for each significant topic. The standards themselves provide guidance on selecting metrics to report. Using standardised metrics helps the organisation and its stakeholders compare performance with others.
  • Disclose: Report to all stakeholders on ‘material topics’ that reflect the organisation’s most significant impacts.

GRI Universal Standards

Last updated: 2021

Reporting standards designed to help any organisation understand and disclose their impacts in a way that meets the needs of multiple stakeholders. There are a set of Universal Standards that apply to all organisations, and 35 Topic Standards that contain disclosures for impacts related to economic, environmental and social topics.

Use this resource to:

  • Identify sustainability topics: Use the guidance in the Universal Standards (GRI 1, 2 and 3) when conducting a materiality assessment for reporting. This type of materiality assessment also helps identify sustainability topics to measure and manage.

CDP’s Disclosure System

Last updated: 2021

Tool for investors, companies, cities, states and regions to manage their environmental impacts. The CDP Disclosure System supports companies in making their environmental impact transparent to stakeholders, better understanding how they can reduce their impact, and act to become environmental leaders.

Use this resource to:

  • Identify sustainability topics: Fill in CDP’s questionnaires to understand the relevant climate change, forests and water security impacts to measure, based on the organization’s size, sector, and geography.
  • Measure sustainability performance: Use CDP’s questionnaires as sets of environmental metrics.
  • Assess impact: Fill in the questionnaires to track change in performance over time. Each question is scored – some with reference to social or ecological thresholds – to help the organisation determine whether it is performing sustainably on that topic.
  • Disclose: Report to all stakeholders on climate change, forests and water security. The questionnaires provide a framework for companies to report environmental information to their stakeholders covering governance and policy, risks and opportunity management, environmental targets and strategy, and scenario analysis. Receive an A-D grading based on questionnaire responses.
  • Benchmark: Tool allows companies to benchmark their environmental performance against their industry peers and receive feedback on their progress each year. The information disclosed is also used by financial markets for stewardship and engagement, in investment research, new financial products, and global indices and ratings.
Last updated: 2021

This short guidance recommends an approach to SDG-related disclosure based on the approach set out in the Task Force on Climate-related Financial Disclosures (TCFD).

The Global Investors for Sustainable Development Alliance (GISD) is a group of 30 large investment firms convened by the United Nations Secretary General. The GISD sits within the United Nations Department of Economic and Social Affairs (UNDESA) and aims to scale-up long-term finance and investment in sustainable development.

Use this resource to:

  • Disclose: Organisations can use the recommendations to guide their disclosure related to SDGs.
Last updated: 2021

This report recommends a set of sector-specific, SDG-related metrics by drawing on metrics from existing standard setters and benchmarks.

The Global Investors for Sustainable Development Alliance (GISD) is a group of 30 large investment firms convened by the United Nations Secretary General. The GISD sits within the United Nations Department of Economic and Social Affairs (UNDESA) and aims to scale-up long-term finance and investment in sustainable development.

Use this resource to:

  • Identify sustainability topics: The report suggests SDGs and related sustainability topics for eight sectors. Organisations can consider their sector and check whether the SDGs and related sustainability topics suggested are applicable to their own business.
  • Measure sustainability performance: The report suggests SDG-related metrics for eight sectors. Organisations can consider measuring the metrics specific to their sector.
  • Disclose: Organisations can include the recommended SDG-related metrics in their disclosure to stakeholders.

SDG Impact Standards for Enterprises

Last updated: 2021

Practice standards that provide a common language and a system for integrating sustainable development issues, the Sustainable Development Goals and impact management into business and investment decision-making. These practice standards also outline the ‘ABC’ classification methodology, which helps organisations assess whether an impact ‘Acts to reduce harm’, ‘Benefits stakeholders’, or ‘Contributes to solutions’ in relation to the SDGs.

Use this resource to:

Set up processes and embed practices that orient an organisation towards achieving the SDGs. The SDG Impact Standard contains practice indicators that are relevant to several actions. Use the links below to access guidance for different practice indicators. Alternatively, view the whole guidance document here.


Definitions

Enterprise value

Market capitalisation (shareholder value) plus the market value of net debt. It is determined by capital market participants based on their estimation of the present value of expected cash flows spanning the short-, medium-, and long-term. Essential inputs in determining enterprise value include corporate reporting in financial statements, as well as reporting on sustainability matters that it is reasonably possible will positively or negatively affect the company’s cash flows over time (i.e. affecting revenue, costs, assets, liabilities, cost of capital and/or risk profile). The term is widely used and is technically specific in capturing the notion of expected value creation/preservation/erosion over time for a company’s equity and debt investors. This expected value creation/preservation/erosion is fundamentally interdependent with a company’s creation/preservation erosion of value for its other stakeholders.

Source: Value Reporting Foundation (VRF)

Management

The processes used by the organisation to identify, assess and manage sustainability performance.

Source: Task Force on Climate-related Financial Disclosures (TCFD)

Significant

An impact is significant if the change in well-being (or the condition of the natural environment) caused by the organisation is big and/or occurs for many people, lasts for a long time and is important to those affected. See Assess Impact for information on collecting these data points..

Source: Social Value International (SVI)

Stakeholder

An entity or individual that can reasonably be expected to be significantly affected by the organisation’s activities, products and services, or whose actions can reasonably be expected to affect the ability of the organisation to successfully implement its strategies and achieve its objectives.

Source: Global Reporting Initiative (GRI); OECD Due Diligence Guidance for Responsible Business Conduct; OECD Well-being Framework; Value Reporting Foundation (VRF) Integrated Reporting Framework

Standard

Rules or guidelines for common and repeated use to which organisations demonstrate adherence with which compliance is not necessarily mandatory in law. Standards are created through a process of multi-stakeholder consultation.

Source: Adapted from ISEAL

Sustainable

Meeting the needs of the present without compromising the ability of future generations to meet their needs or overshooting Earth’s ecological limits (Brundtland Commission). In context of impact measurement, outcomes for people are sustainable if they are within the acceptable range determined by societal thresholds, and outcomes for the natural environment are sustainable if they are within the acceptable range determined by ecological thresholds (Science-Based Targets Initiative and Kate Raworth). Sustainability is the quality of being able to continue over a period of time (Cambridge English Dictionary).

Source: Brundtland Commission; Science-Based Targets Initiative; Kate Raworth; Cambridge English Dictionary

Disclosures about an entity’s performance on sustainability matters that drive enterprise value, including information about an entity’s governance, strategy and risk management of those matters.

Source: Value Reporting Foundation (VRF)

Sustainability reporting

A company’s practice of reporting publicly on its most significant economic, environmental, and/or social impacts, and hence its contributions – positive or negative – towards the goal of sustainable development.

Source: Global Reporting Initiative (GRI)

Sustainability topic

A term used broadly to denote aspects of stakeholder well-being (e.g. health, wealth, safety), or business activities or practices that are evidenced drivers of well-being (e.g. employment, diversity and inclusion). This term is synonymous with ‘sustainability matters’, ‘impact areas’, ‘impact categories’ or ‘general issue categories’ which are similar terms used by different standard setters.

Source: OECD Well-being Framework; Global Reporting Initiative (GRI) Sustainability Topics; Sustainability Accounting Standards Board (SASB) General Issue Categories; IRIS+ Categories; United Nations Environment Programme Finance Initiative (UNEP FI) Impact Areas

Was this content useful?

If you would like to give us feedback on how we can improve this content, please complete our feedback form.