Sustainability and integrated reporting
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Sustainability and Integrated
Reporting
Arthik Davianti
1. Sustainable Development
2. Accounting and Disclosure
3. Corporate Social Responsibility
4. Corporate Sustainability Reporting
5. Integrated Reporting
6. What’s next?
SUSTAINABLE DEVELOPMENT
CONFLICT
of rights…
Whose rights is it???
People vs Nature
Present vs Future
Sustainable Development
1987 1992 2012
Sustainable Development
Accounting and Disclosure
Information
Account
Economic Account
Social Account
Environmental Account
Sustainability Account
Balance???
Ethics & Moral
Accountability
Accounting and Disclosure
Mandatory versus Voluntary
Law – Guidelines – Standards
Numbers versus Narratives
Financial measurements
Non-financial measurements
Corporate Social Responsibility
Follow the money??
Dimensions:
The stakeholder dimension
The social dimension
The economic dimension
The voluntariness dimension
The environmental dimension(Carroll, 1999; Dahlsrud, 2008)
Corporate Social Responsibility
Corporate Sustainability
Reporting
What are we looking for?
A medium
Reporting?
The Future We Want Paragraph 47 – Rio+20 Engaging major group and other stakeholders
We acknowledge the importance of corporatesustainability reporting, and encourage companies, whereappropriate, especially publicly listed and large companies,to consider integrating sustainability information into theirreporting.
We encourage industry, interested government andrelevant stakeholders, with the support of the UnitedNations system, as appropriate, to develop models for bestpractice and facilitate action for the integration ofsustainability reporting into account experiences fromalready existing frameworks and paying particular attentionto the needs of developing countries, including for capacitybuilding.
Sustainability Reporting
WHAT IS GRI?
The Global Reporting Initiative (GRI) is a
leading organization in the sustainability field.
GRI promotes the use of sustainability
reporting as a way for organizations to
become more sustainable and contribute to sustainable development.
AccountAbility is a leading global organisation providing innovative solutions to the most critical challenges in corporate responsibility and sustainable development.
The AA1000 Series of Standards based on the principles of:Inclusivity - people should have a say in the decisions that impact on themMateriality - decision makers should identify and be clear about the issues that matterResponsiveness - organizations should be transparent about their actions
AccountAbility works to:• Help its clients and members improve business performance and
build sustainable competitive advantage• Enable open, fair and effective approaches to stakeholder
engagement• Develop and recognise responsible competitiveness in
companies, sectors, countries and regions• Create effective collaborative governance strategies for
partnerships and multilateral organisations that are delivering innovation and value
• Set and influence sustainability standards• Help corporations, non-profits, and governments embed ethical,
environmental, social, and governance accountability into their organisational DNA.
The Ten Principles The UN Global Compact's ten principles in the areas of human rights, labour, the environment and anti-corruption enjoy universal consensus and are derived from:
• The Universal Declaration of Human Rights• The International Labour Organization's Declaration on
Fundamental Principles and Rights at Work• The Rio Declaration on Environment and Development• The United Nations Convention Against Corruption
The UN Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anti-corruption:
Human Rights• Principle 1: Businesses should support and respect the
protection of internationally proclaimed human rights; and• Principle 2: make sure that they are not complicit in human
rights abuses.Labour• Principle 3: Businesses should uphold the freedom of
association and the effective recognition of the right to collective bargaining;
• Principle 4: the elimination of all forms of forced and compulsory labour;
• Principle 5: the effective abolition of child labour; and• Principle 6: the elimination of discrimination in respect of
employment and occupation.
Environment• Principle 7: Businesses should support a precautionary
approach to environmental challenges;• Principle 8: undertake initiatives to promote greater
environmental responsibility; and• Principle 9: encourage the development and diffusion of
environmentally friendly technologies.Anti-Corruption• Principle 10: Businesses should work against corruption in all
its forms, including extortion and bribery.
Integrated Reporting
Integrated Reporting
The International Integrated Reporting Council (IIRC) was established in 2010.
<IR> is a process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation.
An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term.
Integrated Reporting
<IR> AIMS TO:
• Improve the quality of information available to providers of financial capital to enable a more efficient and productive allocation of capital
• Promote a more cohesive and efficient approach to corporate reporting that draws on different reporting strands and communicates the full range of factors that materially affect the ability of an organization to create value over time
Integrated Reporting
<IR> AIMS TO (CONTINUES):
• Enhance accountability and stewardship for the broad base of capitals (financial, manufactured, intellectual, human, social and relationship, and natural) and promote understanding of their interdependencies
• Support integrated thinking, decision-making and actions that focus on the creation of value over the short, medium and long term.
Integrated Reporting
<IR> IN THE CORPORATE REPORTING LANDSCAPE:• <IR> is about better reporting, not more reporting• <IR> is consistent with numerous developments in
corporate reporting take place within national jurisdictions across the world
• <IR> will provide the impetus for greater innovation in corporate reporting globally
• <IR> has a combined emphasis on conciseness, strategic focus and future orientation, the connectivity of information, and the capitals and their interdependencies
• <IR> emphasizes the importance of integrated thinkingwithin the organization.
Integrated Reporting
http://www.theiirc.org/international-ir-framework/
Integrated Reporting
Integrated Reporting
Integrated Reporting
Organization overview and external environment:
Strategic focus and future orientationConnectivity of information
Integrated Reporting
Organization overview and external environment:
Stakeholder relationship
Integrated Reporting
Value creation
Principles:• Strategy focus and
future orientation• Stakeholder
relationships
Integrated Reporting
Integrated Reporting
IR Guiding Principles
this extract
demonstrates:
• Connectivity
information
Integrated Reporting
IR Guiding Principles
this extract
demonstrates:
• Strategic focus and
future orientation
• Stakeholder
relationships
Integrated Reporting
What’s next?
Are we under
pressure??
Corporate Social
Responsibility
versus
Corporate Sustainability
Reporting
Sustainability Reporting
versus
Integrated Reporting
Sustainable Reporting vsIntegrated Reporting
Why has IR become a trending topic?
An explanation rests on the increasingly complex business environments and changing stakeholder needs that have resulted in an evolution of business information and annual reporting over the years (Eccles, Krzus, and Ribot, 2014).
Integrated reporting is a failure (Flower, 2015, p. 15)
a. The single report: The Integrated Report is not to become the firm’s primary report; it is an extra report alongside conventional financial statements and sustainability reports,
b. Sustainability: The Integrated Report is not to cover sustainability,
c. Stakeholders: The Integrated Report is not to cover in a comprehensive fashion the impact of the firm’s activities on stakeholders
d. Lack of impact: The IIRC places very few specific obligations on the preparer of an Integrated Report.
The focus of integrated reporting is to consider how an organisation creates value – rather than on measuring impacts – and accountants and sustainability practitioners and researchers have to date given little attention to how this might be done under a multiple capital model (Adams, 2015, p. 26).
Integrated Reports privilege a neo-liberal programmatic and incorporate the elements of sustainability that are aligned with underlying principles of capitalism (Thompson, 2015, p. 21).
A mandatory ‘comply or
explain’ regime
Mixed response
Opportunity versus Challenge
What’s next?
What’s next?
Raise to the challenge
Pursue the knowledge
What’s next?
Propose the perspective
of accounting as discourse
You must be THE CHANGE
you wish to see in the world(Mahatma Gandhi)
Sustainable Development
Accounting and Disclosure
Corporate Social
Responsibility
Corporate Sustainability
Reporting
Integrated Reporting What’s next?
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Thank youTerima kasih
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