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• examine the reasons for the increased demand for and extent of non…

- - - - The increase in business profitability and ability to manage risk will also benefit the business’s reputation and brand, including its licence to operate and its ability to raise external funds.
        
        The cost of not adjusting to climate change
- - - - • Sustainability reporting on economic, social and environmental performance
        • Non-financial issues are not solely environmental.
        • Many large companies publish sustainability reports, possibly using the Global Reporting Initiative (GRI) Framework.
    - - Indicate aspects of performance that might be included in reports.
        Focus on disclosures about material sustainability issues (‘material aspects’).
        The Guidelines provide a framework for sustainability reporting in a standardised form.
        Standardisation makes comparisons possible (over time, and possibly with other similar entities).
        
        The Global Reporting Initiative (GRI) is an attempt to encourage standardisation of sustainability
        reporting, and better quality reporting.
      - Boundaries
        • Sustainability impacts created by an entity may occur outside as well as within the entity.
        • Need to decide on the reporting boundaries for material impacts
      - Disclosure in G4 reports
        Two kinds of disclosures:
        • General Standard Disclosures (GSDs)
        • Specific Standard Disclosures (SSDs)
        SSDs then divided into: (i) Disclosures on Management Approach; and
        (ii) Indicators.
        
        Seven categories of GSDs:
        • strategy and analysis;
        • organisation profile;
        • identified material aspects and boundaries;
        • stakeholder engagement;
        • report profile;
        • Governance; and
        • ethics and integrity.
        For each category there are core disclosures and comprehensive disclosures. Entities choose which set of general standard disclosures to make, core or comprehensive
        In addition, an entity reports SSDs on material aspects of performance that have been identified by the entity
        
        IGORSES
        :
        
        In each of these categories, there is a set of basic disclosures that an organisation is required to make. The G4 guidelines provide 58 GSDs. If the reporter chooses to report ‘in accordance—core’, it has to report on 34 GSDs. If the reporter choose to report ‘in accordance—comprehensive’, it has to report on all 58 GSDs. Both options are available for an organisation of any type, size, sector or location
        
        The choice between the two options is driven by the organisation’s reporting needs and, ultimately, the stakeholders’ information needs
        
        GRI emphasises its impartiality and reinforces the role of stakeholders in assessing the reporting performance of the organisation (GRI 2013a).
        
        Building blocks
        
        The content of sustainability reports prepared under the G4 guidelines is shaped by a three-level structure comprising categories, aspects and individual indicators. Three categories are the main focus of the guidelines:
        
        economic;
        
        environmental; and
        
        social.
      - gri!!!!!
      - principles of report content
        SiScMC
        
        principles of report content!!!
        
        Material aspects are defined by the G4 guidelines as:
        … those that reflect the organization’s significant economic, environmental and social impacts; or that substantively influence the assessments and decisions of stakeholders. To determine if an Aspect is material, qualitative analysis, quantitative assessment and discussion are needed (GRI 2013b, p. 92).
      - gri principles for report quality
        CBRACT
        
        principles for rport quality!!!!
      - The purpose of sustainability reporting as stated by the GRI is:
        … the practice of measuring, disclosing, and being accountable to internal and external stakeholders for organisational performance towards the goal of sustainable development (GRI 2006, p. 3).
        
        The GRI reporting framework is a practical application of sustainability reporting. Many countries do not have specific standards on sustainability reporting and are therefore adopting the comprehensive framework provided by the GRI.
      - GRI has also attempted to align its framework with other pronouncements, such as those issued by the OECD and the UN covering multinational organisations and human rights.
- - - - TOET
        • Increased transparency to shareholders, clients and the public audience.
        • Identifying how the organization copes with threats arising from climate change.
        • Highlighting the business opportunities available.
        • Enhanced ability to increase efficiency and reduce unnecessary costs (CDP 2013b).
      - The information provided to the CDP by companies is increasingly being used by other parties to develop sustainable supply chains. Due to either legislation or market lobbying, organisations are now becoming more conscious of climate and environmental performance over their whole supply chain.
  - - - – Water Accounting Conceptual Framework
        
        – AWAS1 (2012) first water accounting standard on Preparation and Presentation of General Purpose Water Accounting Reports
        
        – AWAS2 on assurance engagements on general purpose water accounting reports.
        
        KE water!!!!
  - - - • Some disclosure requirements. In Australia:
        ‒ ASX rules requiring listed companies to provide details of performance in relation to any relevant environmental legislation
        ‒ also Operating and Financial Review (OFR) to include discussion of significant environmental and other sustainability risks
        ‒ Corporate Governance Principles and Recommendations (2014): An entity should disclose whether it has significant exposure to environmental and social sustainability risks and if so how these are being managed.
        
        The inclusion of this recommendation reflects growing recognition of the importance of sustainability risks to investors’ medium- and long-term decisions.
        
        Outside of traditional financial reporting, there has been increased emphasis on the reporting of natural capital, which is a major component of the sustainability reports that are being produced. The major reporting framework in place is the Global Reporting Initiative (GRI) (discussed earlier), which covers aspects of natural capital for which both quantitative and qualitative reporting are commonly included in sustainability reports. Examples of natural capital reporting, under the CDP and water accounting,
        
        Within the new corporate reporting approach of IR discussed earlier, natural capital is one of the six capitals that are required to be reported on, if material to the organisation. Where material, the associated risks and opportunities and the increased emphasis to report on these (either by producing an integrated report, a sustainability report or other reporting mechanisms such as CDP or water accounting) means that it is necessary to have a natural capital reporting system in place.
    - - There are a number of systemic reasons for this: ABIFFS
        
        Our entire economic and financial system is based on flawed assumptions of infinite resources and perpetual equilibrium in the natural ecosystem.
        
        Our thinking and behaviour are overly dominated by purely financial measures of progress and ‘success’ such as gross domestic product (GDP), revenues, profit, cash-flows and earnings per share.
        
        The structures of modern accountancy are derived historically from societies and economies that assumed that nature’s abundance would last indefinitely.
        
        Our business models and practices do not reflect how business is an integral part of a wider, complex system.
        
        The focus of the vast majority of businesses is on short-term financial performance and annual returns.
        
        Perhaps, most importantly, we lack the frameworks and systems needed to account for the relationship between natural capital and business strategy and performance.
      - It is often argued in business that we can’t manage what we can’t measure. Most companies do not understand the complexities of natural capital, nor do they have the approaches or tools for accounting for the natural capital that their business draws upon.
        
        However, this is changing, with some organisations developing their own approach to quantify, price or otherwise account for natural capital externalities. This enables them to deal with these externalities strategically
    - - While such individual initiatives are to be applauded, there are advantages in developing standardised approaches. Developing a standardised approach means that each organisation need not bear the costs of developing its own reporting methodology.
        In addition, a standardised approach becomes widely known and assists with comparisons between companies.
- - - - This means that assurance practitioners applying AA1000AS are more likely to consider an organisation’s sustainability performance and recommend improvements rather than to certify or provide an opinion on the appropriateness of the data and reports, given the underlying data and systems.