eBusiness Weekly
Tawanda Collins Muzamwese
The rise in sustainability reporting
Over the past two decades, the number of companies making sustainability claims and writing Sustainability Reports has increased. According to the Global Reporting Initiative (GRI) the number of companies that have produced a sustainability report has increased and approximately 95 percent of the world’s largest firms publish some form of a sustainability report.
Of these published reports 46 percent to 50 percent have some form of assurance. Currently there are 25 952 reports recorded as published through the GRI database and more continue to be developed in different parts of the world. Zimbabwean corporates have already joined the bandwagon and have started to take sustainability reporting seriously. Even for those not reporting publicly, sustainability is becoming core to the business strategy.
What is a sustainability report?
A sustainability report, is a report that is developed by an organisation to disclose its performance on environment; social and economic indicators. This helps companies to achieve the Triple Bottom Line and facilitate achieving goals for People-Planet-Profit. Companies that develop sustainability reports can achieve cost savings due to resource efficiency, increased level of legal compliance to legislation, improved stakeholder relations, improved corporate image, better access to investment opportunities and are also better positioned to enter international markets.
According to the Global Reporting Initiative the number of companies disclosing sustainability performance through sustainability reports has been on the rise and at the same time the number of reports showing some form of assurance or verification is also increasing sharply. The most popular framework in the world that is used for preparing sustainability reports is provided by the Global Reporting Initiative (GRI) through the GRI Standards of 2016 (latest version).
Is sustainability reporting only for listed companies?
Sustainability reporting is not only for listed companies but it is relevant to any company that is concerned about the people, planet and profit. An organisation of any size, sector and economic activity can formulate a sustainability report that is relevant to its activity.
However, on many stock exchanges in the world in over 60 countries this has become a listing requirement. It is better for organisations to be proactive and already start the sustainability reporting framework than be pushed by stock markets, regulators, customers and other key stakeholders.
The need for sustainability assurance
Although many companies, including those in Zimbabwe have started the journey of sustainability reporting and Corporate Social Responsibility (CSR), very few of the reports are independently assured. Independent Assurance and third party verification of your sustainability report enhances credibility, reliability and confidence amongst stakeholders as it enables a sustainability report and its disclosures to be assessed by someone independent of the organisation and cross-checked for accuracy before informing stakeholders.
Some of the sustainability reports and claims are not assured and verified due to lack of awareness of the need for assurance and also the lack of availability of assurance services in selected countries.
Therefore, the reason why assurance is on the rise in many countries is because stakeholders want confidence in what is being reported and also in order to avoid “Greenwashing” — whereby an organisation makes sustainability claims of things that it is not implementing, whilst hoodwinking stakeholders or amplifying sustainability performance and CSR achievements.
Greenwashing is also on the rise in many parts of the world and it should be prevented. Consumers need to be increasingly aware of this risk and be alert of companies that can provide misleading sustainability information.
Who carries out sustainability assurance?
While some Zimbabwean companies have embarked on a journey of sustainability reporting, not all of the companies actually facilitate independent assurance of their reports. Some companies are not yet ready for assurance whilst others are not sure yet where to seek assurance services.
Sustainability assurance is a specialised activity that is carried out by competent and trained personnel from licensed organisations. A company requiring its sustainability report to be independently assured based on AA 1 000 AS should seek for a Licensed Assurance Provider or Certified Practitioners who have undergone a Certified Sustainability Assurance Practitioner (CSAP) Training programmes recognised by AccountAbility (UK).
Toxiconsol Consultancy is the first Zimbabwean company to be Licensed Assurance Provider to assure sustainability reports based on AA 1000 AS. Also the company is the first to have a Certified Sustainability Assurance Practitioner (CSAP) qualified personnel. While the Global Reporting Initiative (GRI) develops standards for Sustainability Reporting, it is important to note that AccountAbility (UK) complements sustainability reporting by maintaining a register of Licenced Assurance Providers (LAPs) and also Certified Sustainability Assurance Providers (CSAPs).
What is AA 1000 standard and what is its significance to sustainability reports?
AA 1 000 AccountAbility Series consist of a set of three standards that are mutually reinforcing; namely AA 1000 Accountability Principles Standard, AA 1000 Stakeholder Engagement Standard and AA 1000 Assurance Standard
AA 1000 Assurance Standard (AS) is a standard that is developed by Accountability (UK) and consists of requirements that guide the assurance of sustainability reports. It is the world’s first standard that has been designed specifically for assuring sustainability reports.
AA 1 000 Accountability Principles Standard (APS) was first formulated in 2003 and revised in 2008 and the latest version released in 2018. The standard is based on 4 Principles (Materiality, Responsiveness, Inclusivity and Impact).
AA 1 000 Stakeholder Engagement Standard (SES) is a standard that is focused on how organisations can effectively engage stakeholders in their pursuit of sustainable development and in the development of sustainability reports.
AA 1 000 Assurance Standard (AS) provides guidance on how to carry out an assurance engagement and should be used by Licensed Assurance Providers and Certified Sustainability Assurance Practitioners.
AA 1 000 enables companies to report accurately and assure sustainability performance to stakeholders. The next version of the AA 1 000 AS is scheduled for release in 2019 in line with new developments. Other frameworks such as ISAE 3 000 are also used for guiding assurance engagements.
It is essential for companies developing sustainability reports to ensure that the principles of Inclusivity, Materiality, Responsiveness and Impact are upheld. As sustainability report that meets international standards should be inclusive of stakeholders in its development and should report on material issues that are relevant to the company. In addition the report should respond to stakeholder concerns and should demonstrate sustainability impact.
Role of a licensed assurance provider in providing assurance services
It is not every organisation that can provide assurance services for sustainability reports, but a selected few licensed and Certified Assurance Providers. A list of Licensed Assurance Providers for sustainability Reports is available on Accountability website and grouped according to the continent of origin: http://www.accountability.org/standards/licensing/aa1000as-licensed-providers/
Currently there are about 278 Licensed Assurance Providers for AA 1 000 AS in the world; 16 of these being in Africa and only 1 being located in Zimbabwe. Individual practitioners certified are currently 37 globally. Engaging a licensed provider to assure your sustainability report is beneficial as it ensures that you get good feedback for improving your sustainability report, the report can be benchmarked with other international examples and also you get value for money.
Whilst many emerging consultants and organisations claim to be involved in assurance, companies requiring this service for their sustainability reports to be assured should check credentials of service providers and also verify with AccountAbility (UK) if the assurance provider is licensed and also if the assurance practitioner is certified, especially if the assurance engagement is to be based on AA 1000 Framework. This helps to get value for money and also to get high quality assurance services and avoid unscrupulous sustainability firms from advising on sustainability reporting.
Before the availability of a licensed provider in Zimbabwe, some companies had been seeking services from neighbouring and international countries due to lack of availability of such a service in Zimbabwe.
However, sustainability assurance services are now available locally and there is less need to engage international experts to just travel for an assurance engagement to assure a sustainability report. Companies still maintain the right to choose an assurance provider of their choice whether local or international.
