Facilitate the convergence of sustainability reporting framework
Distinguished panelists, experts, ladies and gentlemen,
It is a great pleasure and honor for me to be here to present UNCTAD work on the promotion of harmonization, high quality and comparability of sustainability reporting by companies as part of the work of the United Nations Conference on Trade and Development towards implementation of Sustainable Development Goals of the 2030 Agenda for Sustainable Development. I would like to thank the organizers for inviting me to this important event and thus providing an opportunity to share our work with you, in particular, to present to you UNCTAD Guidance on core indicators for entity reporting on “contribution towards implementation of the Sustainable Development Goals”[1] (or the GCI).
In 2015, the UN member states adopted the 2030 agenda for Sustainable Development. Since then, they have been working on establishing their priorities and development plans towards its implementation and monitoring the progress. To support this process, a Global Indicator Framework was created by the UN Inter-agency and Expert Group on SDG Indicators (IAEG-SDGs)[2] . The 2030 agenda includes 17 SDGs, 169 targets and 232 indicators.
Among those, there is one target and one indicator directly relevant to the private sector, i.e., target 12.6. Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle; indicator 12.6.1. Number of companies publishing sustainability reports.
In addition to the indicator 12.6.1, many other SDG indicators refer to data already being provided or could be provided by companies in their published reports, such as indicators on the use of energy and water, carbon emissions, waste generation, gender equality and community development to mention a few. Accordingly, company reporting has the potential to become and is increasingly becoming a primary source of information on company SDG-related performance.
Relevant data on companies’ contribution towards the SDGs is critical for assessing the progress of the SDG implementation enhancing the SDG-oriented corporate governance mechanisms; decision making by investors and other key stakeholders and capital provides as well as promoting behavioral change at the enterprise level.
This in turn gives a new impetus towards enhancing the harmonization of enterprise sustainability reporting based on the SDG monitoring framework and its macro indicators applicable at a company level. However, achieving such objective requires further efforts towards the improvement of quality and consistency of the enterprise data and making them useful for the stakeholders such as investors, society, governments, suppliers among others. It is now acknowledged by all key players in this area: the existence of diverse sustainability reporting frameworks and standards lead to inconsistent and incomplete information that cannot be easily compared across companies. Thus, there is a need to address these challenges to improve the quality and reliability of sustainability data and reporting, with a view to improving corporate decision-making while strengthening investors’ and other stakeholders’ protection and information; promoting efficient and transparent markets, economies and societies; facilitating the reduction of systemic risks; and improving corporate internal control systems and management practices.
Responding to these challenges, early on, UNCTAD through its Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) – focal point in the UN system on enterprise accounting and reporting issues - has identified the need for baseline SDG indicators for companies to enable harmonization, comparability and benchmark of enterprise reporting in this area.
Since the adoption of the 2030 agenda, UNCTAD has been working towards developing practical tools to assist countries in their efforts to measure the contribution of the private sector to sustainable development, in particular to the achievement of the SDGs, in a consistent and comparable manner. UNCTAD also assist companies in integrating such information into their accounting and reporting practices and providing data to key stakeholders.
As a result of this work, UNCTAD has developed and launched at its 35th ISAR session in 2018 “Guidance on core indicators for entity reporting on contribution towards implementation of the Sustainable Development Goals”[3] (GCI) which was endorsed by the member States. Core indicators were selected through a series of elaborations at several ISAR intergovernmental sessions and discussions with a consultative group of experts between 2016 and 2018. The selection of the 33 indicators is based on key reporting principles, agreed selection criteria, main existing reporting frameworks, companies’ reporting practices, and their relevance to specific SDG macro indicators applicable at a micro-level. The guidance aims to help entities to provide baseline data on sustainability issues in a comparable manner that would meet the common needs of many different stakeholders of sustainability and the SDG agenda[4] . It provides practical information on how selected core indicators could be measured in a consistent manner, and in alignment with countries’ needs. Such needs include monitoring the achievement of the SDGs and preparing their Voluntary National Reviews (VNRs) for the UN High Level Political Forum (HLPF) that gathers annually in July in New York to assess the progress on the SDG implementation[5].
Cover key areas common to all businesses, such as rational use of natural and material resources (water, energy, land, clean area, waste); social issues, such as workers health and safety, access to training, gender equality; good governance such as anti-corruption practices, and economic contribution. Here you can see all indicators in 4 areas.
To validate the approach and practical applicability of the core indicators, 20+ case studies conducted in different geographical areas; in countries with various levels of economic development, including in China; in a great range of industries and with companies of different sizes including SMEs since 2019.
Key conclusions:
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most companies were able to provide data on most of the core indicators;
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no single indicator that could not be reported by all companies;
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capacity building and technical expertise is needed.
To facilitate implementation, UNCTAD also developed Training manual and is developing an online platform on the GCI implementation.
ISAR concluded its 37th session in November 2020 attended by close to 400 participants. In its agreed conclusions, it underlined the essential role that sound sustainability reporting by entities plays in promoting sustainable investment and finance and in attaining the Sustainable Development Goals. And the coronavirus 19 pandemic has significantly heightened the focus on sustainability issues. In this regard, it emphasized the need to foster further efforts and cooperation in all initiatives towards a single, coherent and robust set of standards on sustainability reporting that would provide consistent and comparable data, facilitate the interconnectivity of integrated reporting and ensure an equal footing of financial and sustainability reporting. It also underlined that climate-related financial disclosures are critical to understand the possible exposure of companies’ activities to the medium- and long-term effects of climate change; as well as their impacts on society; and to properly manage those impacts, risks and opportunities, including the efficient allocation of capital supporting a transition to a more sustainable, low-carbon economy.
In this regard, ISAR also recognized the important role that the GCI has been playing as a useful tool to facilitate the convergence of sustainability reporting frameworks. GCI has provided early on an initial and simple common set of universal indicators for entities’ baseline reporting on sustainability issues which is also in alignment with the 2030 Agenda for Sustainable Development.
Today I am very glad to be able to present the GCI to you, which has been recently translated into Chinese. So, it is now available or soon be available in all official UN languages such as Arabic, Chinese, English, French, Russian and Spanish.
We look forward to our collaboration towards promotion of sustainable development and sustainability reporting by companies. We hope that the GCI will be useful to companies and policy makers in China in this regard and will facilitate further progress in this area. Thank you for your attention.
Source:
[1] UNCTAD (2019). Guidance on core indicators for entity reporting on contribution towards implementation of the Sustainable Development Goals. (UNCTAD Sales No. E.19.II.D.11). Available at: https://unctad.org/en/PublicationsLibrary/diae2019d1_en.pdf (accessed 09 July 2019).
[2] Further information can be found under:
https://unstats.un.org/sdgs/iaeg-sdgs/
[3] UNCTAD (2019). Guidance on core indicators for entity reporting on contribution towards implementation of the Sustainable Development Goals. (UNCTAD Sales No. E.19.II.D.11). Available at: https://unctad.org/en/PublicationsLibrary/diae2019d1_en.pdf (accessed 09 July 2019).
[4] Further details on the GCI are discussed in the Section III of this Issue note.
[5] HLDP – is the main United Nations platform on sustainable development which plays a central role in the follow-up and review of the 2030 Agenda for Sustainable Development the Sustainable Development Goals (SDGs) at the global level. The Forum meets annually under the auspices of the Economic and Social Council.
