All over the world, there seems to be a lot of buzz surrounding the issue on sustainability reporting. In our relentless pursuit to achieve a more sustainable future, governing bodies have taken concrete steps to address the imminent concerns on sustainability, particularly those that refer to climate change.
In the Philippines, the Securities and Exchange Commission (SEC) has joined the global campaign to encourage the private sector in the journey towards sustainability by mandating sustainability reporting. http://www.sec.gov.ph/wp-content/uploads/2019/02/2019MCNo4-1.pdf
Early this year, the SEC has issued the guidelines on sustainability reporting as part of the Annual Report submitted to SEC 17 – A. It has taken a “comply or explain” approach as a motivating tool to increase accountability and transparency by requiring all publicly listed companies in the Philippines to publish sustainability reports for 2019 starting 2020. This approach is not unique to the Philippines as our neighbors in the ASEAN region have taken even bolder steps towards mandatory sustainability reporting requirements.
This brings us now to the discussion most sustainability conferences bring on the table, “Is Mandatory Better?”
There are always two sides of the coin, but I think for our purpose, it is best to focus on the spirit behind mandating sustainability reporting.
1. Voluntary vs. Mandatory – We are all familiar with the old-age debate on nature vs. nurture. Not all children take an enthusiastic attitude towards the first day of school. Yet, in just a short while, we notice quite a turn-around in the disposition. Mandating sustainability reporting takes the nurture approach, by providing a prepared environment for corporates to disclose its strategy, policies, practices and performance regarding its economic, environmental and social impacts. While viewed to be a “must” in the beginning, it will slowly encourage the practice of sustainability through reporting, hoping that somehow it will also unravel its value for the company in the long-haul.
2. Green Practices vs. Green Dressing – The very early years of CSR always cautioned organizations from doing good deeds for photo release purposes, rather global organizations encouraged companies to take a closer understanding of the deep causes of socio-economic problems and go for more sustainable approaches towards social development. We are now treading on a familiar path when it comes to integrating sustainability practices. Sustainability is a journey. The cautionary tale on mandating sustainability reporting is to focus on quality and long-term sustainability programs rather than a race to provide impressive sustainability reports and sound bites. The key is to provide balanced reporting. Of course, this is always easier said than done.
3. Content vs. Form – There are accepted sustainability reporting frameworks enumerated by the SEC namely GRI, SASB, IIRC. When reporting, we are always challenged to balance the content of our disclosures while making it appealing to read. In today’s society where are are bombarded with stimulating visual aids, it is tempting to prioritize the form. After all, we may think, what use is there of a good content, when no one bothers to read it. Luckily, there are so many communication tools like the use of infographics, “snackable,”bite-sized information that help make relevant data become meaningful information.
4. Materiality vs. Comprehensiveness – There are so many things happening in our organizations that in order to impress our stakeholders, we may have a tendency to “over-inform.” To balance this tendency, our Stakeholder Engagement and our internal analysis of our ability to create value will help us prioritize what is truly material to our business. Understanding what is material makes our report more relevant, allowing our stakeholder have a meaningful understanding of our strategy, leading to evidence-based decisions.