As an accountant, I’m intrigued by the standards that exist by the Global Reporting Initiative on sustainability reporting and how it’s maintained, assessed, policed, etc. Typically the “meat” in a firm’s external audit lie in the audit opinion and financial statements… I’ll be honest, that’s the first thing I flip to, because that’s where the facts are. The numbers don’t lie – a quick glance at the margins, ratios and bottom line will tell you a lot about the company. Very rarely do I read it cover to cover, but I will now start doing that, because it’s in the Management Discussion and Analysis (MD&A) section of audit reports that managers talk about GRI, and other things you don’t necessarily think of when you value a firm, like intellectual capital. I always thought of it as a place where management paint their numbers in the most positive light possible and briefly talk about external opportunities and threats.
The GRI Initiative provides standardized rules in which management follows to develop their framework to suit their company in advance such as:
- Principles to define report content: Materiality, Stakeholder Inclusiveness, Sustainability Context, and Completeness
- Principles to define report quality: Balance, Comparability, Accuracy, Timeliness, Reliability, and Clarity
- Guidance on how to set the Report Boundary
Requirement management disclosures are defined as follows:
- Strategy and Profile
- Management Approach
- Performance Indicators
In preparing responses to the Economic Indicators, data should be compiled from figures in the organization’s audited financial accounts or its internally audited management accounts, wherever possible.
To enhance the credibility of sustainability reporting, the GRI recommends, in addition to the establishment of suitable management systems and reporting processes, having the reports certified by auditors.
Both for the stakeholders as well as for the management, the external audit provides the assurance that reports are accurate, complete and appropriate. The auditor’s examination of systems and processes, along with the associated findings and recommendations, which are recorded in the assurance statement are often starting points for the optimization of internal sustainability management.