Disclosure for Sustainability: The Case of Integrated Reporting

Disclosure for Sustainability: The Case of Integrated Reporting

Gözde Ünal (Bogazici University, Turkey) and Ali Çoşkun (Bogazici University, Turkey)
DOI: 10.4018/978-1-4666-6635-1.ch017
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Abstract

Besides financial performance, corporations started to disclose their sustainability performances with an increasing awareness on environment. This chapter compares two mainstreams in sustainability reporting, one that relies on guidelines of Global Reporting Initiative (GRI) and the other one that follows the integrated reporting () framework published by International Integrated Reporting Council (IIRC) while emphasizing mainly the latter one. Sustainability reports prepared in accordance with the framework aim to provide accountability for business impacts for a niche target audience, which are the providers of financial capital.
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Disclosure And Sustainability

With increasing awareness on sustainability, many corporations began to announce their annual sustainability reports without any legal obligation. Publicly traded companies are required to submit their financial reports regularly. They have a tradition of preparing their annual reports and reporting their financial performances. Financial reporting today is acknowledged by globally accepted standards like IFRS and GAAP, where measurement, reporting and auditing goes through principles and well-defined practices. These standards also serve to attain numbers and financial statements free of fraud. However, financial reporting still has its drawbacks as it cannot satisfy its readers with its nature of past performance justification. This backward looking style in financial reports and the time needed to aggregate the data and reveal it in an annual report makes it hard for the readers to assess the value that is created by the operations of the business for its shareholders. After all, in these reports the shareholders are trying to find the answer to the question that how much the company can grow and generate dividends for its shareholders in the future.

Key Terms in this Chapter

IPCC: The Intergovernmental Panel on Climate Change.

Integrated Reporting: A concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term.

ESG Data: Non-financial information on company’s environmental, societal and governance performance.

IIRC: The International Integrated Reporting Council (IIRC) is a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs that is aestablished to provide a common basis for corporate communication about value creation.

IFRS: The International Financial Reporting Standards developed by the International Accounting Standards Board (IASB).

Sustainability Reporting: Company or Organization Reporting that adopts disclosing economic, environmental, social and governance performance and impacts.

GRI: Global Reporting Initiative announces Sustainability Reporting Guidelines for all companies and organizations.

Responsible Investment: Investment process which takes ethical and ESG considerations into account especially in fundamental investment selection and management decisions.

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