Mariel de Jesus
For over 10 years now, companies in the Philippines have been exploring the practice of sustainability reporting. Though widely adopted in many countries, it is still very much a work in progress.
While in many cases, government regulators and civil society are driving the effort to report, there is a growing number of investors who are looking for information beyond financial performance.
As such, stock exchanges in many countries have made reporting on environment, social, and governance factors mandatory for publicly listed companies. The Philippines joined this wave, and businesses must now submit mandatory sustainability reports beginning this year.
Prior to the move to make reporting mandatory, only a small percentage (less than 20%) of publicly-listed companies regularly reported on their environment, social, and governance performance. With the Philippine Stock Exchange’s move, many companies are now rushing to comply, but fail to understand exactly what reporting entails, much less what sustainability and sustainable development are, and what they are expected to do in the light of both local and global social, economic, and environmental challenges.
Reporting: The status quo
Performance reporting is not new. Companies are required to make financial and governance disclosures to stock exchanges as part of their regulatory requirements. To ensure responsibility and accountability in the oil, gas, and mineral resources extractive industry, the Extractive Industries Transparency Initiative (EITI) was established, and today 53 countries implement the standards to report on various aspects of the industry’s activities: natural resources, contracts and licenses, production, revenue collection and allocation, social and economic spending, and public benefit.
The gold standard in terms of sustainability reporting framework for businesses is the Global Reporting Initiative (GRI) Standards, arguably the most well known and most widely adopted template worldwide.
The GRI Standards provide guidance on how to gather and report on a wide range of economic, environmental, and social indicators. Beyond these disclosures, the Standards also prescribes stakeholder engagement – to identify and better understand who the company’s stakeholders are, as well as their needs and concerns.
The GRI Standards also have a materiality process, which enables a company to identify just those issues which are most material to the company, those that are within their spheres of influence and upon which they can have the most impact.
However, in some company’s haste to get to the “reporting,” many may gloss over the stakeholder engagement and materiality processes. Of course, it is likely that a company will have an idea of what their stakeholders’ main concerns are, but these are often fluid and shift over time.
Understanding and knowing the stakeholders better enables companies to design interventions and initiatives that will indeed address stakeholder concerns and improve engagement.
As for materiality, there are always things that are important to a company (profit, revenue, savings, sales), but feeding in stakeholder engagement and understanding what investors really want to see, what customers really demand, what communities hosting business facilities need, will draw in another lens by which to look at what topics are really important.
Today, there are many more frameworks available – some more flexible and with different perspectives. However, the challenge is really for businesses to move beyond frameworks and templates and understand what sustainability means to their business and what it can achieve for the good of a wider community and the world as a whole.
Despite over a decade of sustainability reporting, the question remains: how can businesses move this forward, not just in terms of reporting, but in terms of an actual agenda and action plan?
With the deadline looming on the UN Sustainable Development Goals (SDGs) and with so many countries still missing the mark, and in light of the of the challenges now posed by a post-COVID world, there is a need to act with urgency.
Many businesses feel the pressure to do everything and this may discourage them from getting involved at all. Rather, businesses should be focused on two basic things: What negative impact do their activities have and what are they doing, or can they do to mitigate and manage this? What can they do, and do well, to contribute to the global sustainable development agenda?
As businesses seek ways to pivot, redefine, and redesign post-COVID, they must do so in a way that will ensure that they do not simply fall back into the way of business as usual. Many businesses ignored the calls to curb emissions and respond to the issue of climate change. In COVID, we see the result of this inaction.
In the transition to a world where business is now forever changed, an honest effort must be made to push the sustainability agenda and recognize the need for greater reflection.
- What is the role of business?
- What impact does business really have on community and on the environment?
- What do businesses need to re-imagine a new normal?
- What changes can be made to improve processes and make them cleaner and safer
There is also the need to bring in greater perspective.
- Beyond the investors and the stockholders, who are affected by operations?
- How can the response be for them?
- Can business begin to think of those who do not share in the financial performance but are affected by the daily operations and have a right to participate in the process of development?
And finally, there is the need to bring in the idea of value beyond economic growth and financial gains: What value can business contribute?
Ms Mariel de Jesus currently works as Sustainability Head of a Philippine private organization providing sustainability reporting services to businesses. Mariel previously worked as Researcher with the Environmental Science for Social Change (ESSC), a Jesuit research and training organization in the Philippines, and continues to engage with Ecojesuit activities in exploring mechanisms to respond globally to integral ecology concerns.