sustainability and integrated reporting

Sustainability and Integrated

Reporting

Arthik Davianti

1. Sustainable Development

2. Accounting and Disclosure

3. Corporate Social Responsibility

4. Corporate Sustainability Reporting

5. Integrated Reporting

6. What’s next?

SUSTAINABLE DEVELOPMENT

CONFLICT

of rights…

Whose rights is it???

People vs Nature

Present vs Future

Sustainable Development

1987 1992 2012

Sustainable Development

Accounting and Disclosure

Information

Account

Economic Account

Social Account

Environmental Account

Sustainability Account

Balance???

Ethics & Moral

Accountability

Accounting and Disclosure

Mandatory versus Voluntary

Law – Guidelines – Standards

Numbers versus Narratives

Financial measurements

Non-financial measurements

Corporate Social Responsibility

Follow the money??

Dimensions:

The stakeholder dimension

The social dimension

The economic dimension

The voluntariness dimension

The environmental dimension(Carroll, 1999; Dahlsrud, 2008)

Corporate Social Responsibility

Corporate Sustainability

Reporting

What are we looking for?

A medium

Reporting?

The Future We Want Paragraph 47 – Rio+20 Engaging major group and other stakeholders

We acknowledge the importance of corporatesustainability reporting, and encourage companies, whereappropriate, especially publicly listed and large companies,to consider integrating sustainability information into theirreporting.

We encourage industry, interested government andrelevant stakeholders, with the support of the UnitedNations system, as appropriate, to develop models for bestpractice and facilitate action for the integration ofsustainability reporting into account experiences fromalready existing frameworks and paying particular attentionto the needs of developing countries, including for capacitybuilding.

Sustainability Reporting

WHAT IS GRI?

The Global Reporting Initiative (GRI) is a

leading organization in the sustainability field.

GRI promotes the use of sustainability

reporting as a way for organizations to

become more sustainable and contribute to sustainable development.

AccountAbility is a leading global organisation providing innovative solutions to the most critical challenges in corporate responsibility and sustainable development.

The AA1000 Series of Standards based on the principles of:Inclusivity - people should have a say in the decisions that impact on themMateriality - decision makers should identify and be clear about the issues that matterResponsiveness - organizations should be transparent about their actions

AccountAbility works to:• Help its clients and members improve business performance and

build sustainable competitive advantage• Enable open, fair and effective approaches to stakeholder

engagement• Develop and recognise responsible competitiveness in

companies, sectors, countries and regions• Create effective collaborative governance strategies for

partnerships and multilateral organisations that are delivering innovation and value

• Set and influence sustainability standards• Help corporations, non-profits, and governments embed ethical,

environmental, social, and governance accountability into their organisational DNA.

The Ten Principles The UN Global Compact's ten principles in the areas of human rights, labour, the environment and anti-corruption enjoy universal consensus and are derived from:

• The Universal Declaration of Human Rights• The International Labour Organization's Declaration on

Fundamental Principles and Rights at Work• The Rio Declaration on Environment and Development• The United Nations Convention Against Corruption

The UN Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anti-corruption:

Human Rights• Principle 1: Businesses should support and respect the

protection of internationally proclaimed human rights; and• Principle 2: make sure that they are not complicit in human

rights abuses.Labour• Principle 3: Businesses should uphold the freedom of

association and the effective recognition of the right to collective bargaining;

• Principle 4: the elimination of all forms of forced and compulsory labour;

• Principle 5: the effective abolition of child labour; and• Principle 6: the elimination of discrimination in respect of

employment and occupation.

Environment• Principle 7: Businesses should support a precautionary

approach to environmental challenges;• Principle 8: undertake initiatives to promote greater

environmental responsibility; and• Principle 9: encourage the development and diffusion of

environmentally friendly technologies.Anti-Corruption• Principle 10: Businesses should work against corruption in all

its forms, including extortion and bribery.

Integrated Reporting

Integrated Reporting

The International Integrated Reporting Council (IIRC) was established in 2010.

<IR> is a process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation.

An integrated report is 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.

Integrated Reporting

<IR> AIMS TO:

• Improve the quality of information available to providers of financial capital to enable a more efficient and productive allocation of capital

• Promote a more cohesive and efficient approach to corporate reporting that draws on different reporting strands and communicates the full range of factors that materially affect the ability of an organization to create value over time

Integrated Reporting

<IR> AIMS TO (CONTINUES):

• Enhance accountability and stewardship for the broad base of capitals (financial, manufactured, intellectual, human, social and relationship, and natural) and promote understanding of their interdependencies

• Support integrated thinking, decision-making and actions that focus on the creation of value over the short, medium and long term.

Integrated Reporting

<IR> IN THE CORPORATE REPORTING LANDSCAPE:• <IR> is about better reporting, not more reporting• <IR> is consistent with numerous developments in

corporate reporting take place within national jurisdictions across the world

• <IR> will provide the impetus for greater innovation in corporate reporting globally

• <IR> has a combined emphasis on conciseness, strategic focus and future orientation, the connectivity of information, and the capitals and their interdependencies

• <IR> emphasizes the importance of integrated thinkingwithin the organization.

Integrated Reporting

http://www.theiirc.org/international-ir-framework/

Integrated Reporting

Integrated Reporting

Integrated Reporting

Organization overview and external environment:

Strategic focus and future orientationConnectivity of information

Integrated Reporting

Organization overview and external environment:

Stakeholder relationship

Integrated Reporting

Value creation

Principles:• Strategy focus and

future orientation• Stakeholder

relationships

Integrated Reporting

Integrated Reporting

IR Guiding Principles

this extract

demonstrates:

• Connectivity

information

Integrated Reporting

IR Guiding Principles

this extract

demonstrates:

• Strategic focus and

future orientation

• Stakeholder

relationships

Integrated Reporting

What’s next?

Are we under

pressure??

Corporate Social

Responsibility

versus

Corporate Sustainability

Reporting

Sustainability Reporting

versus

Integrated Reporting

Sustainable Reporting vsIntegrated Reporting

Why has IR become a trending topic?

An explanation rests on the increasingly complex business environments and changing stakeholder needs that have resulted in an evolution of business information and annual reporting over the years (Eccles, Krzus, and Ribot, 2014).

Integrated reporting is a failure (Flower, 2015, p. 15)

a. The single report: The Integrated Report is not to become the firm’s primary report; it is an extra report alongside conventional financial statements and sustainability reports,

b. Sustainability: The Integrated Report is not to cover sustainability,

c. Stakeholders: The Integrated Report is not to cover in a comprehensive fashion the impact of the firm’s activities on stakeholders

d. Lack of impact: The IIRC places very few specific obligations on the preparer of an Integrated Report.

The focus of integrated reporting is to consider how an organisation creates value – rather than on measuring impacts – and accountants and sustainability practitioners and researchers have to date given little attention to how this might be done under a multiple capital model (Adams, 2015, p. 26).

Integrated Reports privilege a neo-liberal programmatic and incorporate the elements of sustainability that are aligned with underlying principles of capitalism (Thompson, 2015, p. 21).

A mandatory ‘comply or

explain’ regime

Mixed response

Opportunity versus Challenge

What’s next?

What’s next?

Raise to the challenge

Pursue the knowledge

What’s next?

Propose the perspective

of accounting as discourse

You must be THE CHANGE

you wish to see in the world(Mahatma Gandhi)

Sustainable Development

Accounting and Disclosure

Corporate Social

Responsibility

Corporate Sustainability

Reporting

Integrated Reporting What’s next?

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Thank youTerima kasih