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Sustainability Report – A Closer Look to The Companies

by Dyah Reza Lestari | 18-08-2018 01:20


In the past, company reports only focused on financial performance reports or we called as financial reports. This makes sense because the company is established to seek profit, so stakeholders want to know the company's performance from this side. As time goes by, financial reporting is not enough to describe a company's performance. The report must also be equipped with the extent to which the company is responsible for other aspects related to human, environment, and society. From this perspective, Sustainability Report was born.


What is Sustainability Report? Sustainability Report is a breakthrough made by the regulator in responding to stakeholder and public's needs toward company's concern about environmental and natural safety from the business processes. Sustainability reporting can be considered as synonymous with other terms for non-financial reporting; triple bottom line reporting, corporate social responsibility (CSR) reporting, and more. It's also an intrinsic element of integrated reporting; a more recent development that combines the analysis of financial and non-financial performance. Non-financial reporting, such as sustainability and CSR reporting, is a fairly recent trend which has expanded over the last twenty years.


Thus, at this time, companies and organizations of all types, sizes, and sectors published sustainability report as a medium to disclose more informations related to the company, particularly about economic, environmental, and social impacts caused by its everyday activities. Sustainability report also presents the organization's values, governance model, and demonstrates the link between its strategy and its commitment to a sustainable global economy. This report is not just report generation from collected data; instead it's a method to internalize and improve an organization's commitment to sustainable development in a way that can be demonstrated to both internal and external stakeholders.


There are a variety of reasons that companies choose to produce these reports, but at their core they are intended to be "vessels of transparency and accountability". Often they also intended to improve internal processes, engage stakeholders, and persuade investors. Sustainability reporting is therefore a vital first step for managing change towards a sustainable global economy, promoting transparency,  and clear understanding of national sustainable development efforts.


The value of the sustainability reporting process is that it ensures organizations consider their impacts on these sustainability issues, and enables them to be transparent about the risks and opportunities they face. Stakeholders also play a crucial role in identifying these risks and opportunities for organizations, particularly those that are non-financial. This increased transparency leads to better decision making, which helps build and maintain trust in businesses and governments.


Thousands of companies across all sectors have published reports that reference GRI's Sustainability Reporting Guidelines. Public authorities and non-profits are also big reporters. GRI's Sustainability Disclosure Database features all known GRI-based reports. GRI (Global Reporting Initiative) has pioneered sustainability reporting since the late 1990s, transforming it from a niche practice into one now adopted by a growing majority of organizations. The GRI reporting framework is the most trusted and widely used in the world. Sustainability report disclosures that are in accordance with the GRI must fulfill several principles. These principles are listed in the GRI-G4 Guidelines, the latest guideline by GRI. The GRI Sustainability Reporting Guidelines enable all organizations worldwide to assess their sustainability performance and disclose the results in a similar way to financial reporting.


When the companies disclose non-financial information using the GRI Standards, it will benefit in many ways. The reporting process allows to gain a comprehensive understanding of the risks and opportunities facing company's business. Sharing information about policies and performance on environmental, social, and governance issues helps the company build trust with customers and partners, monitor and mitigate risk, and find ways to improve efficiency, resulting in a positive impact on financial results. By reporting with the GRI Standards, the company will also fulfil the compliance requirements of regulations from governments, financial markets, and international organizations. The GRI framework is referenced in over a hundred policy instruments and dozens of stock exchanges or market regulator across the world.


Governments and market regulators can also promote a culture of transparency, stimulating public debate. They are positioned to invite business to support specific initiatives and activities, promote, and support research, build practical capacity, enter into public-private partnerships, promote, and support multi-stakeholder initiatives. The United Nations Conference on Sustainable Development – Rio+20 – was an outstanding example of making sustainability reporting top of the agenda. Paragraph 47 of the Rio+20 outcome document, The Future We Want, addresses the importance of sustainability reporting and recognizes the role of Governments in promoting it.


In Indonesia, sustainability report disclosures are still limited to voluntary. Although it is still voluntary, there are almost 9% of companies listed on the Indonesia Stock Exchange (IDX) have issued sustainability reports. The issuance of sustainability reports in Indonesia today is almost largely based on the disclosure standards by the Global Reporting Index (GRI). As of the end of 2016, 49 IDX listing companies have issued sustainability reports. Not only listing companies, but non-listing companies also show enthusiasm in publishing sustainability reports. The high enthusiasm from the publication of the sustainability report shows that this report is an important report to be published, especially in terms of knowing how the company integrates environmental, social and good governance aspects.


To read more about this, kindly go to :

https://www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx

https://www.globalreporting.org/information/news-and-press-center/Pages/GRI-introduces-G4-Exam-the-next-step-for-sustainability-practitioners.aspx

https://www.ojk.go.id/sustainable-finance/id/publikasi/riset-dan-statistik/Pages/Sustainability-Report-bagi-Lembaga-Jasa-Keuangan-dan-Emiten.aspx