SUSTAINABILITY
Sustainability, Social and Environmental Issues
• The sustainability idea firstly emerged as an economic
concept and sustainability and sustainable economic
development are used interchangeably, leaving social and
environmental dimensions of sustainability in an inferior
position.
• Social, economic and environmental elements are one of
the significant challenges for organizations and society
(Moran et al., 2014; Lodhia, 2018a).
• There is a growing expectation towards public sector
organizations not only to meet spending mandates
(pure financial performance) but also to create a value
for all interested stakeholders that is sustainable from an
economic, social, and environmental point of view
Sustainability, Social and Environmental Issues
• The effectiveness of stakeholder engagement can be
undermined by certain difficulties and challenges faced
by an organization.
• Holdway (2019) argues that social and environmental
accountability by firms can be compromised by a lack of
democracy within engagement and decision-making
processes.
“The social responsibility of business encompasses the
economic, legal, ethical and discretionary expectations
that society has of organizations at a given point in time.”
• Over the last two decades, it has become increasingly
acknowledged that organizations’ performance must be
assessed taking into account organizations’ sustainable
impact on the environment and the society at large
Sustainability Accounting and Reporting
• Sustainability accounting and reporting (SAR) constitute a process through
which an organization’s sustainability performance is measured and
communicated.
• Sustainability Accounting represents an information management and
accounting method that creates and provides information aimed at
demonstrating an organization’s progress towards its sustainable goals.
• Sustainability Reporting completes the process by formalizing the
information to disclose about the organization’s sustainability performance.
• Although Sustainability Accounting and sustainability reporting are two
distinct terms, together, they form a unique accountability system able to
record and communicate information on organizations’ sustainable
performance.
Why is Sustainability Important to Business Resilience?
• A business making a positive contribution to planet Earth’s ability to sustain
human and biological life and it's natural assets.
• Makes business sense and recognizes that, ultimately, organizations are an integral
part of society and the economy
• This understanding can lead to the development of a more resilient business models
that is the basis for creating and sustaining value over time
• planet, people, profit, and corporate social responsibility.
• A sustainable strategy can lead to business resilience by enabling an organization
to create value for its shareholders while it also contributes to a sustainable society
by meeting the needs of this generation without sacrificing future generations.
• A truly sustainable strategy is one that integrates material sustainability issues,
leading to business models that enable net positive economic, environmental, and
social impacts.
True Cost Accounting
• The discipline of True Cost Accounting enables us to understand more about the
scale and nature of ‘externalities’ by identifying, categorizing and quantifying,
and where possible pricing all the different costs and benefits involved.
• True cost accounting explained: A Tale of Two Chickens is a short film which
illustrates how we are paying a high price for food in hidden ways and why we
need true cost accounting in our food and farming systems.
https://www.youtube.com/watch?v=KVTLLrP9uOg
Sustainability Metrics
• Consultation of stakeholders to identify what is material to their organization
• Identify and prioritize what they want to measure:
Economic (e.g., revenue, profit, company turnover)
Social (e.g., labor statistics, human rights, consumer issues, community impact)
Environmental (e.g., water stewardship, greenhouse gas emissions, waste
management)
• A materiality assessment that considers various perspectives, creates a solid basis to
develop plans for managing business sustainably.
• Strategy, reporting and communication, can be aligned along uniform priorities,
while strengthening the relationships with your most important stakeholders.
• To ensure that you do not overlook new business developments and trends, its
recommended to repeat every 2 years the assessment
Sustainability Metrics
What is Sustainability Reporting?
• According to the Global Reporting Initiative, Sustainability report or
Corporate Social Responsibility (CSR) Report can be defined as:
“A sustainability report is a report published by
a company or organization about the
economic, environmental and social impacts
caused by its everyday activities. A sustainability
report also presents the organization’s values
and governance model and demonstrates the
link between its strategy and its commitment to
a sustainable global economy.”
Purpose of a Sustainability Report
• Sustainability reports aim to enable companies to measure the impact of
their activities on the environment, on society and on the economy (the
famous triple-bottom-line).
• Sustainability report also allows companies to externally communicate with
their stakeholders what are their goals regarding sustainable development
and CSR.
Drivers of Reporting
• Better Reputation
• Meeting the expectation of employees
• Improved Access to Capital
• Increased Efficiency and Waste Reduction
Benefits of Sustainability Reporting
Internal benefits for companies and organizations can include:
• Increased understanding of risks and opportunities
• Emphasizing the link between financial and non-financial performance
• Influencing long term management strategy and policy, and business
plans
• Streamlining processes, reducing costs and improving efficiency
• Benchmarking and assessing sustainability performance with respect to
laws, norms, codes, performance standards, and voluntary initiatives
• Avoiding being implicated in publicized environmental, social and
governance failures
• Comparing performance internally, and between organizations and
sectors
External benefits can include:
• Mitigating negative environmental, social and governance impacts
• Improving reputation and brand loyalty
• Enabling external stakeholders to understand the organization’s true
value, and tangible and intangible assets
• Demonstrating how the organization influences, and is influenced by,
expectations about sustainable development
Sustainability Reporting in the Philippines
• Securities and Exchange Commission(SEC) Memorandum Circular No. 4 of
2019: Sustainability Reporting Guidelines for Publicly-Listed Companies
(PLCs).
• PLCs will be required to attach the Reporting Template, but the SEC will
allow explanations for the items where the company cannot supply answer if
there is no available data yet.
• The Sustainability Reporting Guidelines focuses on the economic,
environmental and social disclosures which are in addition to the
governance disclosures that are embodied in the Integrated Annual
Corporate Governance Reports.
Sustainability Report Examples (2019)
• https://www.sminvestments.com/wp-content/uploads/2020/08/SMIC-
SUSTAINABILITY-REPORT-2019.pdf
• http://pldt.com/docs/default-source/annual-reports/sustainability-report/pldt-
2019-sustainability-report.pdf?sfvrsn=2
• https://www.mpic.com.ph/wp-
content/uploads/2020/09/MPIC_SUS19_20200915.pdf
• https://sustainability.ayala.com/sustainability
https://www.ayala.com.ph/sites/default/files/pdfs/Ayala%20Corporation%20
2019%20Integrated%20Report%20-%20ASD.pdf
Reporting Approaches
Globally Recognized Standards/Frameworks in Reporting Sustainability
• According to SEC, Philippines have less than 22% of publicly-listed
companies have published a report on sustainability impacts and
performances. The need to promote sustainability reporting to Philippine
companies served as the drive for the SEC to include Principle 10 in the
Code of Corporate Governance for Publicly-Listed Companies (PLCs).
• This Guidelines builds upon four of the globally accepted frameworks,
which companies use to report on sustainability and non-financial
information
•
• Global Reporting Initiative’s (GRI) Sustainability Reporting Standards
• the International Integrated Reporting Council’s (IIRC) Integrated
Reporting (IR) Framework
• Sustainability Accounting Standards Board’s (SASB)
• Task Force on Climate-related Financial Disclosure (TCFD)
GLOBALLY RECOGNIZED STANDARDS / FRAMEWORKS
Guiding Principles
Materiality
Goals for Implementing Principles
The Securities and Exchange Commission’s goal is to raise
awareness among Philippine listed companies on sustainability reporting,
under the Memorandum Circular, the SEC has declared the following
objectives:
• To make sustainability reporting relevant and value adding to Philippine
PLCs
• To help PLCs to identify, evaluate, and manage their material Economic,
Environmental and
• Social risks and opportunities
• To help PLCs to assess and improve their non-financial performance across
Economic, Environmental and Social aspects of their organization to
optimize business operations, improve competitiveness and long-term
success
• To provide a mechanism that would allow the PLCs to communicate with
their stakeholders, including investors or its potential investors
• To enable PLCs to measure and monitor its contributions to universal
targets of sustainability such as the United Nations Sustainable
Development Goals and the Ambisyon Natin 2040 (the long- term vision
statement released by the Philippine National Economic and Development
Authority).
GRI Categories And Aspects
The GRI Standards help organizations’ understand their outward impacts:
on the economy, environment, and society. The GRI Standards are divided
into two main areas:
1. UNIVERSAL STANDARDS
2. TOPIC – SPECIFIC STANDARDS
Universal Standards
• GRI 101:
-Foundation is the starting point for using the set of GRI Standards.
-sets out the Reporting Principles for defining report content and quality
• GRI 102:
-General Disclosures is used to report contextual information about an
organization and its sustainability reporting practices.
• GRI 103:
-Management Approach is used to report information about how an
organization manages a material topically.
Topic-specific Standards
• 200 Series: • 300 Series:
Reporting requirements under this series Reporting requirements under this series
• 201: Economic Performance • 301: Materials
202: Market Presence 302: Energy
203: Indirect Economic Impacts 303: Water
204: Procurement Practices 304: Biodiversity
205: Anti-corruption 305: Emissions
206: Anti-competitive Behavior 306: Effluents and Waste
307: Environmental Compliance
308: Supplier Environmental Assessment
Topic-specific Standards
• 400 Series:
Reporting requirements under this series
401: Employment 410: Security Practices
402: Labor/Management Relations 411: Rights of Indigenous Peoples
403: Occupational Health and Safety 412: Human Rights Assessment
404: Training and Education 413: Local Communities
405: Diversity and Equal Opportunity 414: Supplier Social Assessment
406: Non-discrimination 415: Public Policy
407: Freedom of Association and 416: Customer Health Safety
Collective Bargaining 417: Marketing and Labeling
408: Child Labor 418: Customer Privacy
409: Forced or Compulsory Labor 419: Socio-economic Compliance
Sustainability reporting with the GRI Standards
https://www.youtube.com/watch?v=6LkrhalWIMc&t=32s
Contemporary Developments
• Emergence of sustainability reporting and studies on sustainability coincides
with global developments on sustainability.
• Government and companies consider sustainable development as a way to
increase international competitiveness of companies in global arena.
Government promotes sustainability reporting and sustainable development
issues as part of its national development plan.
• Turkish companies started to initiate environmental protection, promotion of
social welfare and justice and educational projects to gain competitive
advantage in global arena and to increase their brand value in the eyes of
national and international customers.
• Until 2010, companies had used various names to report their projects like
sustainability report, sustainable development report, corporate social
responsibility report, corporate responsibility report, citizenship report, UN
Global Impact Progress Report or as an appendix to their annual report.
Starting from 2010, the naming of the reports has standardized and currently
most companies name their reports as “Sustainability Report”.
• The common priority areas in Sustainability projects in Russia can be
classified as:
• increasing workplace conditions, safety and employee rights,
• implementing corporate governance and anti-corruption policies,
• supporting children and especially disabled children in society,
• promoting family and general health in society and
Climate Change & Accounting
The Impact of Climate Change Policy on Corporate Strategic Management:
• Physical risks
• Transition risks
• Greenhouse Gases (GHG) potential liability
• Focus primarily on measures that have a short-term cost-
• saving effect
• Thorough understanding of climate risks is rare
• Few have governance and steering mechanism
• Pressure to act from a broad range of stakeholders
• Decision to adopt GHG management practices is either
PROACTIVE or REACTIVE
Climate Change & Accounting
Overview of Integrated Reporting
• Integrated reporting was developed by the IIRC
• Provides a clear and concise representation of how the organization
demonstrates stewardship and how it createsvalue, now and in the future.
• Founded on integrated thinking
• “The Capitals”
financial, manufactured, intellectual, human, social and relationship, and natural
