Sustainability Reporting Connecting the Dots Synne Mari Pedersen & Sunniva Bratt Slette Breakfast seminar, Sustainability Hub Norway Litteraturhuset, 28.04.2017
1 Introduction to sustainability reporting
The what and why s of sustainability reporting Governance Strategy and Text implementation Non-financial reporting Resonsible supply Text chain Impact, measurement Impact measurement and valuation valuation and 3
Non-financial performance plays an important role in investor s decision-making Company CEOs should lay out an annual strategy for long-term value creation and ensure board oversight 39% Strongly agree 53% Agree Source: Is your nonfinancial performance revealing the true value of your business to investors? (EY, 2016) Over the long term, ESG issues ranging from climate change to diversity to board effectiveness have real and quantifiable impacts 42% 50% Strongly agree Agree Do companies adequately disclose their ESG risks that could affect their current business models? 4
Corporate reporting is changing 1 2 3 Is sustainability reporting becoming more mainstream? Organizational value increasingly derived from intangible assets Sustainability reporting Regulatory framework and national legislation is lagging behind Integrated reporting From sustainability reporting to integrated reporting 5
2 Overview of reporting initiatives
Timeline: Historical development of sustainability initiatives, 1972-2016 Slette & Pedersen (2016)
Navigating the reporting landscape Normative framework Process standard Comparative evaluation mechanism Management system 8
Evolution of corporate reporting.. Source: Integrated reporting (EY, 2014) - Adapted from IIRC, Towards Integrated Reporting: Communicating Value in the 21st Century, September 2011
.. and the concept of integrated reporting An integrated report is a concise communication about how an organization s strategy, governance, performance and prospects lead to the creation of value over the short, medium and long-term. - IIRC Framework What is integrated reporting? Source: Integrated reporting, elevating value (EY, 2014) 10
Five steps towards integration 1 3 2 There s more capitals than just financial What is the business model? 4 Defining materiality 5 Connecting the dots Measuring value creation Natural capital Inputs Important exercise Strategy exercise The holy grail? Social and relationship capital Value-adding activities Risk and opportunities Externalities Outputs Requirement of GRI Standards Link to market value Intangible assets Intellectual capital Scope of report Definition of KPIs Human capital Stakeholder engagement Financial capital Manufactured capital Value to customer 11
3 Converging towards standardization?
Standardization 13
Source: TCFD (2016) 14
Sustainability reporting closes the gap Sustainability reporting Public funding Private funding Slette & Pedersen (2016) 15
Reporting on the SDGs It is the fiduciary duty of the board to ensure that its company is responding to the Sustainable Development Goals in a way that makes sense of its sector and strategy, therefore protecting both the short and long-term interests of the corporation. - Robert Eccles, Harvard Business School 16
Source: Rockström and Sukhdev (2016), Stockholm Resilience Centre. Illustration: J. Lokrantz/Azote 17
Increasing transparency makes markets more efficient and economies more stable and resilient. Michael R. Bloomberg 18
Synne Mari Pedersen synnemp@gmail.com 934 39 644 Sunniva Bratt Slette sunniva.slette@ntnu.no 922 53 676
We have conducted 45 inteviews with 33 stakeholders Financial institutions International organizations Public institutions Interess enter Companies Interest organizations Research and academia 20