Getting started with your Best Sustainability reporting Project

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Getting started with your Sustainability reporting

Getting started with your Sustainability reporting

0. Overview Sustainability reporting

Organisations embarking on the sustainability reporting journey would do well to establish a sustainability reporting cycle, setting out what needs to be done, how, when and by whom.

There are four stages to the sustainability reporting cycle and these form the basis for the structure of this project guide:

  • who is accountable and responsible,
  • the processes for identifying material sustainability-related information for reporting purposes,
  • determining, collecting and reporting the data, and
  • considerations for verification that can lead to continual improvement of reporting

When undertaking sustainability reporting, there may well be instances when working on one stage may necessitate considering another stage or parts within a stage. For instance, new information discovered when collecting data for reporting may prompt the organisation to revisit the identification of sustainability-related risks and opportunities (SRROs) that could reasonably be expected to affect the organisation’s prospects or material information about those SRROs. Beyond reporting, the organisation may also revisit its strategy for managing its SRROs.

In support of a simpler engagement, this project guide such that each stage can be engaged with independently of another. Where relevant, links or outlines to key interconnected content from other stages are included. There’s no one-size-fits-all solution. It is therefore important to take time to work through the suggested processes, then design processes appropriate to your organisation and implement them.

It’s also essential to reflect and return to the cycle to build in continual improvement. Those designing and implementing processes for the first time may wish to engage with this guide’s content piecemeal, and all are encouraged to return regularly to its key messages.

1. Allocating Responsibility and Establishing the Landscape for Sustainability reporting

Sustainability reporting is a subset of corporate reporting which, in turn, is essentially about accountability and communication. Whereas the corporate reporting focus has previously been on financial reporting, today’s approach incorporates sustainability reporting, which provides a more holistic view of the organisation.

In addition, before charting a path and making key decisions, it is important, to understand and evaluate where the organisation currently stands in relation to sustainability reporting and the environment in which it is operating.

1.1 Leverage the reporting process

Deciding who in the organisation should be responsible for sustainability reporting begins with looking at the existing financial reporting process. As in financial reporting, each participant in the sustainability reporting process has a role in ensuring that relevant, useful, comparable, reliable and consistent information is provided to enable primary users and other users to make informed decisions.

For a large organisation, other users can include individuals from risk management, finance, human resources and technology, as well as those in operational functions, including the supply-chain management function.

It is important to note that while the reporting process may not change significantly on the surface, the organisation still needs to consider how the roles and interactions among the respective participants might need to change.

Sustainability reporting

1.2 Decide who are responsible, accountable, consulted, and informed

An organisation should not stop at identifying and deciding who is responsible – it is equally important to identify and decide who among those along the reporting process are accountable, consulted and kept informed.

Having a sufficiently detailed Responsibility Assignment Matrix (or ‘RACI matrix’) in place can ease communication and ensure clarity throughout the organisation, by ensuring that everyone is always on the same page (see RACI matrix below).

Sustainability reporting

Details could include information about how oversight is exercised in a situation where particular responsibilities were delegated. With this in place, the organisation can then look to reviewing and updating its terms of reference, mandates, and other policies to reflect changes where necessary.

The responsibility for producing the sustainability report is likely to become an increasing part of the professional accountant’s role, for reasons including the need to present a holistic story about an organisation’s sustainability-related and financial performance, position, and future prospects. Because providing sustainability related information is not limited to large or more complex organisations, it is also likely that much smaller organisations facing resource constraints will make responsibility for sustainability-related information a required part of the role of the finance function.

1.3 Enhance governance

Those charged with governance have a vital role in overseeing an organisation’s strategy, decisions on major transactions, and its risk management process and related policies. With sustainability reporting developments, the governance role is expanding to include sustainability and related reporting considerations, including considerations of any necessary trade-offs associated with SRROs in pursuit of a just transition (see IFRS S1 §27 and 33(c).). For example, these might include considering the environmental impacts of building new operations against employment opportunities that would be created for the surrounding community.

Regardless, care is needed to avoid a ‘compliance mindset’ and ensure that governance is not reduced to a box-ticking exercise.

Senior management should support those charged with governance in their oversight of SRROs through the use of controls and procedures, which should be integrated consistently across the organisation’s internal functions.

Where those charged with governance have delegated responsibility for a particular role, there should be a clear line of reporting and oversight exercised over that position (see RACI matrix above), with clear expectations set on the scope and frequency of reporting to those charged with governance, in order to facilitate timely decision-making and effective oversight.

Governance is important for all organisations, irrespective of size. Large organisations are likely to have more complex governance structures spanning across different functions and components. In contrast, a smaller organisation might find that the majority of its governance roles are held by a small group of individuals.

Below some questions are set out that those charged with governance, or audit committees, can pose to senior management in fulfilling their expanded role.

Sustainability reporting

1.4 Understand the organisation and its environment

As a start, those responsible can ask these questions to determine the parameters within which the applicable reporting frameworks should be identified.

  • Where does the organisation operate? This covers the organisation’s legal form and where it is physically located, as well as the jurisdictions in and with which the organisation carries out its activities. These can be at international, regional and/or national levels, and can include activities carried out online through a virtual platform.
  • In which industries is the organisation involved? A larger or more complex organisation might be involved in a range of activities spanning multiple industries, which might be (though not necessarily) interrelated. Each industry is likely to have its own set of requirements, with certain industries, eg finance, healthcare, being more heavily regulated than others.

1.5 Identify relevant reporting frameworks

Next, the organisation should identify the legislation, jurisdictional and industry requirements, relating to sustainability reporting, that are applicable to the organisation. Every organisation, regardless of size and complexity, needs to comply with a combination of jurisdiction- and industry-specific disclosure requirements, which can differ in complexity depending on where and how the organisation operates.

The organisation’s legal form is likely to determine the extent to which requirements apply, and the level of disclosures required. For example, companies often have different, if overlapping, reporting requirements from other types of organisations, such as sole proprietorships, partnerships, clubs, societies and cooperatives. Similarly, publicly traded organisations are likely to have disclosure requirements that are different from and more stringent than those for organisations that are not publicly traded.

An organisation operating across multiple jurisdictions might have the added complexity of first having to consider the base disclosure requirements that pertain to all organisations operating in each jurisdiction. The organisation will need to be alert to the possibility that a subsidiary operating in a different jurisdiction from its parent might be required to make disclosures at the same level as, or in a greater level of detail than, its parent.

Then, the organisation needs to overlay that base with industry-specific requirements in the respective jurisdictions, and consider how these apply together and interact with the organisation’s overall structure and value chain.

Care will also be needed to consider whether there are also international or regional requirements that the organisation must comply with in addition to national requirements. If organisations keep a watchful eye on areas for policy development pertaining to encouraging sustainable business practices, they can also gain a head start on future reporting requirements.

Sustainability reporting

Source: Adapted from European Commission 2023b; requirements correct as at July 2023.

Thereafter, the organisation can identify those additional non-mandatory reporting frameworks that it wishes to adopt. An organisation’s selection of relevant reporting frameworks should align with and complement its strategic vision and direction. It will also need to assess how the selected reporting frameworks will interact with, and to what extent they can complement, the mandatory requirements that the organisation must adhere to across all the jurisdictions and industries with and in which it operates.

1.6 Identify priority areas

Having worked through the above stages, the organisation is now ready to prioritise where it will focus its efforts – initial focus might be on mandatory requirements. There is also a need to ensure that it has monitoring activity in place, as this is an evolving space where requirements may change from time to time, at a pace that can differ from one jurisdiction or industry to another, and is often influenced by their respective levels of maturity.

For example, an organisation involved in the healthcare industry may prioritise implementing mandatory regulatory requirements over implementing encouraged best practices.

While an organisation may decide to apply multiple frameworks in communicating its sustainability journey, it also needs to remain mindful of its available resources for achieving that goal. This topic is explored in greater detail in People as enablers.

2. The identification of material sustainability-related information for reporting purposes

2.1 Identify and understand what is important

Before reporting, an organisation needs first to understand its business model, strategy and value chain.

Establishing (or revisiting) the organisation’s purpose and vision can help the organisation chart its direction better, to achieve its aspirations, eg towards achieving net zero, decarbonisation efforts, effluent reduction.

An organisation’s reporting needs are likely to be driven by:

  • the information needed by the organisation’s senior management and those charged with governance to make informed decisions
  • the mandatory reporting requirements to which the organisation is subject, and
  • the legitimate information needs of primary and other users.

Disclosures that meet these reporting needs will be guided by the organisation’s materiality assessment and require considerable judgement. The organisation will need to make various judgements in determining the material sustainability-related information to be reported.

For example (from IFRS S1§75 and Appendix C) in:

  • determining which sources of guidance in the IFRS S1 and IFRS S2 Standards, or other reporting standards, to apply ,
  • identifying SRROs that could be reasonably expected to affect the organisation’s prospects,
  • identifying material information to be disclosed, in accordance with the standard that specifically applies to an SRRO; in the absence of a standard that specifically applies to the SRRO, judgement is applied to identify information that is relevant to the decision-making of primary users of the organisation’s general purpose financial reports, and faithfully represents that SRRO, and
  • assessing whether an event or change in circumstances is significant and requires reassessment of the scope of all affected SRROs throughout the organisation’s value chain.

At the same time, reporting for internal and external purposes should be as closely aligned as possible, both in content and frequency, to optimise operational efficiency and usefulness. This can help organisations reduce their reporting burden.

2.2 Apply a three-step approach to determine material information about sustainabilityrelated risks and opportunities for reporting

Determining material information about SRROs for reporting needs a three-step approach:

  • Step 1: identify the organisation’s SRROs
  • Step 2: assess whether any SRROs could reasonably be expected to affect the organisation’s prospects, then
  • Step 3: determine material information about the SRROs that could reasonably be expected to affect the organisation’s prospects, for reporting externally.

The size and complexity of the organisation, and the resources and capabilities of the people managing the process, may decide whether these steps happen at the same or different times, and be done by the same or different people. A less-well-resourced and less complex organisation may favour conducting the three steps together, as the same people are likely to be responsible for the tasks. In contrast, larger and more complex organisations may choose to carry out these steps separately, with the added granularity of considering them at different levels or geographic locations.

2.2.1 Step 1: identify the organisation’s SRROs

Leverage existing risk management or business-planning processes

An organisation may use its existing risk management process or business-planning process to identify its SRROs. IFRS S1 requires an organisation to use reasonable and supportable information that is available at the reporting date to identify SRROs, including information about past events, current conditions, and forecasts of future conditions5. There may be gaps if the existing risk management or business-planning process was not designed to identify and manage SRROs, but such processes can be enhanced to:

  • assess risks and opportunities arising from new objectives or new sustainability-related targets that the organisation has set for itself or is required to meet as a result of laws and regulations
  • use scenario analysis, taking into account forwardlooking information to identify SRROs
  • assess risks and opportunities arising from the product life cycle assessment (LCA) (see below).

Conduct a product life cycle assessment to identify SRROs and more

A product LCA helps an organisation to evaluate the capitals, including natural capitals, in its value chain. A ‘product’ may be either goods or services. An organisation’s dependencies on these capitals and its impacts on those capitals may give rise to SRROs for the organisation. For example, an organisation could be exposed to the related consequences of SRROs faced by stakeholders throughout its value chain.

A product LCA aids:

  • the identification of SRROs across the product life cycle
  • the identification of metrics for internal and external reporting
  • the identification of the interconnections and trade-offs between the capitals, for decision making
  • the identification of data needs, including signposting stakeholder engagement requirements to acquire this data.

Section 4.3 on people provides guidance on how existing processes may be enhanced.

Scan the environment and external sources

Besides identifying SRROs from information that is developed internally, the organisation may further consider the applicability of:

  • relevant sustainability reporting standards and/or frameworks to identify SRROs that are applicable to the organisation, eg refer to requirements and sources of guidance in the ISSB Standards (IFRS S1 §54–59 and Appendix C),
  • corporate reports of competitors or industry peers for SRROs (and related metrics and targets) that others have identified and assess whether these are applicable to the organisation
  • environmental and societal trends or drivers of change that may result in SRROs for the organisation
  • social media platforms or news channels for news and views about the organisation.

Scan your industry peers or competitors

When scanning the corporate reports of competitors or industry peers for SRROs that others have identified, consider whether data that has been made publicly available:

  • can be used by the organisation in its own scenario analysis and reporting, or
  • can balance its efforts in collecting data from stakeholders up and down its value chain.

Scan the work of experts or other authoritative sources

The works of the Intergovernmental Panel on Climate Change (IPCC), or other authoritative sources may help in identifying SRROs. The IPCC prepares comprehensive assessment reports about the state of scientific, technical and socio-economic knowledge on climate change, its impacts and future risks, and options for reducing the rate at which climate change is taking place (IPCC 2023). The latest IPCC assessment report may help an organisation identify climate-related risks and opportunities (and related metrics and targets) that apply to it and/or provide assumptions and parameters that could be used in its climate-related scenario analysis.

Scan the cyber world

Meanwhile, the speed at which social media and news channels spreads information and influences the public’s perception of an organisation should not be underestimated. It could result in both financial and sustainability implications for the organisation. Technology such as data analytics and artificial intelligence can be used to scour the internet and social media for concerns or sentiments about the organisation and the industries it is involved in, to identify SRROs.

Identify SRROs centrally or at a suitable component

Identifying SRROs may be done centrally or delegated to a suitable component of the organisation. The organisation may use a central-to-component approach, a component-to-central approach, or a combination of both approaches.

  • In using a central-to-component approach, a list of SRROs is identified and maintained centrally. This list of SRROs is then shared with components in the organisation. These components senior management will assess the extent to which each SRRO could affect their respective components’ prospects. Assessed SRROs are then aggregated and prioritised (or ranked) centrally.
  • In using a component-to-central approach, SRROs are identified by each component and then aggregated centrally. The extent to which each SRRO could affect the organisation’s prospects is assessed centrally, together with senior management of all components. Assessed SRROs are then prioritised.

2.2.2 Step 2: assess whether any SRROs could reasonably be expected to affect the organisation’s prospects

Assess the extent to which identified SRROs could affect the organisation’s prospects

In assessing whether the identified SRROs could reasonably be expected to affect the organisation’s prospects, evaluate:

  • the organisation’s dependence on resources and relationships throughout its value chain to generate cash flows and how its activities and outputs affect those resources and relationships, and
  • the scope of the organisation’s value chain, including its breadth and composition, in relation to each of those SRROs (IFRS S1 §B6). (see below)

Determining whether the SRROs could reasonably be expected to affect the organisation’s prospects in the context of sustainability

IFRS S1 sets out the requirements for identifying and determining SRROs that could reasonably be expected to affect the organisation’s prospects but does not dictate any particular process. An organisation is required to explain its processes and the related policies it uses to identify, assess, prioritise and monitor SRROs, and the extent to which, and how, these processes are integrated into, and inform, its overall risk management process (IFRS S1 §44 (a)–(c)).

The search for information to identify SRROs that could reasonably be expected to affect its prospects need not be exhaustive. Organisations are required to use all reasonable and supportable information that is available at the reporting date without undue cost or effort.

The assessment of what constitutes undue cost or effort depends on the organisation’s specific circumstances. It requires a balanced consideration of the costs and efforts for the organisation and the benefits of the resulting information for primary users (IFRS S1 §B10). That assessment is not static and may change over time as circumstances change.

A significant event or significant change in circumstances may cause the scope of an organisation’s SRROs to change, even when the organisation is not directly involved in those events or circumstances.

Could significant events or significant changes in circumstances trigger reassessment of affected SRROs?

A significant event or significant change in circumstances can occur in which the organisation is not directly involved, but which still affects it. This may also arise as a result of a change in what the organisation assesses to be important to primary users of its general purpose financial reports.

Examples of such significant events or significant changes in circumstances include (IFRS S1 §B11):

  • a significant change in the organisation’s value chain (for example, a supplier in the value chain makes a change that significantly alters its greenhouse gas (GHG) emissions)
  • a significant change in the organisation’s business model, activities or corporate structure (for example, a merger or acquisition expands the organisation’s value chain), and
  • a significant change in the organisation’s exposure to SRROs (for example, a supplier in the value chain is affected by a new regulation that the organisation had not anticipated).

On the occurrence of such a significant event or significant change in circumstances, the organisation is required by IFRS S1 to reassess the scope of all affected SRROs throughout its value chain (IFRS S1 §B11).

Prioritise the SRROs that could reasonably be expected to affect the organisation’s prospects

Regardless of the approach taken, those charged with governance should have oversight of the process of prioritising (or ranking) the SRROs that could reasonably be expected to affect the organisation’s prospects. This process may form part of an organisation’s business planning process. The governance body that is responsible for oversight of SRROs could be the board, a committee or equivalent body charged with governance.

While the ISSB Standards do not specify the responsibilities of those charged with governance, they require disclosures on governance to enable primary users to understand the governance processes, controls and procedures used to monitor, manage and oversee the organisation’s SRROs (IFRS S1 §26).

Validate the SRROs that could reasonably be expected to affect the organisation’s prospects

Determining which SRROs could reasonably be expected to affect the organisation’s prospects is a key matter of importance and heavily subjective. Judgements drive the contents for sustainability reporting, and indeed the sustainability strategy itself. That fact warrants efforts to carry out validation to challenge assumptions that the organisation has determined the right SRROs. A great way of doing this is to validate the SRROs with stakeholders (see below).

Validating the SRROs with stakeholders

Validating the SRROs that could reasonably be expected to affect the organisation’s prospects with key stakeholders may unveil the real concerns of each stakeholder group while establishing whether the organisation has determined the right SRROs.

These key stakeholders include:

  • internal stakeholders, such as senior management, those charged with governance, and other employees
  • primary users of general purpose financial reports, such as shareholders, investors and lenders
  • other external stakeholders, such as key suppliers and customers in the value chain, and regulators.

Assessing the extent to which different key stakeholders care about the SRROs that have been determined may be done through:

  • existing sources, such as employee engagement surveys, customer surveys, social media interactions and questions raised at investor presentations and annual general meetings
  • specific stakeholder engagement to gain feedback on SRROs that could reasonably be expected to affect the organisation’s prospects, through interviews, meetings, and workshops.

Organisations that operate in multiple jurisdictions would need to be alert for SRROs and the associated information that may be relevant for reporting within the context of one reporting framework or standard, though it may not be considered material in another.

For example, an organisation may report its sustainability-related information in accordance with the ISSB Standards and the European Sustainability Reporting Standards (ESRS). The latter require sustainability matters to be assessed using the double materiality principle.

In certain circumstances, a particular SRRO could be relevant for reporting if:

  • its information is relevant to external stakeholders, other than primary users, as it affects them or the environment, or
  • it is considered material in the context of another reporting framework or standard that the organisation is/will be complying with, or
  • law or regulation specify requirements for disclosure about the particular SRRO.

The validation process may begin with stakeholders other than the primary users. The next step is to validate whether information about an SRRO, either individually or in combination with other information, is material to primary users when taken as a whole.

The approach for validating SRROs with stakeholders is not standardised and can be adapted for the different stakeholder groups.

Here is an example of how assessing SRROs that could be relevant for reporting may look like.

Assessing SRROs that could be relevant for reporting

Sustainability reporting

Note. This diagram is for illustration only and is not to scale. Organisations may find other ways that are more suitable for their circumstances to illustrate the assessment of SRROs that could reasonably be expected to affect the organisation’s prospects.

2.2.3 Step 3: determine material information about the SRROs that could reasonably be expected to affect the organisation’s prospects, for reporting externally.

The threshold that distinguishes material information from non-material information will be unique to each organisation.

In determining material information for reporting about the SRROs that could reasonably be expected to affect the organisation’s prospects, the following factors need to be assessed:

  • The requirements of relevant sustainability reporting standards or frameworks that specifically apply to that SRRO.
  • The information’s relevance to the organisation’s purpose and business, by taking into account the nature, magnitude and likelihood of actual or anticipated effects from the SRROs.
  • Its relevance to key internal and external stakeholders – if information about an SRRO is highly scrutinised by primary users, it could be material for reporting regardless of the magnitude of its potential effects (see table A below).
  • Both quantitative and qualitative factors, such as the magnitude and the nature of the effect of an SRRO on the organisation, should be assessed. Different factors may be used for environmental, social or governance topics. These factors may include the level of greenhouse gas (GHG) emissions, number of employees, revenue or profit, among others.
  • The extent of managing the SRRO, such as putting controls around it, and whether the controls will trigger remedial actions. Such actions may include stopping something entirely, changing the way of doing some thing, or sharing the risk. If the importance of managing the SRRO and putting controls around it can be justified, information about the SRRO is most probably material.
  • The potential effects and likelihood of future events – information about an SRRO is more likely to be material if the potential effects are significant and the event is likely to occur (See table B below).
  • The dynamic pace at which an SRRO can affect an organisation’s prospects – evaluate what can cause an SRRO to affect an organisation’s prospects and how quickly it can happen (see table C below).

Table A – Considering influences on users’ investing decisions

‘If we didn’t disclose [information about] this SRRO, would it make a difference to users’ investing decision?’ (a risk management expert).

Table B – Assessing the potential effects and likelihood of future events

In some cases, SRROs might relate to a possible future event with uncertain outcomes. Information about such SRROs is more likely to be material if the potential effects would be significant and the event is likely to occur (IFRS S1 §B23). For such cases, the organisation needs to assess:

  • the potential effects of the events on the amount, timing and uncertainty of the organisation’s future cash flows over the short, medium and long term (referred to as ‘the possible outcome’), and
  • the range of possible outcomes and the likelihood of the possible outcomes within that range (IFRS S1 §B22).

Table C – The relationship between multiple forms of materiality

Information needs of primary users may evolve over time15. Organisations need to be forward-looking and proactively identify and evaluate triggers that may rapidly cause SRROs to affect an organisation’s prospects. When it happens, information about an SRRO that appears immaterial today can quickly become material tomorrow (WEF and BCG 2020).

Hence, materiality assessment is a continuous process that requires considerable judgement. This is true regardless of the materiality principle applied.

Organisations that operate in multiple jurisdictions and use more than one reporting framework or standard for their reporting would need to be more vigilant. They need to be alert to, and make judgements about, the new information and developments in the environment and society that can be potential triggers. Some information may become less material over time, though this may be a lesser concern. In the next column the example illustrates how the materiality of information about an SRRO can be dynamic.

An illustration of the relationship between multiple forms of materiality

Sustainability reporting

The above example illustrate how the materiality of information about an SRRO can be dynamic.

  • A geopolitical event (or other SRRO) disrupts the organisation’s supply-chain, requiring a change in raw material sourcing or production processes that impairs how employees discharge their role. Judgement will be needed in assessing whether the impact on employees is relevant for impact materiality reporting, and possibly also under ISSB Standards.
  • A freak weather event (or other SRRO) results in damage to the organisation’s local infrastructure, halting production and in turn, slowing sales of these manufactured goods. Such an event may well be material under the ISSB Standards and the applicable accounting standards (eg the IFRS Accounting Standards), and judgements must be made about the information that will be material to investors.

2.3 Reassess materiality judgements

Material information about an organisation’s SRROs may change over time. Information that was material in the previous period may no longer be material now, if circumstances have changed. Conversely, information that was not material in the previous period may now become material. As mentioned earlier, this could happen rapidly (see Table C and An illustration of the relationship between multiple forms of materiality above). A new (or previously unidentified) SRRO may even arise (see Could significant events or significant changes in circumstances trigger reassessment of affected SRROs? above).

The ISSB Standards require materiality judgements to be reassessed at each reporting date, taking into account changed (or new) circumstances and assumptions (IFRS S1 §B28).

3. The identification of relevant data in operations including collection and ESG reporting/Sustainability reporting

Data is the means by which an organisation can analyse and interpret the present and look towards the future, using techniques such as predictive analytics and scenario analysis to demonstrate impact over the short, medium and long term. Having a universal data model is essential to this.

Part of the data model is informed by the prior stages of the reporting cycle, but there are additional considerations that relate to:

  • determining the reporting boundary and value chain
  • setting the scope and parameters of data collection
  • determining the data requirements.

3.1 Determine the reporting boundary and material information in the value chain

An organisation’s dependencies on various capitals (or resources and relationships) throughout its value chain and its impacts on those capitals will probably give rise to sustainability-related risks and opportunities (SRROs) for the organisation.

An organisation should determine its reporting boundary in accordance with the applicable sustainability reporting standards. Specific disclosures may be required that depend on data from investees and from stakeholders in its value chain (see below).

Identifying the consolidated group and its value chain for sustainability reporting

Sustainability-related information prepared in accordance with the ISSB Standards needs to be for the same reporting organisation as the related financial statements (IFRS S1 §20). If the organisation prepares its consolidated financial statements to provide information about the parent and its subsidiaries as a single reporting organisation, it should do the same for sustainability reporting.

An organisation’s sustainability-related information should enable the primary users of its general purpose financial reports to understand the effects of the SRROs on the cash flows, access to finance and cost of capital over the short, medium and long term for the parent and its subsidiaries (IFRS S1 §B38).

The organisation is required to describe:

When disclosing Scope 1 and Scope 2 GHG emissions, the organisation disaggregates emissions between the consolidated accounting group and other investees, such as associates, joint ventures and unconsolidated subsidiaries (For an organisation applying the IFRS Accounting Standards, the

consolidated accounting group comprises the parent and consolidated subsidiaries (see IFRS S2 §29(a)(iv)).

Care is needed to apply the right criteria in determining the reporting boundary throughout an organisation’s value chain. Using different approaches will result in different extents of value chain reporting and thus produce variable results (see below).

Reporting GHG emissions in the value chain

In reporting information about Scope 3 GHG emissions in accordance with IFRS S2 §29(a)(vi), enable primary users to understand the source of these GHG emissions by considering all 15 categories of Scope 3 GHG emissions throughout the organisation’s entire value chain (upstream and downstream) and disclosure of the categories that are included within its measure of Scope 3 GHG emissions (IFRS S2 §29(a)(vi)(1) and §B32). The 15 categories of Scope 3 GHG emissions are described in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (Greenhouse Gas Protocol 2011). An organisation whose activities include asset management, commercial banking or insurance would be required to disclose additional information about the organisation’s Category 15 GHG emissions or those associated with its investments (financed emissions) (IFRS S2 §29(a)(vi)(2)).

IFRS S2 also requires Scope 3 GHG emissions to be measured in accordance with the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Greenhouse Gas Protocol 2004), to the extent that the requirements do not conflict with the requirements in IFRS S2 (IFRS S2 §29(a)(ii) and §B23).

If the organisation is required by a jurisdictional authority or an exchange on which the organisation is listed to use a different method for measuring its GHG emissions, it is permitted to use this method for as long as the jurisdictional or exchange requirement applies to the organisation (IFRS S2 §29(a)(ii) and §B24).

3.1.2 Set the scope and parameters of data collection Understand stakeholders’ information needs

It is important to understand why the data identified for collection is necessary, and how it interacts with and fits into the organisation’s business model and overall sustainability strategy.

For a more holistic understanding of which data will be able to meet stakeholders’ information needs, and to inform the organisation’s decision making relating to data collection methodology (see section 5.2), an organisation may engage with the following partners:

  • financial capital providers and financial institutions, to understand what data they will require and how they intend to harvest the data directly from the organisation
  • technology vendors, to understand what data they collect from the organisation, its value chain and their other customers; technology vendors may be able to share insights on the organisation’s data collection or data validation/verification
  • local chambers of commerce or industry networks, to consider how they can support data collection, by working collectively. Align data collection to reporting needs

As much as possible, data collected should align to reporting needs for internal and external purposes, including for stakeholder-management purposes.

Providing stakeholders with information based on a common set of data establishes the foundation for a common understanding, which is key to developing and maintaining an effective relationship between an organisation and its stakeholders. Being able to look through the same lens reduces misunderstandings and improves decision making. For this, the data must be relevant and aligned with the organisation’s business model, purpose and direction so as to be decision-useful. Consider data while setting measurable metrics and targets

The value and usefulness of data is unlocked through comparison of an organisation’s metrics with internal targets, industry benchmarks and other organisational metrics. Where possible, the sustainability-related data should have qualities consistent with the financial data. Below an example is provided of how the ISSB Standards can be applied in identifying metrics for measuring an organisation’s progress towards its targets.

Identifying metrics for measuring progress towards targets

In measuring progress towards any targets that the organisation has set, and any targets it is required to meet by law or regulation, reliable metrics and taxonomy should be used to identify and describe the reporting data consistently. Referring to the applicable reporting frameworks or standards, in the first instance, will identify the metrics, and associated taxonomy that specifically apply to a given SRRO.

If an organisation applies the ISSB Standards, it applies the IFRS Sustainability Disclosure Standard that specifically applies to that SRRO. If an IFRS Sustainability Disclosure Standard that specifically applies to an SRRO is absent, guidance is supplied by IFRS S1 §57–59 for identifying information (including metrics) that is:

Given the breadth of sustainability topics, an organisation may use a range of inputs in reporting these metrics, which can include direct measurement, reasonable estimates, and credible and verifiable proxy data.

An organisation is required to use all reasonable and supportable information available to it at the reporting date without undue cost or effort when selecting the measurement approach, inputs and assumptions used in measuring Scope 3 GHG emissions. However, IFRS S2 does not specify the inputs that an organisation uses in measuring its Scope 3 GHG emissions, but the standard requires the organisation to prioritise inputs and assumptions using these characteristics (which are listed in no particular order) (IFRS S2 §B39-B40):

The availability of data and the organisation’s ability to collect those data are also critical to its ability to report progress against those targets. Though setting targets is not a typical corporate reporting activity, organisations should think holistically about how its sustainability reporting process may interact with its strategy to manage SRROs. The box below highlights examples of such considerations when setting sustainability-related targets to manage SRROs.

Setting sustainability-related targets

‘Sustainability-related targets tend to be based on long-term aspirations, but care is needed to balance investors’ expectations against the organisation’s ability to meet the targets set and reporting on its progress. Investors often assess organisations annually, and the investment community holds these organisations accountable for disclosures made.

‘An organisation, especially one just commencing sustainability reporting, should start by aiming for achievable targets and maintaining the integrity of its overall corporate reporting process as it grows. The organisation should regularly monitor its progress towards such targets. This will provide strong foundations on which to build its sustainability reporting over the longer term, helping to mitigate risks of greenwashing.’ (an amalgamation of comments from roundtable participants)

3.1.3. Determine the data requirements for each SRRO to be reported

Working closely with components across the organisation enables identification of the sustainability-related information relevant to SRROs that could reasonably be expected to affect the organisation’s prospects, including the relevant metrics (see below). The organisation’s process in identifying SRROs was explored above in the section ‘Determining the material sustainability-related information to be reported‘.

Example of determining data requirements for SRROs

Applying IFRS S1, a manufacturer of household and personal products might identify access to and use of clean water as an SRRO that could reasonably be expected to affect its prospects, as its business model depends heavily on water as a natural resource.

Next, applying IFRS S2, the organisation could consider the industry-based guidance for the household and personal products industry, and might conclude that water management should be one of its disclosure topics.

An example of relevant metrics, and therefore the data requirements, that could inform the disclosures on this SRRO that could reasonably be expected to affect the organisation’s prospects might include those shown in the below table.


Potential data requirements

(1) Total water withdrawn

(2) Total water consumed

Percentage of each in regions with High or Extremely High Baseline Water Stress

  • Types of water sources, which might include surface water, groundwater, rainwater, water obtained from water utilities or other organisations.
  • Water sources in locations with High or Extremely High Baseline Water Stress as classified by the World Resources Institute’s (WRI) Water Risk Atlas Tool, Aqueduct (WRI n.d.).
  • Amount of water withdrawn from each source, measured in thousand cubic metres (m3).
  • Amount of water consumed in the organisation’s operations, measured in thousand cubic metres (m3).

Note. The organisation might further analyse the above data by key operational segments, geographical locations, or manufactured products.

Source: Adapted from IFRS S1, paragraph B3 (ISSB 2023a) and the Industry-based Guidance on Implementing Climate-related Disclosures: Volume 5 – Household & Personal Products (ISSB 2023c)

An organisation involved in multiple industries might find it useful to identify overlapping metrics and further isolate them into a practical set of metrics for reporting, which should help to guide data collection as well.

3.2 Data collection for Sustainability reporting


Data will invariably come through multiple sources, with some obtained through less mature processes and systems. Hence we need to understand and consider how amalgamating different types of data, with differing levels of verifiability, will fit into an organisation’s overall data collection process and framework.

In this stage, the guidance we provide relates to the following activities:

  • selecting sources of data
  • establishing the data collection methodology
  • considering the use of external support.

3.2.1 Select appropriate sources of data for Sustainability reporting Identify and understand existing data in use

Identifying sustainability-related data currently in use within the organisation, its availability and how it is being collected is likely to be an organisation-wide exercise. Collaboration and engagement across the organisation’s end-to-end product delivery cycle will be key. It is important that the organisation brings its people along on its sustainability reporting journey. When they understand the purpose of the data being collected, the organisation stands to benefit from having better insights into that data. Identify and consider available sources of data

An organisation might source its data internally or externally. To identify the most appropriate source of data for the organisation, its availability and ease of access, accuracy and verifiability should be considered. Data verifiability through the presence of an audit trail is critical in inspiring stakeholders’ trust in the reported information. This is particularly important where there is a greater level of measurement uncertainty, such as verifiability of assumptions involved in making estimates and/or sources of proxy data. Ethically consider the proportionality of cost against benefit

Ethics are involved when assessing the cost and effort of obtaining the necessary data to support sustainability reporting, and whether they are proportionate to the benefits of providing that information. For a start, it’s best to prioritise reporting that uses available and accessible data.

The ISSB introduced the concept of ‘all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort’ to ease the burden of disclosure and assist organisations in applying the ISSB Standards (Basis for Conclusions for IFRS S1, paragraph BC9.). The ISSB Standards may specify what is reasonable and supportable information in specific cases (IFRS S1 §B8).

For example, when preparing disclosures about the anticipated financial effects of an SRRO, an organisation is required to use (IFRS S1 §37):

  • all reasonable and supportable information that is available to the organisation at the reporting date without undue cost or effort; and
  • an approach that is commensurate with the skills, capabilities and resources that are available to the entity for preparing those disclosures.

3.2 Establish the data collection methodology for Sustainability reporting

3.2.1 Consider available technology options

If the necessary data is not readily available in the desired form, mechanisms should be set up to collect, process and/or monitor it, eg through internal surveys. Algorithm driven data collection may result in a more efficient data collection process, especially when value chain reporting is involved. The use of technology to facilitate sustainability reporting is discussed here.

3.2.2 Align frequency of data collection with reporting timelines

Aligning the frequency at which the data is collected and reported requires taking into consideration mandatory reporting timelines. For example, the ISSB Standards require sustainability-related information to be issued at the same time as the related financial statements (IFRS S1 §64). Therefore, data must be collected on a timely basis to enable an organisation to issue its sustainability-related information for the same reporting period and at the same time as the organisation’s corresponding financial information.

3.2.3 Use consistent methodology

Sustainability reporting data should be collected at consistent intervals using a consistent methodology. If an organisation’s data collection methodology can be improved to collect better-quality data, it should move towards adopting the better methodology. See further details in section 6.3 for an outline of how a disclosure can explain what has changed as a result of the improvement.

3.2.4 Maximise use of data collected

An organisation should aim to align the data collected to meet both internal and external reporting needs at the same time. Maximising the usefulness of the data collected while optimising operational efficiency through economies of scale helps organisations to minimise their reporting burden. Close alignment between an organisation’s sustainability strategy and reporting needs also helps solidify appreciation of the former.

3.2.5 Practise responsible procurement

To support value chain reporting, an organisation could practise (or enhance its) responsible procurement. Implementing a supply chain code of conduct might further instil financial and social transparency along the supply chain, thereby creating accountability and full disclosure for issues such as human rights, health and safety, and environmental impacts. For example, an organisation can enhance its questionnaires for suppliers (which form part of their responsible procurement process) to probe topics such as the suppliers’ codes of conduct, and/or information about their approaches to child labour, GHG emissions, etc. This mechanism can then be used to monitor suppliers’ practices against the organisation’s supply chain code of conduct.

3.2.6 Keep the data-collection process simple

Organisations should strive to keep the data-collection process as simple as possible (eg through the use of technology). Organisations might also find it helpful to demonstrate to stakeholders in the value chain how reporting on such data can be beneficial to them. In practice, there may be instances where data cannot be collected directly from the value chain, in which case, the organisation will need to consider whether sourcing for proxy data will meet its needs.

3.2.7 Embed verification within processes and systems

An organisation needs to plan for verification within its processes and systems to ensure that its outputs are credible and can be relied upon. Controls for sustainability reporting should apply the same rigour as controls for financial reporting. The effectiveness of these internal controls over sustainability reporting needs to be monitored periodically and ideally, should coincide with the monitoring of internal controls over financial reporting (see below).

Considerations for internal controls over sustainability-related data

The data used in sustainability reporting is often different from that used in financial statements, tending to be more unstructured and qualitative, and is estimated using multiple sources. The ability to review large volumes of data in real time can be a necessity for many organisations but is challenging when the volumes of data increase and the potential risk profile broadens. Data governance, quality, modelling and analytics are therefore critical.

One of the challenges faced with such volumes of data is that with traditional sampling techniques it is hard to ensure that appropriate conclusions are drawn from testing.

Overall, 80% of respondents to a recent survey either agreed or strongly agreed that internal controls should be extended to sustainability-related information, and ESG-related reporting.

For internal controls to be effective, an appropriate combination of people, process, technology and data is required. If any one of these elements is not effective, the effectiveness of the internal control framework is diminished.

The opportunity to use computing power to constantly review the totality of a population, often referred to as ‘continuous monitoring’, may offer advantages in internal control monitoring. Data inspection techniques such as using embedded code to identify potential patterns in transactions in real time offers an opportunity not only to improve the performance of a control but also to increase the value added to organisations.

It is important to strike a balance between the continuous monitoring of data and the identification of transactions that might require further investigation or subsequent audit work, based on the assessment of strategic risks.

In addition, the report Achieving Effective Internal Control over Sustainability Reporting (ICSR), produced by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides guidance on establishing and maintaining an effective system of internal control over sustainability-related information (COSO 2023).

3.3 ESG Reporting i.e. Sustainability reporting

Data collected will need to be analysed in accordance with the relevant reporting requirements, which may include scenario analysis in accordance with the organisation’s business and risk management approach. In this stage, the guidance relates to the following activities:

  • Select the means of communication
  • Ensure connectivity of information
  • Apply the qualitative characteristics of good reporting
  • Enhance the reporting package

3.3.1 Select the means of communication

Disclosures tell an organisation’s story. With the implementation of sustainability reporting, this extends to telling an organisation’s story about its sustainability reporting journey.

Reporting frameworks generally do not specify a location for the reporting of sustainability-related information. Each organisation should determine the most suitable mode of communication, given the types of sustainability-related information involved as well as the audience it intends to reach. This will also be subject to regulatory or other requirements specific to the jurisdictions involved.

As an example, the ISSB Standards suggest that sustainability-related financial disclosures could be included in an organisation’s management commentary or a similar report, when it forms part of the general purpose financial reports. Such reports could also be known as ‘management’s discussion and analysis’, ‘operating and financial review’, ‘integrated report’ or ‘strategic report’. An organisation may also include such disclosures by cross-reference to another report that it publishes (IFRS S1 §61, 63, and §B45–B47).

In line with this train of thought, the annual report is often recognised as an important and trusted means of communication. The annual report is currently still the preferred means of communication, with the sustainability report and integrated report also being popular choices. In addition, websites, social media feeds, newsletters, employee meetings and supplier briefings are also ways in which an organisation can communicate more directly, in a more tailored and more timely way, with stakeholders other than investors.

Disclosures about the organisation’s business model and policies developed using integrated thinking that include medium to long term considerations will be less inclined to materially change year on year, unless the SRROs change. Such disclosures might be presented as publicly available standing information in, say, the organisation’s website.

Other, more specific or precise information that needs to be updated from time to time, eg metrics relying on systems and technology for collection, might be presented in a location which can be accessed by investors and other relevant stakeholders. Depending on the organisation’s and stakeholders’ needs, disclosures on metrics and targets might even be decoupled, such that targets (and comparisons against them) might be periodically reported upon separately.

3.3.2 Ensure connectivity of information

Research into climate-related disclosures in the construction materials and chemicals industries indicated that disclosures are often scattered, duplicated, and have little to no cross-referencing (Baboukardos et al. 2022).

The result is information overload that hinders, instead of enabling, transparency and comparability, with readers having to spend considerable time and effort to find the information that they need.

Organisations need to provide information in a coherent and consistent manner to enable primary and other users to understand the connections between various types of information as shown below.

Sustainability reporting

Drawing connections between disclosures involves, but is not limited to, providing necessary explanations and cross-references, and using consistent data, assumptions and units of measurement. Organisations should clearly and concisely explain these connections and avoid unnecessary duplication where disclosures involve common items of information (IFRS S1 §B42) (see below).

An example of connected information

Source: Adapted from the ISSB Standards

In providing connected information on strategy and financial planning(IFRS S1 §B43) an organisation might explain in its disclosures:

  • how its strategy will affect or is likely to affect its financial statements and financial planning
  • how its strategy relates to the metrics used to measure progress against targets
  • how its use of natural resources or changes within its supply chain could amplify or, in contrast, reduce its SRROs
  • the link between its use of natural resources or changes within its supply chain to information about current or expected financial effects on its production costs, its strategic response to mitigate those risks and its related investment in new assets
  • the link between its narrative information to the related metrics and targets and to information in the related financial statements.

Further, applying the ISSB Standards together, if oversight of SRROs is managed on an integrated basis, the organisation should avoid duplication by providing integrated risk management disclosures instead of separate disclosures for each SRRO(IFRS S2 §26.).

Disclosures on the organisation’s past performance, current position and future prospects should also clearly demonstrate how value has been created and how the organisation intends to create more value in the future, reflecting the interaction of various resources and capitals.

For example, applying the Integrated Reporting Framework, disclosures should show the linkages and relationships between the six capitals: financial, manufactured, social, human, intellectual and natural.

3.3.3 Apply the qualitative characteristics of good reporting

Sustainability-related information, which can be financial and/or non-financial, should be supported with appropriate narrative (qualitative) disclosures. Often, telling the organisation’s story about its sustainability ambitions and strategy to achieve them can guide its sustainability-related non-financial disclosures.

Good-quality information for corporate reporting (which includes sustainability reporting) generally demonstrates these qualitative characteristics as set out in IFRS S1 (IFRS S1 Appendix D), and shown below.

Sustainability reporting

IFRS S1 specifies that for sustainability-related information to be useful, it must be relevant and faithfully represent what it purports to represent. This usefulness is enhanced if the information is comparable, verifiable, timely and understandable. To achieve faithful representation, disclosures should provide a complete, neutral and accurate depiction of an organisation’s SRROs (IFRS S1 §10-16).

To support the credibility of sustainability-related information, the ISSB Standards prescribe disclosures of inputs, assumptions and judgements used in preparing that information. Where there are changes to this information in subsequent years, the ISSB Standards also prescribe the disclosure requirements for comparative information (IFRS S1 §70–71).

3.3.4 Enhance the reporting package

Having worked through the earlier stages of the sustainability reporting cycle, the organisation should now be ready to incorporate additional, relevant data into its reporting package and move to the next stage of preparing its disclosures.

Every organisation, regardless of size and complexity, is likely to have some form of reporting package to help guide its internal reporting process. This reporting package might range in complexity from a set of spreadsheets to automated, system-generated reports based on data collated from multiple locations and sources. To a certain extent, additional work might be needed to design the output of this reporting package in a form suitable for stakeholders’ consumption.

A set of worksheets is included in the Appendices to guide preparation of sustainability-related information in accordance with the ISSB Standards, which integrate the Task Force on Climate-related Financial Disclosures (TCFD) recommendations’ four core pillars (see below).

  • Appendix A provides a sample worksheet for preparing information for disclosure in accordance with IFRS S1, to communicate the effects of an organisation’s SRROs (other than climate-related) over the short, medium and long term.
  • Appendix B provides a sample worksheet for preparing information for disclosure in accordance with IFRS S2, to communicate the effects of an organisation’s climate-related risks and opportunities over the short, medium and long term.

The four pillars of the TCFD recommendations integrated into the ISSB Standards

The ISSB Standards integrate the TCFD recommendations’ four core pillars, which can also be used to structure an organisation’s disclosures. However, the requirements of the ISSB Standards can sometimes go beyond the TCFD recommendations.

The four core pillars of TCFD’s recommendations



Risk management

Metrics and targets

Governance processes, controls and procedures the organisation uses to

monitor and manage SRROs.

See also Section 1, Allocating responsibility for sustainability reporting, which explores the Responsibility Assignment Matrix, a possible source of information for disclosures. Other sources to consider include the organisation’s internal policies and terms of reference.

The approach that the organisation uses to manage SRROs.

See below on how an organisation can communicate its SRROs to relevant stakeholders.

Processes the organisation uses to identify, assess, prioritise and monitor SRROs.

Disclosures should enable understanding of how these processes are integrated into, and inform, the organisation’s overall risk management process, as well as enable assessment of the organisation’s overall risk profile and overall risk management process.

See also Section 3, Determining the material sustainability related information to be reported.

The organisation’s performance in relation to SRROs, including progress towards any targets the organisation has set or is required to meet by law or regulation.

Disclosures for each SRRO must include metrics required by the ISSB Standards. In the absence of an ISSB Standard that specifically applies to the SRROs, IFRS S1 §54–58 and Appendix C set out the Sources of Guidance to guide identification of applicable metrics.

See also Section 4, Determining the data requirements.

Communicating to relevant stakeholders the SRROs that could reasonably be expected to affect an organisation’s prospects

The list of prioritised SRROs that could reasonably be expected to affect an organisation’s prospects may be expanded into a schedule, to include relevant information such as timescale and people (or organisational component) responsible for managing each SRRO. This schedule should be made accessible to senior management and employees as their roles require.

The schedule of SRROs should assist in:

  • describing the organisation’s environment-, social-, and governance-related targets to help internal and external stakeholders understand and consider what is important for the organisation, and

  • setting its sustainability strategy.

It is important to convey a clear strategy to both internal and external stakeholders on how the organisation will achieve its sustainability-related targets.

4. Implementing reporting: plan, technology and people as enablers

Successful implementation of any process but, in particular, one that brings changes as big as sustainability reporting, will depend upon the following key elements:

  • creating a formal implementation plan,
  • using technology as an enabler, and
  • working with people as enablers.

4.1 Create a formal implementation plan

Considering the breadth and depth of changes that an organisation will probably need to implement to achieve its reporting needs and goals, the organisation might wish to supplement its sustainability reporting cycle (see Executive summary, The stages to fulfilling the call to action) and RACI chart (see section 1.1, Box 1.2) with a formal implementation plan specifying timescales to guide its execution. This plan, supported by technology and people as enablers, might include details on the following aspects.

  • Systems development – setting appropriate timescales for building the necessary systems and processes to support them.
  • Enhancing standard operating policies and procedures to incorporate timescales for sustainability related data collection and verification. This can include specifying when data is updated centrally, at a designated time, so that reporting teams will know when to watch for updated or new requirements. The organisation might also consider aligning the timing for updates of financial, sustainability-related and other corporate reporting data to build discipline for data collection among the reporting teams.
  • Establishing a reporting hub comprising an interdisciplinary team of individuals charged with developing and maintaining the organisation’s overall corporate reporting process. This hub should have the authority and capabilities to set organisation-wide minimum standards on controls, data collection and evidence requirements, including the designated levels. For instance, whether data collection happens at site, industry, country, or regional level.
  • Holding awareness sessions for internal and external stakeholders, and training for those expected to use the new systems (see below).

Financial and sustainability reporting should be taken equally seriously

The system is only as good as the person who is [in]putting the data. So, building that human capability is critical, and this is a problem that we continue to face every day. It’s so important that everyone takes non-financial reporting as seriously as financial reporting’ (an accountant involved in the sustainability reporting process).

4.2 Technology as an enabler of Sustainability reporting

The available technology options will depend on the size and complexity of the organisation and its activities, as will the extent to which they can aid the organisation in its data collection efforts to facilitate sustainability reporting.

An organisation may start by capturing data for sustainability reporting with the technology that is readily available, such as spreadsheet-based templates hosted on web-based collaborative platforms (eg Microsoft Excel spreadsheets hosted on SharePoint, or Microsoft Forms), and subsequently move to applications with enhanced data analytics capabilities to support homogeneity.

On the scalability and flexibility of a technology, consider whether the system and its vendor(s) will grow in tandem with the organisation.

There are concerns over the reliability and verifiability of data collected internally or by other parties that is used in sustainability-related disclosures. Systems for collecting ESG data are less mature than ERP systems used for financial information. Organisations are encouraged to monitor the evolving landscape as the technology for sustainability reporting develops.

Data is collected but not always traceable to its source, especially when manual interventions are involved. As mentioned in section 5.2.7, the technology should include verifiable audit trails that will enable audits to be performed on the data collected, processed, stored and reported by the system. This would allow the system and the data that it processes to be accredited by independent third parties, thus improving trust in the information reported.

Traceability of data can be enhanced by:

  • installing monitoring equipment (eg sensors) to automate data collection, albeit at additional costs, and
  • using software to automate calculations or conversion of data.

Investing in new technology or integrating it with existing systems may require deep consideration of its design and functionality. These are important matters to be discussed with technology vendors or service providers before making any purchases

Design considerations for technology

These design considerations would help an organisation determine the most important features that are relevant to its needs. Large organisations may find many of these features relevant, while less-well-resourced organisations may not need all these features immediately. This list may not include all the features that could be relevant to an organisation. They are organised into several themes for consideration.

Themes for consideration

The system should

System architecture and integration

  • store data centrally (ie providing one source of data, or often referred to as single source of truth)
  • link to and integrate with internal policies and targets
  • link to or integrate with existing systems to pull data from them (eg financial reporting, payroll, ERP)
  • be intuitive and offer straightforward user interfaces
  • be scalable – the technology (and the vendor) should have the ability to grow as the organisation grows.

Data governance and management

  • perform automated aggregation of data from internal and external sources into one place
  • perform automated checking of data accuracy, consistency and completeness
  • have verifiable audit trails such that will enable audits to be performed on the data that it collects, processes, stores and reports
  • provide proxy data to supplement data from the value chain
  • be equipped with cybersecurity features to protect against unauthorised access and data breaches.


  • be accessible to internal and external stakeholders (eg suppliers, customers), allowing them to input data directly, where applicable
  • be accessible to all employees, depending on customisable access rights, allowing access to the organisation’s policies and data.


  • produce output (eg reporting templates) that can be used for internal and external reporting
  • produce visualised information (eg dashboards or infographics) for monitoring and presentations
  • have sufficient flexibility to adapt to the evolving needs of the organisation and the applicable reporting frameworks or standards.

4.3 People as enablers of Sustainability reporting

In this section on people as enablers we explore the key matters relating to people, specifically:

  • making the case for investing in people,
  • establishing who is accountable and responsible for delivery,
  • creating awareness and education on sustainability reporting and the necessary processes,
  • reviewing the organisation design to ensure people are best placed to fulfil their roles,
  • engaging and managing external stakeholders so that they appreciate the sustainability-related information they will receive and need to provide, and
  • managing talent to ensure the appropriate capabilities (skills, mindsets and behaviours) exist.

Make the case for investing in people

Introducing sustainability reporting, even in order to provide data to others in the value chain, will be a major undertaking. For many organisations, this will necessitate making the case for investment in people, be it for the development of new capabilities, improving the way in which teams operate, or changing the organisational structure. This case should centre on people’s essential roles in various aspects of the organisation.

  • Embracing a culture that considers sustainability more generally will create a commitment towards embedding sustainability holistically across the organisation and driving high-quality sustainability reporting.
  • Influencing the content and pace of regulatory developments: sustainable business regulation, its reporting and assurance requirements are progressing at pace and will continue to do so. In turn, to ensure fit-for-purpose regulation, organisations should make their views known among regulatory authorities, for instance, in the reporting on business model transformation plans in compliance and support of national sustainability-related targets.
  • Building the processes and systems in the design, implementation and their operation.
  • Engagement to access and share data and insights: sustainability-related reporting requires considerable amounts of data and insights from across the organisation, value chain and other parties in the external environment. Further, the resulting sustainability reports and information are of interest to a wider range of stakeholders than perhaps is the case with financial reports, therefore greater consideration of the engagement with these stakeholders is required.
  • Filling the knowledge gap: in and across many organisations, sustainability reporting will require training on the wealth of new knowledge relating to such topics as the environment, economy, human rights, social and working conditions, responsible products, and society (GRI n.d.).
  • Developing integrative-thinking capabilities: collectively building processes, incorporating technology and persuading people to embrace sustainability reporting constitute what your company’s insights work has shown is a complex multi-dimensional problem. To solve such problems, individuals need to demonstrate five integrative-thinking capabilities that will require initial and continual development as sustainability issues and the business landscape evolve (see below).

Complex multi-dimensional problems and the five integrative-thinking capabilities

Complex multi-dimensional problems:

  • are difficult to define
  • involve complex systems
  • are difficult to approach
  • introduce uncertainty as to whether or when they have been fully resolved.

To solve them, individuals need to apply five integrative-thinking capabilities in the five integrative-thinking capabilities (see below).

Sustainability reporting

These capabilities are the personal and interpersonal skills, mindsets and behaviours necessary in problem-solving.

  • Continually becoming: nurturing the five personal capabilities that enable a finance professional to grow and evolve continually through time.
  • Empathising: solving problems through understanding others’ viewpoints and seeing things from the perspectives of the various stakeholders.
  • Exploring: searching out unfamiliar territory to learn about it, and inviting others to join in the exploration – asking questions, modelling plausible scenarios and testing assumptions.
  • Co-creating: seizing the opportunities that arise from collaborating with others, including people outside one’s own organisation.
  • Empowering: enabling team members and, in some cases, external stakeholders, to take actions and to influence outcomes.


Appendix A: IFRS S1 sample worksheet

IFRS References: IFRS S1 §27(a) and §27(b)

Sustainability reporting

This sample worksheet is available for download at: Appendix A IFRS S1 Sample Worksheet

Appendix B: IFRS S2 sample worksheet

IFRS References: IFRS S2 §10-12, and §15-21

Sustainability reporting

This sample worksheet is available for download at: Appendix B IFRS S2 Sample Worksheet

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