New Delhi, 24 August 2021: With the- changing global landscape backed by regulatory demands, shareholder capitalism and changing preferences among consumers, businesses are gradually understanding the importance of incorporating non-financial parameters in reporting. Adequate integration of Environment, Social and Governance (ESG) in risk management and proper disclosure of initiatives undertaken are becoming significantly important, says EY report ‘The Evolving Non-Financial Reporting Landscape.’
The ongoing Covid-19 pandemic has helped with widespread awareness on actions pertaining to ESG issues. They can no longer be delayed; a strong sustainability implementation is the only way forward into the new normal. The sharp focus on ESG is a consequence of the need for building better business ecosystems and bringing greater resilience for the future.
Shailesh Tyagi, Partner, Climate Change and Sustainability Services (CCaSS), EY India said, “There exists no formal boundary for sustainability topics. It varies across geographies, markets, industries and sectors with newer issues and frameworks being added continuously. This complexity of addressing several issues under varied frameworks highlights the need for an effective, integrated and concise non-financial disclosure.”
Chaitanya Kalia, Partner and National Leader, Climate Change and Sustainability Services (CCaSS), EY India added, “Although several sustainability frameworks with individual approaches may be meaningful in the context of specific information requirements, the cumulative result is often duplication of efforts. It becomes difficult for stakeholders to navigate through and make meaningful inferences out of the disclosures in a simple, comparable and consistent manner. Though individual standards keep evolving, the demand from the broader stakeholder community for simplification and rationalization of the sustainability reporting landscape is rising.”
This report details the evolving reporting landscape in terms of non-financial disclosure that demands increased granularity in data, enhanced metrics for performance measurement, and equal rigour of financial and non-financial assessment. It also highlights the importance of board-level demonstration of commitment towards impact measurement and monitoring of non-financial disclosures. The evolution of non-financial disclosures has the potential to bring about the systemic transition in ESG reporting, enabling best practices across boards and creating long-term value.
An important initiative in this direction was launched at the World Economic Forum’s fourth annual Sustainable Development Impact Summit in September 2020, where a set of universal ESG metrics and disclosures were released to measure stakeholder capitalism that companies can report on regardless of their industry or region. The ‘Measuring Stakeholder Capitalism’ Framework was endorsed by the International Business Council (IBC), a community of over 120 global CEOs.
This report further focuses on the trends in the current ESG reporting landscape, the drivers for change, parallel systems that are into play, Indian scenario of increased disclosure requirements and future design of ESG reporting.
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