July 2, 2019 /3BL Media/ - The world’s leading financial and non-financial corporate reporting frameworks have the same common foundations, based on the key objectives of transparency and accountability, according to a position paper published by the framework providers. The paper sets out the key principles report preparers should follow for achieving such transparency and accountability.
Participants of the Corporate Reporting Dialogue – an initiative bringing together the major international reporting frameworks - identify transparency and accountability as critical to achieving high quality governance mechanisms and empowering stakeholders in modern societies and markets. Furthermore, transparency and accountability enables better decision-making by market parties and serves the public good.
In the paper - entitled Understanding the value of transparency and accountability - GRI, CDP, the Climate Disclosure Standards Board, International Accounting Standards Board, the International Integrated Reporting Council, the International Organization for Standardization and the Sustainability Accounting Standards Board set out seven principles they commonly believe are fundamental to corporate reporting: materiality, completeness, accuracy, balance, clarity, comparability and reliability.
The paper states: “These common principles are a reminder that the Dialogue participants have similar expectations from companies in preparing and disclosing information. This implies an alignment at the fundamental level of the frameworks.”
The position paper acknowledges a commonly agreed need for companies to go beyond disclosure and demonstrate accountability to stakeholders: “Transparency needs accountability in order to drive effective behavior or performance: disclosing in itself is not enough if those holding to account do not have the power to influence the behavior or performance.”
CRD participants have committed to promoting the application of these principles for the wider reporting landscape in future interactions or partnerships, as part of their commitment to providing greater clarity to the reporting landscape on how to use the individual frameworks of Dialogue participants to achieve effective, holistic reporting.
Notes for editors
The seven transparency and accountability principles that Dialogue participants commonly believe are fundamental are outlined below. In addition, each individual framework has its own unique principles that may not be present in (all) other frameworks.
The brief descriptions included are not to be seen as the common definitions by the Dialogue, but only serve the purpose of briefly clarifying the principles.
- Materiality: this regards relevant information that is (capable of) making a difference to the decisions made by users of the information.
- Completeness: all material matters identified by the organisation for the relevant topic(s) should be reported upon.
- Accuracy (free from material error): the information reported should be free from material error.
- Balance (neutral): the information does not have bias, i.e. is not presented in such a way that the probability would be increased that it will be received favourably or unfavourably by the users.
- Clarity: the information will be understandable and accessible to the users; this includes a certain level of conciseness.
- Comparability, including consistency: information is reported on the same basis and applying the same methodologies year-on-year. Also, the information enables comparison against other organisations.
- Reliability: in preparing the information processes and internal controls are in place that ensure the quality of the information and allow for examination of the information reported.
The Corporate Reporting Dialogue is an initiative, convened in June 2014 by the International Integrated Reporting Council, designed to respond to market calls for greater coherence, consistency and comparability between corporate reporting frameworks, standards and related requirements.
Authors of the CRD Transparency and Accountability paper:
Global Reporting Initiative (GRI) is an international independent organization that has pioneered corporate sustainability reporting since 1997. GRI helps businesses, governments and other organizations understand and communicate the impact of business on critical sustainability issues such as climate change, human rights, corruption and many others.
CDP is an international non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests.
Climate Disclosure Standards Board (CDSB) is an international consortium of business and environmental NGOs, committed to advancing and aligning the global mainstream corporate reporting model to equate natural capital with financial capital.
International Accounting Standards Board (IASB) The IFRS Foundation is a not-for-profit international organisation responsible for developing a single set of high-quality, global accounting standards, known as IFRS Standards. IFRS Standards are now required in over 140 jurisdictions, with many others permitting their use.
International Integrated Reporting Council (IIRC) is the convenor of the Corporate Reporting Dialogue. It is a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs. The coalition is promoting communication about value creation as the next step in the evolution of corporate reporting. Visit www.integratedreporting.org or follow @theiirc
International Organization for Standardization (ISO) is an independent, non-governmental international organization with a membership of 163 national standards bodies each of which represent the stakeholders in their countries. Through its members, it brings together experts to share knowledge and develop voluntary, consensus-based, market-relevant International Standards that support innovation and provide solutions to global challenges.
Sustainability Accounting Standards Board (SASB) is an independent standard-setting organization that develops and maintains robust reporting standards that enable businesses around the world to identify, manage and communicate financially material sustainability information to their investors. SASB standards are evidence based, developed with broad market participation, and are designed to be cost-effective for companies and decision-useful for investors. To download any SASB industry-specific standards, or learn more about SASB, please visit www.SASB.org.
Additional participant in the CRD:
Financial Accounting Standards Board (FASB) (FASB participates as an observer) is the independent, private-sector, not-for-profit organization that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP).
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KEYWORDS: Better Alignment, sustainability, sustainability reporting, collaboration, GRI