Reporting Trends with Sustainability Expert, Wim Bartels
09 March 2016

​In this interview, Wim Bartels, shares his expert insights into current and future trends of sustainability reporting and provides advice for organizations wanting to create high quality sustainability reports which inform their critical decision making.
​Wim is a member of the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures, and has extensive experience as Global Head of Sustainability Reporting & Assurance at KPMG.
 
You’re hosting a Master Class at GRI’s Global Conference in May on ‘Corporate Responsibility Reporting: Lessons from leaders’. Can you share with us some notable trends in reporting ahead of the Master Class?
One of the most notable trends is for companies to include sustainability information in their annual financial reports. This is now firmly established as standard practice. In our most recent survey (2015), we found that close to 60% of the largest companies in the world do this - a rise from only 20% of companies in 2011. In many countries, this is being driven by regulation. The eight countries with highest rates for including sustainability information in annual reports all have regulations that require it.

In terms of geographical reporting rates, I find it very encouraging to see that the Asia-Pacific countries have caught up with the rest of the world. In fact they have taken a leading position over other regions with 79% of companies based in Asia-Pacific now reporting on sustainability. The quality of reporting in Asia Pacific still has some room for improvement but I am confident that will happen over time as reporting practices mature.

Through our research, we have also discovered that corporate carbon reporting really needs an overhaul. The information that companies provide in their sustainability and annual reports is inconsistent, making it almost impossible to accurately compare one company’s carbon performance with another. Also, strikingly, some major companies in the most exposed sectors do not report on carbon at all or provide poor quality reporting. For example one out of five companies in the chemicals and mining sectors does not report on carbon, and the oil & gas sector notably scores lowest of all for the quality of its carbon reporting based on our criteria. In contrast, the transport & leisure sector scores highest for the quality of its carbon reporting.
 
You must have gained some useful insights over the years into what makes a high quality sustainability report. Can you share some with us?
There are seven key criteria that form the crucial ingredients of quality reporting:
1) Stakeholder engagement
2) Materiality
3) Risk, opportunity and strategy
4) Targets and indicators
5) Transparency and balance
6) Suppliers and the value chain
7) Governance
 
A high quality report is concise and focuses on performance. If reports are too lengthy or elaborate, it tells me that the material meaning of sustainability for the company has not yet been grasped.

A good quality report also puts sustainability in context of external trends and explains how the company responds to the impacts of these trends on the business. There is no use in providing lots of case studies alongside details of policies and procedures if as a reader I don’t see a clear link with the company’s strategy and its value creation (in the broad sense). This is part of the Risk, opportunity and strategy category.

Thirdly it is great to learn where you are, but as a stakeholder I am even more interested in where you want to be. So a clear direction with related targets tells me that a company is serious about its accountability. (Targets & indicators)

To me, one of the biggest pitfalls is to approach sustainability reporting purely as a technical exercise: conducting a materiality process only for the sake of the report, reporting on topics identified and ticking boxes to align with the GRI Guidelines or benchmarks. This does not raise sustainability reporting to its full potential as an input for strategic thinking and strengthening the overall business. We will go through these elements in more detail in our Master Class at the GRI Conference.
 
Do you have any predictions for where reporting is headed in the next 10 years?
I expect to see a continuation of the trend to include sustainability information in annual financial reports. In fact, I would not be surprised if we see fewer companies publishing stand-alone sustainability reports and instead including a more concise amount of investor-relevant sustainability information in annual reports supplemented by further information elsewhere on their websites. This will be driven in part by pressure for companies to get better at identifying, quantifying and reporting sustainability-related financial risk, for example from the FSB’s Task Force on Climate-related Financial Disclosures.

A longer term trend is the increasing interest of large companies in quantifying their social and environmental impacts – both positive and negative – in financial terms. As quantification methodologies mature and more companies begin to do this, I expect to see more of this information filtering through into sustainability and mainstream reporting.
 
 
 
To read more about future trends in reporting, take a look at GRI’s Sustainability & Reporting 2025 project which promotes an international discussion about the purpose of sustainability reporting and disclosures looking ahead to 2025. Later in March, GRI will be releasing its latest Sustainability & Reporting 2025 publication which depicts the key trends we can expect in reporting. These include new formats of reporting as technology transports us towards dynamic sustainability data exchange, a new role for stakeholders, and a greater focus on critical global issues.

You can also sign up for the Masterclass, facilitated by Wim Bartels at the upcoming GRI Global Conference. ‘Corporate Responsibility Reporting: Lessons from leaders’ which takes place on Friday 20 May 2016.