While the Johannesburg Stock Exchange (JSE) mandates that all listed companies must adopt the practices and guidelines outlined by the King III report, non-listed companies are increasingly reaping the benefits of sustainability reporting in their annual reports by being more transparent to stakeholders, says Tiani Annandale, senior consultant at Cortell Corporate Performance Management.
Sustainability reporting generally refers to all the non-financial information organisations should include in their annual financial reports, which encompasses economic, social responsibility, environmental performance and corporate governance. It brings together benchmarks and strategies to ensure best performance related to businesses, the environment and society.
In fact, in tough economic times, stakeholders are demanding full disclosure of business operations to provide strategic direction that will ensure the long-term viability of business in today’s ever-changing business landscape. However, compiling corporate reports is a highly pressurised, deadline driven environment which creates a lot of stress within any organisation.
To streamline the complicated processes, the Global Reporting Initiative (GRI) has introduced standards for sustainability reporting, and thousands of companies across various countries subscribe to them. Many more are to follow as the true benefits of sustainability become more apparent.
While sustainability reporting is not mandatory for non-listed companies, it is today considered to be the best practice methodology and in South Africa it is increasingly becoming a determining factor when corporates are selecting tenders or looking for potential mergers and acquisitions.
Locally, the South African Integrated Reporting Committee, together with the JSE, have developed a local flavour of GRI’s standards, incorporating XBRL or eXtensible Business Reporting Language, a universal financial reporting business language to drive an open global standard for business reporting.
XBRL delivers many benefits and will most likely be released by 2015 as the de facto reporting standard due to its high usability.
However, this increases the complexity of compiling accurate reports dramatically, with companies having to collate the structured and unstructured information from different sources in disparate systems throughout their enterprises in a prescribed format.
It is a time consuming process, requiring many high-level resources to collectively gather, compile and verify the information buried deep in applications, spreadsheets and word processor documents.
As useful as these productivity tools are, they are designed for individual use and not in a collaborative environment which focuses on one version of the truth of critical non-financial and financial data.
These reporting processes also provide little visibility into how edits are tracked and how approvals are made. Additionally, while finance professionals are very familiar with generating reports, assembling them into a highly accessible, informative and attractive document is quite another matter.
If South African organisations want to be part of the global financial world, the only way to ease the burden of reporting is by automating financial and sustainability reporting processes as a whole through the use of technology.
Today, there is software available that provides a secure environment involving multiple participants with different roles and responsibilities within an organisation to collaborate and assemble sustainability reports in a controlled and accurate fashion in line with King III guidelines.
It not only reduces the duplication of information, but has strict checks and balances in place to ensure compliance and eases the burden of the accounting and auditing process. Importantly, through workflow processes that link the co-workers to each other and their responsibility in the process, leads to massive productivity gains and accelerated reporting time frames.
In closing, these reporting tools have literally transformed “triple bottom line” reporting, turning a complex, sometimes badly co-ordinated and error prone process into a more organised, controlled and credible fashion. It frees up key staff to focus on important areas of the business, rather than being bogged down in hunting and verifying information.
Importantly, the whole collaborative process translates into insightful reports which allow top management and stakeholders to analyse and aggregate their sustainability figures to keep their fingers on the pulse. Most of all, if growing organisations in South Africa do not join the sustainability debate, it will impact their bottom line, as well as their impact on the environment and the social conditions around them.