Research & Strategy

By Design Portfolio - 12 Dec 2016

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Shining a light on human rights

On Saturday 10 December 2016, Human Rights Day commemorated the United Nations’ adoption of the Universal Declaration of Human Rights. This year, Human Rights Day has motivated a call for action as widespread disrespect for basic human rights continues across the globe.

Within the context of the annual report a much greater improvement is needed to communicate the human rights impact. The wide and complex geographic reach of many organisations now means that this impact is felt regardless of whether a company is headquartered in a low-risk human rights zone. All regions and sectors are, and will increasingly be, held accountable for their global human rights impact.

To fully understand these complexities, transparency within the corporate communications suite is key. Many companies are at the very beginning of a long journey towards full transparency, but it is one which must be undertaken to safeguard reputation and ensure a high level of ethical best practice is maintained.

New Global Reporting Initiative (“GRI”) Sustainability Reporting Standards

Human rights have been an integral part of the GRI reporting framework since 2002. The recently released GRI Sustainability Reporting Standards, and the earlier GRI G4 Guidelines that they are superseding, make direct reference to numerous international tools and instruments to measure adherence to human rights legislation.

The GRI Standards, comprised of 36 models, are set out to create a “common language” for companies to disclose non-financial information. They also include information on greenhouse gas emissions, energy and water use, as well as labour practices. This modular structure allows for flexibility and gives reporters clear distinctions between reporting requirements, recommendations and guidance.

With the GRI Standards replacing the GRI G4 Guidelines, the areas which have experienced the most change relate to structure, narrative and layout, allowing companies to meet the expectations and requirements of a global standard enforced to enhance the quality and comparability of reporting across the world. There are no new topics that have been added and all the main content and disclosures remain the same; therefore, the impact on the reporting process will be minimal for existing G4 reporters. The GRI Standards will be required for all reports and other materials published on or after 1 July 2018 – the G4 Guidelines will remain available until this date.

The power of sustainability

It is important for companies to understand and communicate their own impact on the economy, the environment and society. In doing so, they can identify and better manage their direct and indirect contributions towards a more sustainable outcome which benefits both the company and the world. A growing number of studies highlight the business case for companies to fully integrate sustainability into their business strategy. The evidence suggests that strong corporate performance in Environmental, Social and Governance (“ESG”) factors correlates positively with improved performance.

As a conduit between issuers and investors, securities exchanges are uniquely placed to promote more transparent and efficient capital markets that generate long-term value. The London Stock Exchange is amongst 23 exchanges that have committed to introducing the new GRI Sustainability Reporting Standards in 2016.

The United Nations Conference on Trade and Development, which co-organises the Sustainable Stock Exchanges initiative, has received confirmation of 21 international exchanges that will be introducing the new guidelines shortly. This scheme encourages companies to act more sustainably.

What does it mean for your company?

Human rights and sustainability should be important to us all. As a practical first measure, the GRI is a useful catalyst to drive “who is responsible for what” within your organisation. Determining roles, responsibilities and capabilities that are relevant for ESG reporting, and identifying the appropriate personnel to effectively co-ordinate this, is an important first step.

For first time reporters, the GRI encourages the use of the new standards, while current GRI reporters should check how the transition to the new standards affects their company and allows them to make an informed decision on future reporting.

To achieve the ongoing objective of diversification within your shareholder base, it is important to evaluate and report on your company’s corporate behaviour. The ESG factors help to identify the risk and opportunities by considering the following:

  • Due diligence
  • Local context
  • Progress on the management of impacts over time
  • The balance between quantitative and qualitative information
  • Clarity and completeness of information
  • Direct and indirect impacts

Although we are celebrating Human Rights Day and the great many achievements that took place in the sustainability landscape this year, there are still challenges ahead.

If we can support you in 2017, please get in touch @WeAre­_DP or contact rochelle.ohagan@design-portfolio.co.uk.