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Research under the microscope

New G4 reporting guidelines

Forget the G20. The new G4 standards is where real change is occurring.

Corporate sustainability reporting has been one of the greatest achievements when it comes to fostering corporate accountability and transparency. While a myriad of voluntary and mandatory sustainability reporting frameworks exist, the Global Reporting Initiative (GRI) is generally cited as the front-runner. With its performance reporting guidelines, the GRI is seeking to make sustainability reporting standard practice. The goal is to achieve a sustainable global economy where organizations manage their economic, environmental, social and governance performance and impacts responsibly and report transparently. According to the GRI, at the end of 2012, there were close to 3,500 reporters of sustainability performance, up from a mere 25 a decade ago. While the rate of uptake has been remarkable, have reporting entities lived up to the expectations of transparency? One grey area that remains is how entities report on their outsourced manufacturing activities. Save for a few instances where companies have reported on supplier audits, environmental, social and health & safety performance at the supplier level almost never makes its way to the reporting entity’s sustainability performance publications.

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Back to the social contract

Corporate Knights rankings penalize companies for minimizing tax payments. What gives?

When it comes to corporate tax payments, the conventional wisdom suggests that companies should minimize tax payments. This makes sense from a financial point of view: If a company is able to minimize tax payments, cash outflows are minimized such that more cash is available for value-creating corporate expansion projects. Corporate Knights’ clean capitalism rating methodology, however, rewards companies that make larger cash payments for taxes as a proportion of earnings before interest, taxes, depreciation and amortization (EBITDA). This approach is used in both the Global 100 Most Sustainable Corporations, as well as the Best 50 Corporate Citizens in Canada rankings. So why are we bucking the trend?

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Integrated reporting

Guidelines on integrated reporting could provide a wealth of information for corporate sustainability rankings.

The sustainability disclosure landscape is set for some ground-breaking changes in 2013. The Global Reporting Initiative (GRI), a leading standard-setter in the world of sustainability reporting, is releasing its fourth generation reporting guidelines in May. To be known as the G4, these new guidelines will improve on the current G3.1 and require a reporting entity to rethink about a number of topics. These include: the extent of its boundary (now to be determined primarily by the existence of impacts), and the heightened role of the highest governance body within the organization.

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