GRI sustainability disclosure guidelines
GRI Sustainability Disclosure Guidelines and the quality of sustainability disclosures by Australian companies
This study on Sustainability Reporting investigates the association between the Global Reporting Initiative’s (GRI) Guideline 3 and Australian regulatory requirements for corporate reporting. The research commences by mapping the sustainability reporting guidelines (SRGs) set out by the GRI on to other Australian regulatory requirements for corporate reporting. These SRGs take a comprehensive approach to reporting and while it is apparent that there is some overlap with mandatory reporting requirements, the extent of this overlap for Australian reporting entities has not been clearly articulated. We use the mapping to determine to what extent the SRGs are expected to lead to disclosures that are overlapping and supplementary to mandatory reporting requirements. This analysis allows us to identify potential deficiencies (or shortcomings) in current reporting regulations.
To identify how the SRGs are related to mandatory reporting requirements, an equivalence table was constructed. Each SRG was mapped on to mandatory disclosure requirements contained in legislation, Australian Stock Exchange (ASX) listing rules and Australian accounting standards (AASBs) using content analysis. Outcomes from this stage of the research indicate that there is considerable variation in the extent to which the SRGs overlap with and supplement mandatory reporting requirements. For example, SRGs related to strategy and analysis, organisation profile, and management approach and performance indicators tend to complement the requirements of the AASBs; while environmental and social indicators supplement them. AASB 101 “Presentation of Financial Statements” is the accounting standard most closely aligned with the GRI guidelines.
The second stage of our research examines the quality of sustainability reporting for a sample of Australian companies from various sectors of the economy. A new metric for sustainability reporting quality based on the GRI’s latest guidelines will be developed as part of the research. The disclosures made by a sample of Australian companies will be analysed using the SRGs as a benchmark. A checklist will be developed and used to calculate a quality score for each company in the sample. Data will be retrieved from the annual and sustainability reports of sample companies. Given that the data pertains to narrative disclosure, it is predominantly qualitative in nature. Content analysis will therefore be a suitable methodology. This analysis will allow us to determine the extent that Australian companies are complying with the SRGs, the quality of complementary sustainability disclosures, and differences in compliance and disclosure quality across sectors.
The results of this project are expected to be useful for accounting and capital markets regulators, the GRI and managers of companies wishing to improve the quality of their sustainability disclosures. Because AASBs are equivalent to IFRS, this research has global relevance.
Julie Cotter (ACSBD)
This research is funded by the Accounting and Finance Association of Australia and New Zealand