Prominence of stakeholders in designing sustainability reporting practices based on g4 guidelines
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This document summarizes a research paper from the International Journal of Management that examines the prominence of stakeholder involvement in designing sustainability reporting practices based on GRI G4 guidelines. The summary includes: 1) Sustainability reporting involves integrating social, environmental, and economic concerns and stakeholder feedback is an important part of the process. 2) The G4 guidelines highlight the importance of stakeholder engagement throughout the sustainability reporting process, from the design stage to the reporting period. 3) By following G4 guidelines and meaningfully engaging stakeholders, organizations can improve their sustainability practices, mitigate risks, and strengthen relationships with important stakeholder groups.
Prominence of stakeholders in designing sustainability reporting practices based on g4 guidelines
- 1. INTERNATIONAL JOURNAL OF MANAGEMENT (IJM) International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 5, Issue 11, November (2014), pp. 70-75© IAEME ISSN 0976-6502 (Print) ISSN 0976-6510 (Online) Volume 5, Issue 11, November (2014), pp. 70-75 © IAEME: http://www.iaeme.com/IJM.asp Journal Impact Factor (2014): 7.2230 (Calculated by GISI) www.jifactor.com PROMINENCE OF STAKEHOLDERS IN DESIGNING SUSTAINABILITY REPORTING PRACTICES BASED ON G4 GUIDELINES CA. Rashmi Ainapur Research Scholar, JAIN University, Bangalore Dr. Batani Raghavendra Rao M.Com., FCMA, CFA, ACMA (UK), CGMA (UKUS), PhD Professor of Finance and Accounting, JAIN University, Bangalore In the end, all business operations can be reduced to three words: People, Product and Profits. Unless you’ve got a good team, you can’t do much with the other two. 70 -Lee Iacocca ABSTRACT This paper outlines the importance of Stakeholder’s involvement in designing the Sustainability Reporting Practices of a company based on G4 guidelines. Stakeholders are the pillars of an organization. An Organization’s success can be measured based on the cordial relationship with its stakeholders. Sustainability Reporting has a wider spectrum, where it consists of reporting on Social, Economical and Environmental policies of an organization. A classic example for maintaining healthy relationship with stakeholders is of Cadbury Limited. The original Cadbury Company was set up 150 years ago and from inception they believed in fair treatment to their employees and various stakeholders. Involvement of stakeholders in essential matters of a company will help in prevention of potential problems, helps in open communication and finally leads to healthy environment in the company. Objective of the proposed study is To outline the Prominence of Stakeholder Involvement in designing Sustainability Reporting Practices based on GRI G4 guidelines. IJM © I A E M E
- 2. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 5, Issue 11, November (2014), pp. 70-75© IAEME 71 Sustainability Reporting Overview Till date there is no globally accepted definition of Sustainability Reporting. European Commission, defined sustainability reporting as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (The council and the European Economic and Social Committee). Hence the above definition clearly states the prominence of various stakeholders in designing, implementation and execution of Sustainable practices. Sustainability Report: A Sustainability Report is a part of integrated reporting. Integrated reports of the company include both financial and non-financial reports. Financial Reports indicate the growth of the company in the monetary terms viz. increase in sales, increase in revenue, increase in market share etc. Sustainability reports are part of non-financial reports which indicate the corporate’s efforts towards maintaining ecological balance by reporting about the economic, environmental and social impacts caused by its everyday activities. Benefits of Sustainability Reporting According to Global Reporting Initiative, Sustainability Reporting benefits organizations in following ways: · Increased understanding of risks and opportunities. · Emphasizing the link between financial and non-financial performance. · Influencing long term management strategy and business plans. · Benchmarking and assessing sustainability performance with respect to laws, norms, codes and voluntary disclosures. · Comparing performance internally and between organizations and sectors. · Mitigating or reversing negative environmental and social impacts. · Improves reputation and brand loyalty. · Enabling stakeholders to understand company’s true value. Drivers of Sustainability Reporting A business cannot succeed in isolation. There are various stakeholders involved in the success of a business. Sustainability Report though is a form environmental reporting can be effectively designed only with the support of various stakeholders. Following diagram depicts various stakeholders who drive the company in the preparation of the sustainability report.
- 3. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 5, Issue 11, November (2014), pp. 70-75© IAEME G4 DISCLOSURES 72 Overview of Global Reporting Initiative The Global Reporting Initiative is a non profit and a leading organization which promotes the use of Sustainability reports by modern organizations. The current world is developing at a great velocity but development alone will not vouch success unless it is coupled with Sustainability. Because Sustainable Development can alone help the future generations to lead a healthier and wealthier life. From its inception GRI has been releasing the various versions of compliance guidelines that help the organizations to comply with the globally acceptable sustainability reporting standards. GRI has released G4, the fourth generation guidelines in May 2013. The G4 guidelines was released after an extensive stakeholder feedback, inputs from thousands of experts across the world from different sectors such as, companies, civil society, labour unions, academicians and finance experts. The main aim of GRI is to design, establish and update the globally acceptable sustainability standards. Gist of G4 Guidelines G4 provides the framework to design the Sustainability Report of an organization. It outlines the various steps involved in designing the report, The following diagram will help us to understand the flow of the process: GENERAL STANDARD DISCLOSURES: • Strategy and Analysis • Organization Profile • Material Aspects Boundaries • Stakeholder Engagement • Report Profile • Governance • Ethics Integrity SPECIFIC STANDARD DISCLOSURES: • Material Aspects • List of specific standard disclosure related to each material aspect Prominence of Stakeholder in Designing Sustainability Report Based On G4 G4 guidelines highlights the importance of stakeholder engagement in the sustainability reporting process. It specifically mentions that the stakeholder should be engaged from the designing stage to the reporting period. According to G4 guidelines the following points of stakeholder engagement should be provided in the sustainability report of organization:
- 4. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 5, Issue 11, November (2014), pp. 70-75© IAEME • List of stakeholder group engaged by organization Outline the categories of stakeholders who are forming part of the sustainability reporting 73 practices. Brief the roles of the above stakeholders in the organization. Nature of stakeholder whether internal or external. • Basis for identification and selection of stakeholders Outline the method followed to select the stakeholders. Outline whether the selected stakeholders form representative sample. Brief out the criteria’s based on which the stakeholders were selected. • Frequency of engagement of each stakeholder group Brief out the time intervals in which the selected stakeholders were consulted. Outline the time spent with each group of stakeholders. • Report of each stakeholder group that raised issues and concerns and the organization’s response to those issues Outline the various issues and concerns raised by the stakeholder groups during the reporting process separately. Outline the response of management to those issues to different groups. LITERATURE REVIEW Following are few of the researches in this area till date, they have tried to bring out the importance of Sustainability Reporting and Role of stakeholders in the reporting process. • Thomas W Concannon, Melissa Fuster, Tully Saunders, Kamal Patel, John B Wong, (2014) “A Systematic Review of Stakeholder Engagement in Comparative Effectiveness and Patient- Centered Outcomes Research”, Journal of General Internal Medicine, Vol. 107, Iss:3, pp.363- 377- The main purpose of this exploratory analysis is to understand whether, based on evidence gathered from international best practices selected among corporations which adopt the Global Reporting Initiative guidelines in sustainability reporting (SR), stakeholders are significantly consulted and involved. • Moser, Donald V and Patrick R. Martin. (2012) A broader perspective on corporate social responsibility research in accounting. The Accounting Review Vol.87, Iss:3, pp. 797-806.- This study examined the accounting aspects of sustainability reporting practices. • Cheng, Beiting, Ioannis Ioannou, and George Serafeim. (2014) Corporate social responsibility and access to finance. Strategic Management JournalVol.35, Iss:1pp.1-23 – This article explored whether following of best sustainability practices will lead to better access to finance. • Isenmann, R Kim, K-C 2006, 'Interactive sustainability Accounting: Developing Clear Target Group Tailoring and Stimulating Stakeholder Dialogue', in Schaltegger, S, Bennett, M Burritt, R (eds), Sustainability Accounting and Reporting, Springer, pp. 533-555 – This study focussed on developing a framework to show the importance of interactive sustainability reporting. • Grafé-Buckstens, A Hinton, A-F 1998, 'Engaging the stakeholders: corporate views and current trends', Business strategy and the environment, vol. 7, no. 3, pp. 124-133 - This study is based on research conducted at Imperial College in 1996, in which the authors have reviewed
- 5. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 5, Issue 11, November (2014), pp. 70-75© IAEME the extent, purpose and motivation of evironmental stakeholder initiatives (ESIs). The research objective was to determine ESIs' impact on corporate environmental management through a survey of businesses engaged in such initiatives, and to propose a set of recommendations for successful implementation of ESIs. 74 CURRENT STUDY The main objective of the current study was to understand the prominence of stakeholders in framing and execution of sustainability reporting practices based on G4 guidelines. ANALYSIS AND FINDINGS Conclusion From the above study it is clear that stakeholders form an integral part of an organization. The modern company cannot work in isolation, there has to be proper co-ordination with various internal and external stakeholders. An organization can reach the pinnacle only when its stakeholders are associated to it positively. A happy stakeholder can increase the overall value of an organization. Hence G4 guidelines should be adhered by the organizations not as a part of reporting but they should take the steps to see whether the stakeholders of the company are actively engaged from the framing stage to the execution stage. REFERENCES 1. Eccles, Robert G., Ioannis Ioannou, and George Serafeim. (2013) The impact of corporate sustainability on organizational processes and performance. Management Science. 2. Hecht, Alan D., et al. (2012) Creating the future we want. Sustain Sci Pract Policy Vol.8, Iss.2, pp: 62-75. 3. Cheng, Beiting, Ioannis Ioannou, and George Serafeim. (2014) Corporate social responsibility and access to finance. Strategic Management Journal, Vol.35, Iss.1, pp: 1-23. 4. Eccles, Robert G., George Serafeim, and Michael P. Krzus. (2011) Market interest in nonfinancial information. Journal of Applied Corporate Finance, Vol.23, Iss.4, pp: 113-127. 5. Glass, Jacqueline. (2012) The state of sustainability reporting in the construction sector. Smart and Sustainable Built Environment, Vol. 1, Iss.1, pp: 87-104. 6. Ioannou, Ioannis, and George Serafeim.(2010) The impact of corporate social responsibilityon investment recommendations. Academy of Management Proceedings. Vol. 2010. No. 1. Academy of Management. 7. Eccles, Robert G., Ioannis Ioannou, and George Serafeim. The impact of a corporate culture of sustainability on corporate behavior and performance. No. w17950. National Bureau of Economic Research, 2012. 8. Arnold, M. C., Alexander Bassen, and Ralf Frank. (2013) Integrating sustainability reports into financial statements: an experimental study. 9. Brockett, Ann, and ZabihollahRezaee. Sustainability Reporting’s Role in Managing Climate Change Risks and Opportunities. Stoner, JAF, and Wankel, C., Managing Climate change Business Risks and Consequences: Leadership for Global Sustainability (2012), pp: 143-158. 10. Kalkanci, Basak, ErjieAng, and E. L. Plambeck. Measurement and improvement of social and environmental performance under voluntary versus mandatory disclosure. Working paper, Stanford Graduate School of Business, 2013.
- 6. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 5, Issue 11, November (2014), pp. 70-75© IAEME 11. AlonsoAlmeida, Maríadel Mar, JosepLlach, and Frederic Marimon. A closer look at the ‘Global Reporting Initiative’sustainability reporting as a tool to implement environmental and social policies: a worldwide sector analysis. Corporate Social Responsibility and Environmental Management (2013). 12. McDermott, Katie E. Financial Reporting Quality and Investment in Corporate Social 75 Responsibility. (2011). 13. Initiative, Global Reporting. G4 Sustainability Reporting Guidelines. Reporting Principles and Standard Disclosures. (2013), pp: 214-230. 14. www.globalreporting.org 15. Prof. Dr. Mahesh S. Halale, “Influence of Foreign Portfolio Investment on Stock Market Indicators” International Journal of Management (IJM), Volume 5, Issue 10, 2014, pp. 1 - 11, ISSN Print: 0976-6502, ISSN Online: 0976-6510. 16. B. A. Prajapati, Ashwin Modi and Jay Desai, “A Survey of Day of the Month Effect in World Stock Markets” International Journal of Management (IJM), Volume 4, Issue 1, 2013, pp. 221 - 234, ISSN Print: 0976-6502, ISSN Online: 0976-6510. 17. Gaurav Gupta and Mrs. Geeta Gupta, “An Analysis of Individual Investors Towards Investing In Stock Market” International Journal of Advanced Research in Management (IJARM), Volume 5, Issue 5, 2014, pp. 10 - 18. ISSN Print: 0976 – 6324, ISSN Online: 0976 – 6332.