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Deloitte Advises Businesses to Consider Integrated ESG Reporting and Reveals New Online Tool for Sustainable Water Management
October 4, 2011
According to a recent paper by Deloitte Touche Tohmatsu Limited (DTTL), the movement toward integrated reporting on environmental, social, and corporate governance (ESG) issues continues to gain momentum despite the relatively slow spread of regulatory mandates in this area. Integrated reporting encompasses elements of traditional financial reporting, sustainability reporting, and governance reporting within a single presentation.
Forward-looking companies are putting integrated reporting on their agendas now, as the benefits of being ahead of the curve may be significant. One such benefit may be marketplace advantage, where organizations that report on the full spectrum of issue may be seen as more advanced than those that restrict their reporting to traditional financial statements, DTTL says.
Other benefits may include better risk management and the identification of new opportunities.
"Today, there are growing expectations that businesses will do more than simply turn a profit," says Nick Main, Leader of Global Sustainability at DTTL. "Today's businesses must operate in a manner that is responsible, ethical, and sustainable. Of course they must operate profitably, and the great opportunity of our time lies in discovering ways of doing so that minimize negative effects on the environment, take into consideration the varied needs of a spectrum of stakeholders, and create sustained benefits—to the communities in which they operate and to the planet generally.”
Despite the clear benefits of integrated reporting, standardization remains elusive. But a number of initiatives are underway by governmental and nongovernmental groups to develop sustainability-related frameworks, principles, codes, and management systems.
One such effort is being led by the International Integrated Reporting Committee (IIRC). Deloitte member firms actively support and contribute to the work of the IIRC, whose recently released discussion paper offers initial proposals for the development of an International Integrated Reporting Framework and outlines next steps toward its creation and adoption.
"We strongly encourage business leaders to follow developments in this area closely, as integrated reporting has the potential to become the preferred reporting format for larger companies in the majority of advanced countries around the world," adds Main.
Separately, Deloitte announced it is providing pro bono services to help develop an online tool to increase public-private cooperation in sustainable water management.
Deloitte is teaming with the International Business Leaders Forum (IBLF), the Pacific Institute and the German International Development Agency (GIZ) in developing the Water Action Hub under the auspices of the United Nations Global Compact and its CEO Water Mandate.
The Hub will feature a mapping function that visually places each facility and/or organizations within watershed maps to help organizations better understand stakeholders and initiatives in their watersheds of interest.
Watershed maps are designed to allow companies to build upon their use of other online analytical mapping and water risk characterization tools such as the World Business Council for Sustainable Development's (WBCSD's) Global Water Tool and the World Resource Institute's (WRI) Aqueduct project.
"Through our experience working with companies to assess and mitigate shared water risks, we have learned a fundamental lesson: companies, acting alone or in small bi-lateral partnerships, are very unlikely to be able to significantly address the water challenges facing their operations, supply chains, and the surrounding communities," says Robin Farrington, senior policy advisor, International Water Policy and Infrastructure, GIZ.
"Most water risks will only be addressed through sustained collective action between public, private, NGO and donor actors, in a way that compliments existing long-term efforts and public policy. The Hub will be a useful tool in helping actors understand who is working in the same watershed, playing an important role in initiating new partnerships which, if managed well, will hopefully lead to long-term public-private collective action," adds Farrington.