Sustainability reporting: it’s time for the Caribbean to come on board

And over the last few weeks, I’ve been thinking about the global trend towards reporting on sustainability, and the ways in which this could be both applicable and beneficial for our local companies.

In October this year, the Global Reporting Initiative (GRI) launched GRI Sustainability Reporting Standards: the first global standards for companies to use when explaining their sustainability impact. The Standards cover a range of non-financial areas where a company may have an impact, including its economic, environmental and social footprint.

This idea of more holistic, non-financial company reporting is not new: Integrated Reporting, or , has been around for many years. Indeed, ACCA starting using for our own financial reports in 2014. Under , companies are expected to report on financial and non-financial elements of their performance, giving investors a ‘bigger picture’ of their activity, with a nod towards the future sustainability of their actions. This type of reporting has been prioritised on a global scale, with the United Nations, under their Sustainability Development Goals (SDGs), encouraging countries around the world to adopt such practices.

According to the Caribbean Corporate Governance Institute, at the onset of 2016 there were no known applications of integrated reporting in the Caribbean, despite the significant advantage that such application would offer to early adopters. The global move towards non-financial reporting indicates a desire from investors to see a more holistic picture of a company, and offering such information would certainly make Caribbean businesses more attractive to local and international investors.

According to The Sustainability Accounting Standards Board (SASB) State of Disclosure report 2016 Sustainability Disclosures usually Fall Short Caribbean Cruises and Carnival Corporation both submitted extensive disclosures related to the sustainability topic “fuel use & air emissions” for the cruise lines industry in fiscal year 2015.

Royal Caribbean reported a 21.4 percent improvement in energy efficiency from 2005 to 2014, while Carnival reported achieving its goal of a 20 percent reduction in emissions over the same period. Carnival also pledged to reach a 25 percent reduction by 2020. While both companies submitted metrics and a full report on energy efficiency, unfortunately the reporting failed to provide investors with comparable data for a like-to-like evaluation. This is an on-going problem in sustainability report; inconsistency. Even when companies included metrics, non-standardised data in the reports makes it near impossible for investors to understand metrics between companies in the same industry.

Perhaps the onset of 2017 is the time for us to start considering this change. It’s clear that non-financial reporting is here to stay: More than 1,000 businesses around the world use to communicate with their investors, and 70 percent of the world’s 300 biggest companies already use GRI Standards.

To use a Christmas metaphor, it appears that the proof is in the pudding when it comes to the benefits of a holistic reporting approach. Not only does it promote economic, environmental and social sustainability in business practices, but it can also improve a company’s ability to attract and retain investors. Research conducted by the International Integrated Reporting Council indicates that investors want more information than just pure financial data, and that the provision of such information has led to an improved relationship between the company and the investor.

However, despite the benefits that have been linked to non-financial reporting, it does seem like the biggest barrier to adopting such an approach is time and resources. That is why I am excited by the introduction of the GRI Standards: they are short and relatively simple and easy to use.

So if you’re after a New Year’s resolution for your business, perhaps you could take a quick look and consider how you could put sustainability higher on your business agenda? Even if you’re not a business leader or decision maker, it may be helpful to think about the ways your business could better improve its social and environmental footprint. And if you are a business leader or decision maker, you could incorporate some tenets of sustainability into your next set of financial reports: it’s time for the Caribbean to come on board.