The Better Alignment Project was a ground-breaking two-year project focused on driving better alignment in the corporate reporting landscape, to make it easier for companies to prepare effective and coherent disclosures that meet the information needs of capital markets and society.

Introduction

The Better Alignment Project was a ground-breaking two-year project focused on driving better alignment in the corporate reporting landscape, to make it easier for companies to prepare effective and coherent disclosures that meet the information needs of capital markets and society.

CDP, the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) committed to driving better alignment of sustainability reporting frameworks, as well as with frameworks that promote further integration of non-financial and financial information. The collaborative project focused on aligning standards with the recommendations published by the Task Force on Climate-related Financial Disclosures (TCFD).

Through this project, participants mapped their respective sustainability standards and frameworks to identify the commonalities and differences between them, jointly refining and continuously improving overlapping disclosures and data points to achieve better alignment, taking into account the different focuses, audiences and governance procedures. Participants identified how non-financial metrics relate to financial outcomes and how this can be integrated in mainstream reports.

An important aspect of conducting this project in the context of the Corporate Reporting Dialogue was to undertake this work with the overview of financial standard-setters, consistent with the ultimate aim of integrating financial and non-financial reporting.

Better Alignment

Corporate Reporting Dialogue participants conducted the necessary work to better align the frameworks in the sustainability reporting space (SASB, GRI, CDP) and frameworks that promote further integration between non-financial and financial reporting (IIRC, CDSB). Dialogue participants worked together to refine overlapping metrics and where their objectives did not require differences, participants agreed to look to achieve and maintain the highest possible alignment. Such alignment is subject to the due process considerations of each organization’s governance procedures.

SASB, GRI, CDP and CDSB mapped their frameworks against the TCFD recommendations and identified opportunities for alignment of metrics where possible across all their reporting frameworks taking into account the different focuses and audiences. This work was conducted in the context of supporting further integration of financial with non-financial reporting, through identifying how the non-financial metrics relate to financial outcomes and how these can be integrated in mainstream reports.

Consultation

We are committed to keeping the market regularly informed of our progress, through regular stakeholder engagement, events, roundtables and progress updates.

The Better Alignment Project’s global stakeholder consultation online survey is now closed. Regional stakeholder roundtables were held globally from April until June 2019.

The purpose of the roundtables was to gather feedback so that we could:

  • Identify opportunities for better alignment in wider sustainability reporting
  • Understand current confusion and barriers to effective reporting on climate, with respect to the TCFD recommendations
  • Discuss insights on how to best integrate financial and non-financial reporting.

The Dialogue participants held two webinars, in March and June 2019, introducing and presenting the results of the consultation, with the findings published in September 2019.

Report

The Corporate Reporting Dialogue participants released a report in September 2019, showing high levels of alignment between their reporting frameworks on the basis of the TCFD recommendations.

Entitled “Driving Alignment in Climate-related Reporting”, the publication maps the Better Alignment Project participants’ standards and frameworks against the seven principles for effective disclosure, the 11 recommended disclosures and 50 illustrative example metrics detailed in the TCFD recommendations. It also documents the commonalities and differences between the Dialogue participants within the parameters of the TCFD recommendations’ example metrics.

The results of the technical mapping provide a practical guide to assist organizations in understanding and implementing the TCFD recommendations when using the participants’ well-established and globally applicable frameworks and standards.

The mapping showed strong alignment between the participants’ frameworks and standards and the TCFD recommendations, specifically:

• The TCFD’s seven principles for effective disclosure are harmonious and complementary with those of the participants’ frameworks and standards, with the mapping showing no sources of conflict.
• The participants are well-aligned with the TCFD’s 11 recommended disclosures, each of which is comprehensively covered by the frameworks and standards.
• Overall, 80% of the TCFD’s 50 illustrative metrics are fully or reasonably covered by CDP, GRI and SASB indicators.
• There are high levels of alignment between CDP, GRI and SASB for the TCFD’s illustrative example metrics, with 70% of the TCFD’s 50 metrics showing no substantive difference between the participants’ indicators. For the remaining 15 indicators, substantive differences are limited.

The Dialogue participants held a webinar, in October 2019, presenting the report in detail.

Frequently Asked Questions

Why is the work of the Corporate Reporting Dialogue important?

The participants of the Corporate Reporting Dialogue are committed to ensuring the corporate reporting landscape is easily navigable, responds to the needs of report preparers and users and conducive of efficient and effective corporate reporting.

By bringing together the major international players in the corporate reporting field, the Corporate Reporting Dialogue serves to develop better understanding between the participants of each other’s work and their latest developments so that they can align their work, share their thoughts and express a common voice on areas of mutual interest.

What do we mean by ‘better alignment’?

Corporate Reporting Dialogue participants will conduct the necessary work to better align the frameworks in the ESG reporting space (SASB Standards, GRI, CDP) and frameworks that promote further integration between non-financial and financial reporting (<IR> Framework, CDSB).

Participants will work together to refine overlapping metrics with the same intent. Where their objectives do not require differences, we will look to achieve and maintain the highest possible alignment. Such alignment is subject to the due process considerations of each organization’s governance procedures.

SASB, GRI, CDP and CDSB mapped their frameworks against the Task Force for Climate-related Financial Disclosures (TCFD) recommendations and will align their metrics where possible across all their reporting frameworks taking into account the different focuses and audiences. This work will be conducted in the context of supporting further integration of financial with non-financial reporting, through identifying how the non-financial metrics relate to financial outcomes and how these can be integrated in
mainstream reports.

What will the outputs and outcomes of this project be?

The initial output, expected in Q3 2019, will be a publication available on this website – the document will show the linkages of the TCFD Recommendations with the respective reporting frameworks and the linkages between the frameworks. This work will include identifying how non-financial metrics relate to financial outcomes, explain how
the TCFD recommendations should be integrated in mainstream reports and outline preparations for a next phase during which the framework providers will align their metrics where possible across all their reporting frameworks.

Dialogue participants believe it is crucial to share up-to-date information on the status of alignment over the course of the project in order to meet the needs of both users and preparers of disclosures and to ensure efficiency in reporting.

How will this project help drive integration in reporting?

Markets nowadays understand that so-called ‘non-financial’ information often becomes financial in the long-term. Investors are looking for context behind non-financial information to understand its links to both the risks and opportunities of the organization. As the TCFD recommendations have demonstrated, investors increasingly expect to find this information in mainstream financial filings and integrated reports.

In driving better alignment, this project will ensure organizations are better placed to provide clear, coherent and comparable data, as well as a multi-capital perspective on how they create value in the short, medium and long term.

Through this project, the Corporate Reporting Dialogue participants are committing to continuous progression towards the integration of non-financial and financial information going forwards.

What are the long-term plans of the Corporate Reporting Dialogue?

Since 2014, participants of the Corporate Reporting Dialogue have collaborated on projects to drive the alignment of corporate reporting. This started with a corporate reporting landscape map, providing a snapshot of corporate reporting initiatives through the lens of integrated reporting. In 2016, participants published a Statement of Common Principles of Materiality, presenting common foundational principles believed to be broadly consistent with all forms of standards’ development and business reporting to stakeholders. Participants of the Dialogue published ‘SDGs and the future of corporate reporting’ – with several of our frameworks at the heart of the transparency
needed to assess progress against the SDGs in a meaningful way.

Participants also published ‘Understanding the value of transparency and accountability’ demonstrating that the participants’ frameworks are built on the same fundamentals and therefore can be used in conjunction with each other.

The two-year better alignment project played a significant role in accelerating progress towards our goals and ran in conjunction with other projects, including our work with investor organizations and regular engagement with businesses and regulators. This is the key forum in the world for bringing together the major players in the corporate reporting field, with all participants committed to driving alignment.

Dialogue participants for the Better Alignment Project