How to simplify corporate reporting

Published on the World Economic Forum blog on 24 September 2019

Today, the Corporate Reporting Dialogue launched the first report from its Better Alignment Project, which brought together major global standard-setters and framework providers to assess their alignment on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

These frameworks already cross the boundaries between non-financial and financial reporting on an individual level – and through this collaboration, participants discovered the alignment of their frameworks both against the TCFD recommendations as well as between frameworks is much higher than anticipated.

The technical mapping shows strong alignment between the participants’ frameworks – including CDP, the Climate Disclosure Standards Board, the Global Reporting Initiative (GRI), the International Integrated Reporting Council and the Sustainability Accounting Standards Board (SASB) – and the TCFD recommendations. Specifically:

  • The TCFD’s seven Principles for Effective Disclosures are harmonious and complementary with those of the participants’ frameworks and standards, with the mapping showing no sources of conflict.
  • The participants are strongly 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 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 high levels of alignment shown demonstrates to me, as chair of the Corporate Reporting Dialogue, that we have to get better at engaging and sharing insights with stakeholders who we know are confused.

Earlier this year, through an online survey and a series of global roundtables held in 11 countries, we consulted around 250 stakeholders, including businesses and investors, on how to support effective disclosures.

The stakeholders reaffirmed an urgent call from the market to unravel and solve inconsistencies in metrics for climate change reporting. Further consultation findings included confusion over the frameworks’ differing definitions of materiality and calls to better articulate the relationships, interconnections and alignment between the reporting frameworks.

Addressing market confusion

The market consultation sent a clear message to the participants of the Corporate Reporting Dialogue: we need to better communicate and illustrate the interconnection and harmony of the frameworks and standards, to help report preparers and investors navigate the reporting landscape.

The aim of this report is to begin to answer this call by providing a practical guide to help stakeholders understand and implement the TCFD recommendations when using the participants’ globally applicable frameworks and standards.

I encourage companies and investors to provide additional feedback to the Corporate Reporting Dialogue regarding the level of clarity it offers to the market for reporting effectively on the risks and opportunities presented by climate change.

It is essential we continue our dialogue with the global marketplace if we are to create the clear and comparable reporting guidelines needed to support a systemic shift towards a sustainable global financial system.

The participants of the Corporate Reporting Dialogue remain committed to ensuring the corporate reporting landscape is easily navigable, responds to the needs of report preparers and users and conducive to efficient and effective corporate reporting. We believe today’s report is a positive step forward, and we look forward to furthering this work with you in the future.

Ian Mackintosh, Chair of the Corporate Reporting Dialogue
Posted under: Insights

Corporate Reporting Dialogue participants

ISO
(Observer)