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ESG roundup: Integrated reporting framework, CDP/FFDP, Walmart

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  • ESG roundup: Integrated reporting framework, CDP/FFDP, Walmart

GLOBAL - The International Integrated Reporting Council (IIRC) is on track to publish the world's first Integrated Reporting Framework by the end of 2013.

The framework aims to accelerate the "global evolution of corporate reporting", allowing organisations to communicate the full range of factors that contribute to the creation of value and ensure they are embedded within their strategies.

IIRC chief executive Paul Druckman said: "It is right that companies' communication with investors and other stakeholders reflect the full range of factors that contribute to the creation of sustainable value. Huge strides have been made in recent years - for example, to incorporate risk disclosure into financial reporting.

"In addition, the development of sustainability reporting provides a new dimension from which to consider value creation and preservation."

Despite these innovations, understanding how companies create sustainable value from their published reports can still be difficult, Druckman said.

"What the Integrated Reporting Framework will do for the corporate reporting process is to enable investors and other stakeholders to understand better the ways in which companies create sustainable value," he said. 

Frank Curtiss, head of corporate governance at RPMI Railpen Investments, which already called on companies to move beyond financial reporting four year ago, said: "Corporate reporting seems to be getting longer, but it is not necessarily getting more informative.

"Better reporting is essential and will lead to better investment decisions and better allocation to capital. It is about bringing together strategy risk and performance and presenting it in a comparable way.

"However, integrated reporting is not about combining sustainability reports with financial reports - it aspires to go beyond combined reporting, which could be truly informative to investors and other stakeholders."

Curtiss also notes that the take-up of the IIRC's pilot programme on the formulation of the framework has had an encouraging take-up, with more than 70 organisations and 20 investors.

The IIRC has also publishes a summary of responses to its discussion paper 'Towards Integrated Reporting - Communicating Value in the 21st Century,' launched in September 2011.

The IIRC's analysis has identified four areas that need to be explored to develop the framework: basic concepts underlying the definition of integrated reporting, the target audience for integrated reporting, from whose perspective value should be considered - value to the organisation, to investors, to other stakeholders or to society at large - and the timing of the release of the framework.

Meanwhile, the Carbon Disclosure Project (CDP) and the Global Canopy Programme (GCP) have announced an alliance that will see GCP's Forest Footprint Disclosure Project (FFD) merge with CDP over the next two years.

It means corporate disclosure on the earth's atmosphere, water and forests will come under one roof, resulting in the world's largest and most comprehensive natural capital disclosure system.
 
Paul Simpson, chief executive at CDP, said: "Investors and corporations are becoming increasingly aware of the extent to which their value chains are influenced by natural resource constraints, which lead to increasing price volatility and risk of business interruption.

"Bringing forests, which are critically linked to both climate and water security, into the CDP system will enable companies and investors to rely on one source of primary data for this set of interrelated issues."

Freddie Woolfe, corporate engagement manager at Hermes Equity Ownership Services, added: "Hermes Equity Ownership Services welcomes the significant development for environmental impact disclosure requests in bringing Forest Footprint Disclosure under the CDP umbrella.

"There is a clear benefit to investors in having a single source for information relating to a significant portion of companies' environmental footprints."

Lastly, it has been reported that a group of New York City pension funds is suing current and former Walmart executives over an alleged bribery scheme at the retailer.

It is the latest in a number of lawsuits filed against Walmart since it emerged that the company's Mexican unit, Walmex, allegedly paid millions of dollars in bribes.

After the corruption scandal emerged, Walmex and Walmart's share prices plummeted by 16% and 7.5%, respectively, after two days of trading.

But the company is no stranger to controversy, and various pension funds have taken action against the retailer in the past.

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