COLLEGE OF BUSINESS AND ACCOUNTANCY

COURSE DESCRIPTION:
ü MAC 16 – Sustainability and Strategic Audit

TOPIC:
ü Other Reporting Frameworks and Overview of Sustainability Assurance

MODULE CODE:
ü SSA 07

LEARNING OUTCOMES:
At the end of this module, the student should be able to:
ü Identify the nature of other reporting frameworks in sustainability reporting.
ü Differentiate GRI with other reporting frameworks in sustainability reporting.
ü Discuss with the nature and need of assurance engagement for sustainability reports.
ü Identify the elements of assurance report in sustainability reporting.
ü Apply assurance reports on sustainability reporting in the Philippines.

BIBLICAL VALUES INTEGRATION:

“The Lord is my strength and my shield; in him my heart trusts, and I am helped; my heart exults, and with
my song I give thanks to him.”
-Psalm 28:7

INTRODUCTION:
“Sustainability calls for a decent standard of living for everyone today without compromising the
needs of future generations” (UNWCED, 1987). Economic, social, and environmental dimensions of human
welfare are main parts of sustainable development. Global society including both public and private agents
take care about more than ever on sustainability issues, such as global warming, environmental pollution,
life quality, income distribution differences, in short, better social, economic and environmental system.
One of the most important elements of the sustainability is better sustainable accounting all the activities
in the value chain management. Sustainable accounting is evolved form of social and environmental
accounting.

BODY:
Sustainability reporting is an organization’s practice of reporting publicly on its significant
economic, environmental and/or social impacts, in accordance with globally accepted standards.
Such disclosures enable organizations to measure, understand and communicate their EESG
performance and then set goals, and manage change more effectively. Often, they go hand in hand
with the setting of performance targets related to EESG impacts.

Globally Recognized Standards/Frameworks in Reporting Sustainability

This Guidelines builds upon four of the globally accepted frameworks, which companies
use to report on sustainability and non-financial information:
1. Global Reporting Initiative’s (GRI) Sustainability Reporting Standards;
2. International Integrated Reporting Council’s (IIRC) Integrated Reporting (IR) Framework;
3. Sustainability Accounting Standards Board’s (SASB) Sustainability Accounting Standards; and
4. recommendations of the Task Force on Climate related Financial Disclosure (TCFD).

Page 1 of 4

GEN-FM-019 Rev 1 Effective 30 Sept 2022

 The GRI Standards has a comprehensive reporting requirement covering economic,
environmental, and social topics. It is also aligned with international standards and normative
frameworks such as the United Nations Global Compact (UNGC) and the International Labour
Organization (ILO) Tripartite Declaration.

The <IR> Framework defines six capitals, seven guiding principles, and eight content
elements of an integrated report but does not specify topic disclosures and measurement methods.
It aims to monitor how the capitals are used and created by the business model and discloses the
companies’ strategies in light of risks and outlook.

The SASB Standards provides industry-based sustainability standards for more than 80
specific industries. It has five general sustainability themes including environment, social capital,
human capital, business model and innovation, and leadership and governance. To address
sustainability issues, a minimum set of topics for consideration in each industry are also provided,
together with quantitative and comparable accounting metrics.

The TCFD – a private-sector task force created by the Financial Stability Board – issued its
final recommendations on climate- related financial disclosure in June 2017, focusing on climate-
related risks, opportunities, and financial impacts, as well as scenario analysis.

The table below distinguishes the reporting standards/frameworks and compares the
guiding principles for defining report content and sustainability topics covered in each. More
information can be found in the full guidance documents for these reporting
standards/frameworks that can be access via their websites.

Page 2 of 4

GEN-FM-019 Rev 1 Effective 30 Sept 2022

 Reporting Standards/Frameworks
Coverage
GRI IR Framework SASB TCFD
General • Economic • Financial capital • Business model and innovation • Climate-related Financial Disclosure
Sustainability • Environmental • Manufactured capital • Leadership and governance • Climate-Related Risks, Opportunities,
Topics • Social • Intellectual capital • Human capital and Financial Impacts
• Human capital • Social capital • Scenario Analysis and Climate Related
• Social and relationship capital • Environment Issues
• Natural capital
Guiding For defining report content: Strategic focus and future orientation: For topic selection: Climate-Related Financial Impacts:
Principles • Stakeholder inclusiveness • Connectivity of information Financial materiality, based on Transition Risks
• Sustainability content • Stakeholder relationships i. potential to affect corporate value or • Policy and Legal
• Materiality • Materiality ii. interest of investors • Technology
• Completeness • Conciseness • Relevant across an industry • Market
• Reliability and completeness • Actionable by companies • Reputation
For defining report quality: • Consistency and comparability • Reflective of stakeholder consensus Physical Risks
• Accuracy For accounting metrics: • Chronic
• Balance • Fair representation • Acute
• Clarity • Useful Opportunities
• Comparability • Applicable • Resource Efficiency
• Reliability • Comparable • Energy Source
• Timeliness • Complete • Products/Services
• Verifiable • Markets
• Aligned • Resilience
• Neutral Thematic Areas:
• Distributive • Governance
• Strategy
• Risk Management
• Metrics and targets
Materiality “Material aspects” are those that A matter is material if it could A fact is material if here is a substantial Public companies’ legal obligation to disclose
reflect the organization’s significant substantively affect the organization’s likelihood that a reasonable investor would material information in their financial filings
economic, environmental and social ability to create value in the short, view its omission or misstatement as having including material climate-related information
impacts; or that substantively medium, or long term significantly altered the total mix of information
influence the assessments and
decisions of stakeholders

Page 3 of 4

GEN-FM-019 Rev 1 Effective 30 Sept 2022

 Sustainability Accounting Standards Board (SASB)
The Sustainability Accounting Standards Board (SASB) is an independent 501(c)(3)
nonprofit organization. SASB’s mission is to develop and disseminate sustainability accounting
standards that help public corporations disclose material, decision-useful information to investors.
That mission is accomplished through a rigorous process that includes evidence-based research
and balanced stakeholder participation. SASB standards are designed for voluntary use in
disclosures required by existing U.S. regulation in with the Securities and Exchange Commission
(SEC), such as Forms 10-K and 20-F.

SASB’s sustainability topics are organized under five broad sustainability dimensions:
1. Environment.
2. Social Capital.
3. Human Capital.
4. Business Model and Innovation.
5. Leadership and Governance.

Dow Jones Sustainability World Index

The Dow Jones Sustainability World Index, or DJSI World, is a global index consisting of the
top 10% of the largest 2,500 stocks in the S&P Global Broad Market Index based on their
sustainability and environmental practices. The index was launched on Sept. 8, 1999, and is
maintained by S&P Dow Jones Indices in conjunction with RobecoSAM, a Zurich-based investment
specialist that conducts detailed sustainability research on thousands of global market
capitalization leaders each year.

DJSI World Characteristics and Methodology

DJSI World, in June 2020, reported 317 constituents and five-year annualized net total
returns of 7.8%. About 47% of the benchmark's weight by market capitalization was concentrated
in companies based in the United States, of which there were 59. The sector breakdown showed
that 25.3% of the companies listed in the DJSI World were information technology companies. The
second highest sector was health care at 21.3% and financials came in third with 12.3%.

OVERVIEW OF SUSTAINABILITY ASSURANCE

Assurance is defined as “an engagement in which a practitioner aims to obtain sufficient

appropriate evidence in order to express a conclusion designed to enhance the degree of confidence
of the intended users other than the responsible party about the subject matter information”
(IAASB, 2013, p.7). The IAASB definition highlights the tripartite nature of assurance engagements
i.e. (1) responsible party, (2) an assurance provider (independent expert) and (3) an intended user.

The demand for sustainability assurance is a result of organizational stakeholders expressing

skepticism over the credibility of published sustainability reports. However, does sustainability
assurance actually improve the quality of published sustainability reports? Answers to this
question can be found in a study undertaken by Moroney et al. (2012) who examine the quality of
environmental reporting by Australian companies. They compared the quality of assured and non-
assured environmental reports to assess if there were differences in the quality of disclosure.

REFERENCES:
• Perlas, M.A., Instructional Material for Sustainability and Strategic Audit

------------------------------------------------------NOTHING FOLLOWS----------------------------------------------------

Page 4 of 4

GEN-FM-019 Rev 1 Effective 30 Sept 2022