Managing the transition to G4 reporting, meeting Dodd-Frank’s approaching deadline for disclosing conflict minerals, and reducing supply chain risk by driving social compliance are among the top sustainability issues for businesses in 2014, according to a new Ernst & Young (EY) publication.
“This year we'll see some big changes in the sustainability-reporting landscape, particularly as companies begin to disclose their conflict-minerals sourcing and begin to transition to the new G4 iteration of the Global Reporting Initiative reporting framework," says Steve Starbuck, Americas leader, climate change and sustainability services, for Ernst & Young. "It's important for companies to stay ahead of these disclosure and reporting changes, while keeping a pulse on investor expectations, so they can adequately address risk and ensure compliance with the new rules."
In EY’s new quarterly publication “Let’s Talk: Sustainability,” the firm outlines the top sustainability trends for companies in 2014:
- Meeting Dodd-Frank Act Section 1502's approaching deadline – The first filing deadline to comply with the U.S. Securities Exchange Commission's (SEC) conflict-minerals disclosure requirements covering calendar year 2013 is June 2, 2014. Per the legislation, companies must investigate their supply chains for conflict minerals and report on their source of origin.
- Managing the transition to G4 reporting – Leading sustainability-reporting organizations are seeking to provide clarity and guidance on what's material in non-financial reporting. Conducting a non-financial materiality assessment this year can provide a company and its stakeholders with valuable intelligence to better measure, manage and assess the business in the short term and long term. Additionally, this exercise is critical to laying a proper foundation for future reporting, particularly in light of the GRI G4 sustainability-reporting guidelines.
- Reducing supply chain risk by driving social compliance into the business – Supply chain management is complex and in the spotlight after recent tragedies such as the Rana Plaza collapse in Bangladesh. To avoid such catastrophes, companies should take steps in 2014 to drive social compliance into their business, such as mapping the supply chain, integrating social compliance into the procurement process and systemizing collaboration between social compliance and internal audit.
- Understanding how environmental, social and governance disclosures affect companies listed on various stock exchanges – Stock exchanges around the world, such as NASDAQ, the Johannesburg Stock Exchange and the London Stock Exchange, are beginning to recommend that their listed companies report on select environmental and social indicators, or explain why they do not. This trend is likely to spread, since the NASDAQ OMX and New York Stock Exchange are participating in the Investor Network on Climate Risk Sustainable Stock Exchanges Working Group, which is collaborating on a standards proposal. Now is the time for companies to establish systems for capturing key ESG metrics and develop a process for measuring non-financial data before such guidance becomes mandatory for listed companies on main U.S. exchanges.
To download the report, visit www.ey.com/us/sustainability.