Your Company’s Social Score Will Soon Be a Credit Score

Sustainability is one of the big buzzwords right now and what it means for insurers and brokers is that ticking the right climate change boxes is going to become part of your everyday business life. You won’t be able to quote, manage admin or settle a claim without considering the sustainability impact in a few years. More importantly, your company accounts are essentially going to become a political speech, as well as a summary of financial facts and figures. Otherwise you won’t get a loan. Here’s a press release from the GRI to let you know which way the wind is blowing;

On 8 March, the IFRS (International Financial Reporting Standards) Foundation Trustees updated on their strategic direction to strengthen financial corporate reporting, by taking account of the financial opportunities and risks of sustainability impacts on enterprise value creation. As a logical next step, today they have announced the establishment of a new working group, consisting of international initiatives focussed on investor interests and reporting on enterprise value creation.

Eric Hespenheide, GRI Chairman, said:

“GRI looks forward to collaborating with the IFRS working group and helping make the important link with sustainability reporting, which focuses on disclosing a company’s impact on the world.

As I set out in my response on 8 March, recognizing investors’ needs for reporting that identifies the effects on value creation, linked to social and environmental issues, is a step in the right direction. However, companies need to be accountable to a multiplicity of stakeholders. This is why financial reporting and comprehensive sustainability reporting, as enabled by GRI, need to be on an equal footing.

The case for multi-stakeholder reporting, which applies the principle of double materiality, (No, we have no idea what that Newspeak means either – Ed) is clear. We will continue to work with IFRS, the European Commission and others to support global changes that fulfill these aims.”

Judy Kuszewski, Chair of the GRI Global Sustainability Standards Board (GSSB), added:

“GRI and the GSSB support a future in which sustainability reporting is on an equal footing with financial reporting, introducing connectivity between these two pillars to improve corporate reporting as a whole. We believe it is essential to strengthen financial reporting by enabling sustainability disclosures, in the context of enterprise value creation, as a precondition for creating this link.

Therefore, we are supportive of this announcement by the IFRS Foundation to strengthen and extend financial reporting, while we are also delighted to be working with the EU to bring about their ambitions for transforming corporate reporting by building the connectivity between financial and sustainability reporting.

Sustainability reporting that reflects the impacts of a company’s activities – alongside robust financial reporting on enterprise value added – is essential to build trust in business, government and other institutions as we face the immense environmental, social and economic challenges ahead.”