Since the consolidation of SASB and TCFD under the International Financial Reporting Standards (IFRS), these standards, along with GRI, are forming the baseline for non-financial disclosures. SASB and GRI already garner the most popularity for impact reporting, but critics argue that even if these standards were adopted by all organizations and they were able to make annual improvements – they’re not enough.
The thought process is that a company measuring and improving against past performance doesn’t make them sustainable and the relevance of a business’s activities isn’t properly considered. However, a context-based approach to sustainability considers local systems with a scalable method beneath the 9 Planetary Boundaries. These benchmarks and thresholds permit an organization to better understand their unique sphere of influence.
Currently, the United Nations Research Institute for Social Development (UNRISD) offers a user manual for an “Authentic Sustainability Assessment,” highlighting elements necessary to encompasses a wider range of sustainability issues that allows organizations to focus on the most material and relevant issues according to their specific context, industry, and stakeholders. A context-based approach may offer greater benefits through customized solutions tailored to the unique needs, goals, and constraints of a particular organization allowing more effective and appropriate intervention.
Interestingly, the SEC nods towards a context-focused approach as Commissioner Peirce notes in April, 2021 that, “The result of global reliance on a centrally determined set of metrics could undermine the very people-centered objectives of the ESG movement” and “preset, government-articulated metrics will stifle the people’s innovation that otherwise would address the many challenges of our age.”
Whether you feel a context-based approach is right for you, these development hint to the future of Sustainability reporting with the goal of providing a more holistic and comprehensive framework. Using more accurate parameters, an organization can better identify and prioritize material issues and risks improving resource use for a greater outcome.
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