The Workshop entitled “Latest Trends of Sustainability Reporting and Independent Assurance” was organized by Hong Kong Quality Assurance Agency (HKQAA) on 20th Jan 2016. Sustainability reporting is the practice of measuring, disclosing, and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development. The seminar aimed to share the latest trends and development in sustainability reporting and how independent assurance or verification could provide both report readers and the organizations’ management with increased confidence in the quality of sustainability performance data. Before the seminar, I took a photo with Ms. Connie Sham for memory.
Ms. Connie Sham (Head of Audit, Strategic Business, HKQAA) was the first guest speaker. In the beginning, Connie explained what was Sustainability Reporting that “the practice of measuring, disclosing and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development.” Moreover, Sustainability Reporting supported continuous improvement in performance over time.
Then she quoted Peter Drucker’s statement that “What you can’t measure, you cannot manage. What you can’t manage, you cannot change.” Connie also explained Sustainability Reporting was Downstream which was come from what you performed and measured using PDCA of CSR on Upstream.
Connie said Sustainability reporting was a tool for Management and Governance, Extensive Communication / Branding / Reputation / Marketing, and External Stakeholder / Client Relations / Partnership Building, etc. A video named “Global Reporting Initiative: The 5 step process” was showed.
A GSR online tool named XBRL Report was introduced. It was a useful platform to consolidate all CSR data for reporting and increased the transparent of organization performance.
And then Connie reviewed the trends in Sustainability Reporting from N100 (100 largest companies) and G250 (World’s largest 250 companies listed in the Fortune Global 500 ranking) and found that both companies were increased to use sustainability reporting. Moreover, HKQAA reviewed the sustainability performance of 685 eligible listed companies for the Hang Seng Corporate Sustainability Index and found that the listed companies issued stand-alone or integrated sustainability / CSR reports were increased by 73% as compared to 2014.
One of sustainability reporting quality assessment methodology from KPMG was introduced. KPMG identified 7 criteria of industry best practice as follows:
1. Stakeholder engagement
3. Risk, opportunity and strategy
4. Targets and indicators
5. Transparency and balance
6. Supplier and value chain
7. Corporate responsibility governance
After that Connie shared some good performance for outstanding companies and highlighted as follows.
- Provide detailed KPIs and measurable targets with tracking the achievement
- Identify and prioritize issues in terms of materiality and significance
- Provide self-assessment grid against the HKEx ESG reporting guide
Some improvement suggestions were also shared as below.
- Presenting a clear strategy of sustainability with measurable targets and its tracking performance
- Identifying all relevant stakeholders in the report
- Categorizing and prioritizing various issues based on significance
The second speaker was Mr. WK Wong (Manager (Carbon and Energy), HKQAA) and he introduced the topic of Drivers and Trends for Independent Assurance. Firstly, he explained what was Assurance using International Federation of Accountants (IFAC) definition that an assurance engagement as one “in which a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria.”
Then he quoted GRI to explain “Why” need an assurance. There were five points as follows:
1. Increase recognition, trust and credibility
2. Reduced risk and increased value
3. Improved Board and CEO level engagement
4. Strengthened internal reporting and management systems
5. Improved stakeholder communication
The trends in assurance of N100 and G250 were increasing.
Mr. Wong introduced Assurance Process which separated into four parts named Assurance Appetite, Assurance Methodology, Assurance Scope and Assurance Providers. Moreover, he also briefed the Assurance Checklist in three stages.
1. Planning stage:
- Laws and Standard
- Internal/External Audience
- Scope / Level of Assurance
- Cost, etc.
2. Execution stage:
- Engagement Plan
- Documentation and Data
- Visits to Key Operational Sites
3. Reporting and feedback stage:
- Process of Assurance Report or Statement
- Verification Report
After that Mr. Wong briefed the different between Reasonable Assurance Engagement (+ve form of expression) and Limited Assurance Engagement (-ve form of expression).
Finally, Mr. Wong introduced HKQAA Verification Process below.
1. Acquiring Basic Information / Off / on-site Review
2. Risk Assessment
3. Establishment of Verification Plan
4. Verification Activity
5. Issue Verification Report, Statement and Opinion
6. QA Review
7. Submission of Verification Report
At the end, he reviewed the main changes HKEx ESG Reporting Guide (See reference). Four report principles was mentioned that were Materiality, Quantitative, Balance and Consistency.
Reference:HKQAA - http://www.hkqaa.org
20150622: HKQAA CSR Strategic Planning and Reporting Workshop - http://qualityalchemist.blogspot.hk/2015/06/hkqaa-csr-strategic-planning-and.html
ISO - International Organization for Standardization's Guidance on Social Responsibility (ISO 26000:2010) - http://www.iso.org/iso/home/standards/iso26000.htm
GRI - Global Reporting Initiative's G4 Sustainability Reporting Guidelines - https://www.globalreporting.org/Pages/default.aspx
ESG Guide - Environmental, Social and Governance Reporting Guide - https://www.hkex.com.hk/eng/rulesreg/listrules/mbrules/documents/appendix_27.pdf
Consultation Conclusions – Review of the Environmental, Social and Governance Reporting Guide - http://www.hkex.com.hk/eng/newsconsul/mktconsul/Documents/cp201507.pdf