Net Balance assesses the state of sustainability assurance

Sustainability adviser Net Balance has found that a growing number of Australian-listed companies are setting high standards of transparency and accountability regarding their sustainability performance, though a large number of companies still face a learning curve in understanding and communicating their social and environmental impacts.

The company published its findings in the report ‘The State of Sustainability Assurance 2013’, which examined sustainability reports released in 2013 and found an increase in the number of companies reporting sustainability performance - 75% of the ASX 200. However, only 29% of those companies are having their data assured, thus providing their stakeholders with robust information about their sustainability performance.

The research, which compared findings with Net Balance’s 2012 State of Sustainability Assurance report, identified an emerging trend in the assurance of human rights disclosures, particularly in relation to supply chain risks. Furthermore, the recommendations provided by assurers are shifting from improvements to data capture and reporting systems to recommendations around transparency, transitioning to more streamlined and concise reports, and clear communication of outcomes.

The ASX recently made changes to its Corporate Governance Principles and Recommendations, which take effect for a listed entity’s first full financial year commencing on or after 1 July 2014. Net Balance noted the presence of Recommendation 7.4, which states: “A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.”

The focus now, said Net Balance, will be on how companies choose to respond to the recommendation, and the level of accountability and transparency they apply to disclosure. For companies seeking assurance, Net Balance provides assurance for the sustainability disclosures of 40% of the current ASX 200 market.

The report can be viewed here.