The strategic focus of companies has shifted dramatically as a result of the economic crisis
ACCA Sri Lanka Awards for Sustainability Reporting was launched in November 2004 to reward and recognize those organizations that report and disclose environmental, social or full sustainability information within Sri Lanka; to encourage the uptake of environmental, social and/or sustainability reporting; and raise awareness of corporate transparency issues and increase accountability of responsiveness to stakeholders.
The panel of judges for the 2021/22 edition comprised Franklyn Amerasinghe – Consultant to the panel of judges; Sriyani Hulugalle – Former Senior Economist, World Bank; Dr Ramani Gunatilaka – Independent Consultant; Dinesh Weerakkody – Chairman BOI and Port City Commission; Prof Kennedy D Gunawardana – Head of Department of Accounting, Chair of Accounting Professor, University of Sri Jayewardenepura; Dr Ranjith Cabral – Chairman, Vidura College Colombo and Ex-Council Member, University of Colombo & Open University of Sri Lanka; and Anthony Jayaranjan – Independent Director Lankem Ceylon PLC.
JUDGES & ACCA OBSERVATIONS
The number of reports was slightly more than last year and was of the highest quality. Almost all of them met the requirements of the contest which required that the organization provides a statement of sustainability in totality. A large number of the reports were integrated and followed the International Integrated Reporting Consultancy guidelines for dealing with material impacts in identified capitals. They conformed to a focus on the three elements of sustainability, namely, the performance of the organization relative to its economic viability, its responsibility to sustain the planet, and being cognizant of the people within and outside the organization.
The following are some of the views of the judges as expressed in the discussion within the panel. The challenge to producing a comprehensive report for the stakeholder was to be careful not to make the presentation too voluminous and difficult to comprehend the essential elements. There were some reports this year which had taken note of the judges’ concerns in this regard and had a leaner more compact look, without losing the focus on conveying the key details.
Comparisons year-on-year, a key component of a credible report, were seen but a longer period of comparison would be valuable to show continuous improvement. Financial performance has been shown by some for as many as ten years and a chart which shows GHG control over the same period would be a great improvement. Reports should contain a credible record of dialogue with key stakeholders, and details of feedback, learnings therefrom, and actual improvements in social performance.
The judges feel that some industry-specific impacts were ignored or inadequately dealt with.
In response to the observations by the judges last year, many reports now focus on gender, but some concern exists relative to equal opportunity within organizations. Mention of specific issues concerning diversity would be welcome as it is clear that there is a reluctance to provide opportunities for females to develop themselves for higher positions. No mention is made of differently-abled persons and policies for the recruitment of such persons.
Nearly all the companies check their report for compliance with the Global Reporting Initiatives and almost all have sought assurance from a third party for the non-financial information, although most of these certificates do not confirm that activities have taken place, which should ideally be reported on by a committee or board tasked with putting in place a sustainability plan and implementing it.
RECOMMENDED FUTURE DIRECTIONS
The strategic focus of the companies participating changed dramatically as a result of the economic crisis and COVID; the productivity of employees who faced many difficulties; and supply chain issues. Companies need to be conscious of the need to be quick in responding to the threats and opportunities which are presented and have shorter more flexible plans. Reporting would necessarily have to show how plans have changed and how the sustainability impacts have changed therewith.
The stage is set for a massive restructuring of public sector services and there may be an opportunity to show the national consciousness of the private sector to retrain and absorb redundant staff retrenched or retired by the government.
There are many industries which now have imported labour because local youth have shown a disinterest in full-time employment. The judges wish to propose that companies should be addressing the issue of employability with special emphasis on retaining people and accommodating them within the formal economy, which if not addressed may result in social strife which will destabilize the operating environment. We see it as a challenge for the private sector to interest itself in educating children in secondary and tertiary educational institutions about the opportunities for them in the formal sector and the advantages of knowledge relevant to stable employment.
Companies have shown a concern for the UN sustainable development goals and this concern should be vigorously pursued as a national priority. The challenge to reach out to the differently abled must be addressed. There is room for organizations to collaborate within districts in identifying how they could work together in delivering their contribution towards achieving the SDGs.
Finally, it may be suggested that companies divulge the process of collating the information which went into the report and the process of compiling it.
JUDGING CRITERIA
The judging panel assessed the applications and focused on the following three key elements of an excellent report:
Completeness (40%):
Corporate context
Key (direct and indirect) environmental impacts
Environmental policy and management commitment
Environmental targets and objectives
Scope of the report (by entity)
Reporting and accounting policies
Report audience identified
Credibility (35%):
Contingency planning and risk management
Compliance/non-compliance record
Environmental impact data
Environmental financial statements and full cost accounting
Approaches to stakeholder dialogue
Third-party statement
Communication (25%):
Layout and appearance
Understandability, readability, accessibility, appropriate length
Innovative approaches
Availability of a summary report and/ or executive summary
Use of Internet
Appropriateness of graphs, illustrations, and photographs