Learnings about reporting

As part of the Sustainable Investing Research Consulting class, I am part of a group working on a project mapping the interoperability of Global Reporting Initiative (GRI) and International Financial Reporting Standards (IFRS) reporting requirements for global stock exchanges to gauge their commitment to sustainability. We determined certain levels of alignment between the country’s reporting framework and GRI and IFRS. These levels included Fully Aligned, Functionally Aligned, Partially Aligned, and more. After completing the mapping, we will be categorizing countries to be Adopter, Adopter+, Independent, Independent+ based on the level of alignment with the standard frameworks. 

This has been a very enriching experience since it has given a lot of us an opportunity to experience what working with a real client would be. I do not intend to suggest that it is a very smooth process – more that I am grateful to have gotten an insight into the world of sustainability consulting. As I outlined in previous memos – my group faced several challenges in terms of the client’s restructuring, language barriers in reading foreign documents, and the resultant push of deadlines. Since then, we decided to still try to delve into the documents with language barriers rather than conforming to categorizing the respective country as ‘Not Aligned’ (as per our degrees of categorization for the mapping of the interoperatability). 

The document I needed to translate was 151 pages long and unable to upload onto any translation websites. Finally, our client walked us through the ‘Google lens’ tool which can scan each page of a document and provide translations. This was a breakthrough but doing this process for 151 pages was unrealistic. Thus, we were able to find the ideal in between of scanning enough pages to be able to skim the document, get an essence of the country’s regulation standards, and be able to adequately fill out the mapping tool. What was also very helpful was finding a page that specified the mandating of IFRS for the country which cut down the scope in half since the country would be perfectly aligned to IFRS. 

Furthermore, within the group we have faced some health challenges with one of us falling very ill and me fracturing my foot. However, our group has adapted very well to these occurrences by shifting meetings online, redelegating the work break down, and communicating compassion. 

Apart from the group dynamics, I have learned a great deal about the reporting landscape globally. I have learned that the Middle East does not have mandated regulation, but mostly voluntary. Furthermore, the stark comparison between the strictness of the mandates for more prominent countries versus less developed countries was very interesting. In addition, I learned that African and South East Asian countries are mostly adopters that integrate international frameworks within their reporting standards. Latin American countries tend to have more independent frameworks for reporting, although a large proportion of the countries do have mandated reporting.

I was primarily working on the interoperatability of GRI and IFRS themselves. I learned a great deal about the differences and commonalities between the two types of frameworks. They are largely similar in terms of the requirements for company reporting. However, they differ in their focus – GRI’s focus being a broad range of stakeholders, and IFRS’ focus being enterprise driven investors. The integration of both these standards is integral in ensuring that all ground is covered in terms of reporting for social and economic benefit. More specifically, this difference in the focus results in material differences where GRI has a double materiality approach and considers both social materiality and financial materiality whereas IFRS is primarily concerned with financial materiality. Similarly, their differences in governance, strategy, and the environment also relies on the key difference in their focus. Thus, making the research in this project integral to determine the gaps in adoption and be able to bridge them as well as integrate the various global standards.

This research has exposed me to a whole new field of sustainability and shown me the importance of international cooperation and the need for standardization to allow these reporting mechanisms to become more widespread. Standardization would allow ease of adoption by countries and companies as there would be a set method companies and countries could follow. This would allow other industries to form to regulate these mandates, creating a smooth flowing process. Globalization of these standards would also promote efficiency and allow sustainability to become more accessible if there is a common established frameworks without requiring underdeveloped countries to tailor frameworks themselves.