Social Impact Day 2020


Session3: “International Trends in Sustainability Disclosure – Harmonization of GRI, SASB, IIRC, CDP and CDSB” (Summary)

・Mr. Yoichi Mori, Chair of the Corporate Disclosure Technical Committee, The Japanese Institute of Certified Public Accountants
・Ms. Hidemi Tomita, Managing Director, Lloyd’s Register Japan KK
・Ms. Yuki Isogai, Technical Lead, Sustainability Center of Excellence, PwC Japan / Partner, PricewaterhouseCoopers Sustainability LLC

・Mr. Takeshi Mizuguchi, Professor, Department of Business Management, Faculty of Economics, Takasaki City University of Economics / Member, Governing Council, Social Impact Management Initiative

Session three focused on international trends in Sustainability Disclosure and harmonization of various standards. There already are various standards for corporate sustainability disclosure, however in 2020 three notable papers were published. First, the World Economic Forum (WEF) released a white paper on “measuring stakeholder capitalism.” Second, five major organizations involved in sustainability disclosure — CDP, CDSB, GRI, IIRC and SASB — issued a joint statement, and finally, the IFRS Foundation proposed setting up a global sustainability standards board in parallel with the International Accounting Standards Board, which signaled a major move toward harmonization of disclosure standards. These initiatives represent a new trend of ESG investment that seeks convergence in policy and practice globally, while already a trend in Europe. Companies are no longer at the stage of questioning why they should incorporate sustainability into their management strategies. Instead, they are now more focused on the “how” — how to establish relevant KPIs, measure them, integrate them into their corporate practice, and devote resources to produce meaningful results. The harmonization of disclosure standards is expected to be globally consistent, comparable, and leverage existing standards.

The concept of “dynamic materiality”, the impact of an organization on the economy, the environment, and society viewed as a dynamic process, which influences business value creation was also proposed in this session.

Since the discussion at the IFRS Foundation will focus on climate change for the time being, many more years will be needed to integrate all other elements.

Under such circumstances, Japanese companies are being asked to address impending issues such as: 1) how they will comprehensively and dynamically understand and internalize the relationship between value-creation (that primarily affects the company) and impact-creation (that primarily affects society), and 2) whether they can figure out a way to compare across corporate practices in the same or similar industry so that they can claim competitive edge and, at the same time, develop a coherent story between the corporate strategy, practice and results. Addressing these adequately will upgrade their communication to investors and different stakeholders.