Development in sustainability reporting: Early evidence on core indicators

Abstract

The development of sustainability reporting has accelerated in recent years (Turzo et al., 2022) due to the activities of numerous actors. The United Nations (UN) adoption of the Sustainable Development Goals (SDGs) has given an added impetus to financial reporting as companies (Pedersen, 2018) are shown as one of the main players that can sensitively contribute to the achievement of these goals. To support this, a set of indicators on sustainable development (Mair et al., 2018) was developed for implementation in non-financial reporting under a joint of International Standards of Accounting and Reporting (ISAR) and the United Nations Conference on Trade and Development (UNCTAD) project. This study concentrates on the effectiveness of the core indicators chosen by UNCTAD as showcased in the ISAR-UNCTAD sessions from 2017 to 2022. Case studies were conducted across various industries, geographies, and company sizes, aiming to evaluate the implementation of these indicators. Most companies could report on most core indicators, although challenges in consistent measurement, comparability, and reporting on environmental and social indicators were observed. The analysis concluded that while most indicators could be reported, providing further technical guidance, and building capacity at all levels is crucial for effective SDG reporting and realizing the 2030 Agenda. As companies become more familiar with the core indicators, the process of preparing sustainability reporting based on the guidance on core indicators (GCI) becomes easier.

Full text

Risk Governance & Control: Financial Markets & Institutions / Volume 13, Issue 2, 2023
52
DEVELOPMENT IN SUSTAINABILITY
REPORTING: EARLY EVIDENCE ON
CORE INDICATORS
Francesco Sotti *, Stefano Santucci **
* Corresponding author, Department of Economics and Management, University of Pavia, Pavia, Italy
Contact details: Department of Economics and Management, University of Pavia, via San Felice al Monastero 5/7, 27100 Pavia, Italy
** Department of Economics and Management, University of Pavia, Pavia, Italy
Abstract
How to cite this paper: Sotti, F., &
Santucci, S. (2023). Development in
sustainability reporting: Early evidence
on core indicators. Risk Governance and
Control: Financial Markets & Institutions,
13(2), 52–66.
https://doi.org/10.22495/rgcv13i2p5
Copyright © 2023 The Authors
This work is licensed under a Creative
Commons Attribution 4.0 International
License (CC BY 4.0).
https://creativecommons.org/licenses/
by/4.0/
ISSN Online: 2077-4303
ISSN Print: 2077-429X
Received: 17.05.2023
Accepted: 27.06.2023
JEL Classification: M14, Q56
DOI: 10.22495/rgcv13i2p5
The development of sustainability reporting has accelerated in
recent years (Turzo et al., 2022) due to the activities of numerous
actors. The United Nations (UN) adoption of the Sustainable
Development Goals (SDGs) has given an added impetus to financial
reporting as companies (Pedersen, 2018) are shown as one of
the main players that can sensitively contribute to the achievement
of these goals. To support this, a set of indicators on sustainable
development (Mair et al., 2018) was developed for implementation
in non-financial reporting under a joint of International Standards
of Accounting and Reporting (ISAR) and the United Nations
Conference on Trade and Development (UNCTAD) project. This
study concentrates on the effectiveness of the core indicators
chosen by UNCTAD as showcased in the ISAR-UNCTAD sessions
from 2017 to 2022. Case studies were conducted across various
industries, geographies, and company sizes, aiming to evaluate
the implementation of these indicators. Most companies could
report on most core indicators, although challenges in consistent
measurement, comparability, and reporting on environmental and
social indicators were observed. The analysis concluded that while
most indicators could be reported, providing further technical
guidance, and building capacity at all levels is crucial for effective
SDG reporting and realizing the 2030 Agenda. As companies
become more familiar with the core indicators, the process of
preparing sustainability reporting based on the guidance on core
indicators (GCI) becomes easier.
Keywords: Sustainability, Non-Financial Reporting, Environmental,
Social, and Governance (ESG), Corporate Social Responsibility (CSR),
Non-Financial Disclosure
Authors’ individual contribution: Conceptualization — F.S. and S.S.;
Methodology — F.S.; Formal Analysis — F.S.; Investigation — S.S.;
Writing — Original Draft — F.S. and S.S.; Writing — Review & Editing —
F.S. and S.S.
Declaration of conflicting interests: The Authors declare that there is no
conflict of interest.
1. INTRODUCTION
The latest and most crucial step in sustainable
development is the adoption by the United Nations
(UN) of ―Transforming our World: The 2030 Agenda
for Sustainable Development‖ (Department of
Economic and Social Affairs, 2015) in which
a conceptual framework for the current and future
peace and prosperity of people and the planet is
provided (Fonseca et al., 2020).
Within this project, all member countries of
the UN, after a shared journey with various
stakeholders, defined a set of Sustainable
Development Goals (SDGs), modeled after
the previous Millennium Development Goals (MDGs).
Although there has been no shortage of doubts

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about the actual achievability of these goals, several
parties have remarked on the importance of this
achievement (Stafford-Smith et al., 2017).
Compared to the previous 8 MDGs, the number
of goals was increased to 17, focusing on sustainable
development that, considering the so-called triple
bottom line (Elkington, 1999), would ensure economic
growth, environmental protection, and social
inclusion. Although the goals outlined by the UN
cover many issues, from poverty to hunger, from
energy to climate (Fonseca et al., 2020), and are
addressed to all actors in society: governments,
nonprofit organizations, civil society, and the private
sector (Mio et al., 2020), among these, the private
sector has been recognized as having a unique role
in pursuing the SDGs because of its financing
capacity, sector-specific knowledge and experience,
managerial capability, and propensity for risk-taking
(Berrone et al., 2019).
These economic activities are recognized as
having a key role in achieving sustainable development
(Datta & Goyal, 2022). For the organizations that
conduct these activities, sustainable development
presents a new challenge in defining their strategies,
conducting their operations, and reporting on them
(Bebbington & Unerman, 2020).
Recent empirical evidence shows that
incorporating the SDGs into business strategies
achieves results such as better financial
performance, development of products with higher
added value, better long-term performance, cost
reduction, and better investor relations (Lassala
et al., 2021).
Thus, following the introduction of the SDGs,
companies have begun to disclose and represent
their involvement in these goals, just as many
countries have begun to regulate the SDGs-related
contribution of large organizations (Pizzi et al., 2022).
Since the adoption of the SDGs, and the MDGs
first, numerous conceptual frameworks (Kücükgül
et al., 2022) and guidelines have been developed
about corporate commitment to sustainability;
currently, Global Reporting Initiative (GRI) and
International Integrated Reporting Council (IIRC) are
the two major standard setters to which companies
turn. The purpose of the conceptual frameworks is
to assist companies in presenting information about
their environmental, social, and economic impacts to
their shareholders. The principles (Global
Sustainability Standards Board [GSSB], 2021;
Integrated Reporting, 2021) identify transparency,
conciseness, reliability, completeness, consistency,
future orientation, and comparability as key
characteristics of non-financial reporting (Kücükgül
et al., 2022). These principles are complemented by
other documents issued by the standard setters of
the main principles of non-financial reporting such
as the four GRI guides (SDG Compass, The Practical
Guide, Analysis of Goals and Targets, and
Addressing the Investor Needs) and the two
Integrated Reporting (IR) guides (The Sustainable
Development Goals, Integrated Thinking, and
the Integrated Report, SDG Disclosures). Parallel to
the work of the UN, non-financial disclosure has
attracted the attention of academics and
practitioners, who have long signaled the need for
companies to implement and improve this form of
reporting (Doni et al., 2020) and also at the regulatory
level, a huge step forward in the awareness of
the need for corporate social responsibility (CSR)
reporting was made with the enactment of
the European Union (EU) Directive 2014/95 (Caputo
et al., 2019), according to which large companies,
with more than 500 employees, must prepare
a disclosure document on the development, results,
positioning, and impact of their business about
environmental, social, labor, human rights,
anti-corruption, and bribery issues starting from
the fiscal year 2017. National transpositions of
the Directive have since confirmed that the most
critical issue in non-financial disclosure
implementation is the choice of the best conceptual
framework and the best set of principles, although
early evidence shows that the two sets of principles
mentioned above are the ones most chosen by
non-financial reporting preparers (Doni et al., 2020).
Moreover, despite the existence of various
standards, regulations, and initiatives, the state of
the art of CSR in general and NFD is still very
uncertain and in flux, confusing guidelines, and
practices around the world (Turzo et al., 2022).
Suffice it to say that no real definition of
non-financial reporting is currently identifiable, but
only several examples of environmental, social, and
governance (ESG)-related information. In addition,
the terms disclosure and reporting are also used as
synonyms although they have different meanings,
just as non-financial reports are differently labeled
(Eccles & Krzus, 2010). Also, as part of the 2030
Agenda, the United Nations Conference on Trade
and Development (UNCTAD) has prepared ―Guidance
on Core Indicators for Entity Reporting on
Contribution towards Implementation of
the Sustainable Development Goals‖ (UNCTAD,
2019a). Specifically, SDG 12 includes as goal No. 6
the encouragement of large corporations and
multinational corporations to adopt sustainable
practices and sustainability reporting. Indicator 12.6.1
is precisely the number of entities that publish
sustainability reporting, while the other indicators
refer to the three ESG areas (environmental, social,
and institutional) plus the economic area already
developed by economic and financial reporting.
These indicators are developed according to
methodologies, selection criteria, reporting
principles, and accounting data explained in
the UNCTAD (2019a, 2020). The use of indicators
and indices for development goals is much debated
(Hák et al., 2016). In part, this depends on past
propositions of indicators and demand for new and
better indices. On the other hand, there is no
consensus on how the development of indicators
should best be managed, that is, whether to act in
a coordinated and regulated manner about
the issuance of indicators or whether to leave room
for the strategy of ―survival of the fittest (indicator)‖
(Dahl, 2012).
Based on these premises, the state of the art of
CSR reporting is as fragmented as ever in terms of
transnational projects, EU and national regulations,
reference principles, and especially in terms of
practices conducted by companies. This paper aims
to shed light on the first empirical evidence in light
of the indicators that non-financial reporting should
offer in the SDGs theme.
The rest of this paper is structured as follows.
Section 2 conducts a review of the existing literature
on SDGs, CSR, and integrated reporting. Section 3

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describes the main frameworks for non-financial
reporting and covers the methodology followed by
Section 4 providing the results achieved and their
discussion. Section 5 concludes the paper.
2. LITERATURE REVIEW AND CONCEPTUAL
FRAMEWORK
The existing literature is vast as, starting from
the general concept of sustainable development, it is
outlined in all the studies done on sustainability and
the national, international, and business initiatives
related to the SDGs. In parallel and specifically
concerning business, the whole strand of CSR has
developed those overlaps with ESG issues.
The first questions about the impacts on
the environment by our civilization date back at
least two centuries, but the terms ―sustainable
development‖ and ―sustainability‖ began to be used
in 1987 when the World Commission on
Environment and Development (Brundtland
Commission) published the report ―Our Common
Future‖. The report found the first definition of
sustainable development as development that meets
the needs of the present without compromising
the ability of later generations to meet their own
needs. Since then, although the concept has been
debated and criticized, it has become a benchmark
for scientific research and sustainability the main
paradigm for development (Ruggerio, 2021). Since
then, although the concept has been debated and
criticized, it has become a benchmark for scientific
research, and sustainability is the main paradigm for
development. The centrality of this issue depends on
many factors. First, having originated from UN
initiatives, it has been incorporated into various
treaties, rules, regulations, and other acts. Second, it
can be applied in various fields of research:
business, agricultural and industrial production, and
urban development. In addition, it has become
the foundation of various theoretical frameworks
such as the circular economy and green economy
(Kirchherr et al., 2017).
Despite the attention obtained by sustainable
development, the issue is still far from having
a precise definition and needs further scientific
research to be useful in decision-making processes
(Bolis et al., 2014). Starting from the definition given
by the World Commission on Environment and
Development (1987), the main criticisms have been
about its alleged vagueness or contradictory nature
(Spaiser et al., 2017). The vagueness can be
attributed to the proliferation of definitions and
the different meanings given to them by different
people (Bolis et al., 2014). The contradiction in terms
of the expression sustainable development can be
attributed to the impossibility of indefinitely
sustaining economic growth on a resource-limited
planet. On the contrary, some authors see
the ambiguity and elasticity of the concept of
sustainable development as the main factor in its
success. Others seek to overcome the incompatibility
between sustainable development and economic
growth, arguing that economic growth is
indispensable to obtain the resources necessary to
have sustainability. This approach is consistent with
Kutnetz’s (1973) assumptions that economic growth
is a benefit to environmental quality. It can be said
that the term ―sustainable development‖ is so vague
and generic that it can be appropriate for different
orientations about development and by different
interlocutors (Barbosa et al., 2014).
In summary, despite the contradictions and
diversity of interpretations of the concept of
sustainable development, we can think of
sustainable development as that process that
encompasses both economic and social development
to protect and improve the natural environment,
social equity, and the well-being of human beings.
The term ―sustainability‖ has also been
the subject of some debate, so much so that it has
been called ―problematic‖ (Korca et al., 2021).
The use of the term first spread about
the exploitation of natural resources such as forests
and fisheries, but it later spread as a social
movement to protect the environment and
the ecosystem. This ecological vision of
sustainability developed around two concepts.
The first is understood as the capacity of the natural
environment to sustain human life; the second is
the impact of human productive activity on
the natural environment that is, by definition,
harmful. The latter concept means that
sustainability also extends to business and, although
primarily focused on ecology, contains an economic
(and social too) element, but is still linked to
the system concept. For this reason, sustainability is
to be understood as broad public policy and as
a guide for making ethical decisions by managers,
politicians, and activists (Sheehy & Farneti, 2021).
Sustainability is therefore the goal of various actions
and behaviors that have sustainable development as
the main process by which to achieve this goal.
It is evident that the use of the term
sustainable development and sustainability, even as
synonyms, has led, especially in practical implications,
to some confusion and misunderstanding. Precisely
because of this, the MDGs first and the SDGs later
have been seen as a major step forward in
the definition and application of sustainable
development and sustainability.
The process of sustainable development
mentioned in the Brundtland report (World
Commission on Environment and Development,
1987) and sustainability as the goal, although they
represented a historic step for society, had left many
doubts, especially in their systemic application, so
much to generate a heated academic debate
(Hopwood et al., 2005). As a result, setting goals and
targets for global sustainability and human
development were considered a major achievement
(Stafford-Smith et al., 2017), although a minority
section of the doctrine has not spared criticism of
the project, even in very provocative tones
(Horton, 2014). Others were quick to point out
the lack of certain issues such as migration, terrorism,
capital flight, and democracy (Gasper, 2019). But
the consensus on the SDGs has identified them as
a shared expression of the needs of all stakeholders
that offers a balance between economic, social, and
environmental development (Fonseca & Carvalho,
2019) and an opportunity to create a single
conceptual framework for ensuring human
prosperity in an era of increasing environmental risk
(Griggs et al., 2014). The global scope of the SDGs
and the multiple issues they address have caused
research on these goals to develop in many
directions. The 17 goals are divided into 6 macro-
areas: dignity, people, planet, partnership, justice,

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and prosperity. Several authors have wondered
about the relationships among the various ESGs, but
with results of limited relevance (Allen et al., 2018).
Some authors have identified various relationships,
but also tradeoffs among the goals. In some cases, it
has been observed that the attainment of one goal
makes the attainment of another impossible or that
the attainment of another goal depends in turn on
an additional goal (Nilsson et al., 2016). For example,
Barbier and Burgess (2017) note that poverty
reduction (SDG 1: No poverty) benefits clean water
and sanitation (SDG 6) and hunger eradication
(SDG 2: Zero hunger) outcomes but simultaneously,
at the expense of other environmental and social
goals, just as Singh et al. (2018) note that
the preservation of marine areas, linked to ocean
sustainability, precludes access to new coastal
resources. More generally, various authors (e.g.,
Barbier & Burgess, 2019) agree that economic and
industrial development hurts other environmental
and economic goals. Even a UN report (UN, 2018) on
progress since the enactment of the SDGs points out
that while child and maternal mortality and extreme
poverty have decreased, the sustainability of forest
and marine areas has declined. Stafford-Smith et al.
(2017) argue that the relationships among
the various SDGs should be studied in three areas:
production sectors (e.g., finance, agriculture, energy,
technology, transportation), social actors involved
(local authorities, governments, private sector,
citizens), and countries, differentiated by income.
Although SDGs refer to various components of
society, primarily governments, the private sector,
and especially large corporations, is reserved a key
role in achieving sustainability goals (Mio et al.,
2020). Several authors have pointed out that the role
of business in sustainable development is undeniable
(García-Sánchez et al., 2020; Sullivan et al., 2018) but
the actual contribution to this is still debated (Wicki
& Hansen, 2019). However, SDG 12 and SDG 17
indicate a clear contribution of businesses in
achieving the goals (Montiel et al., 2021), specifying
that large entities should adopt sustainability-
oriented practices and introduce sustainability
information into their reporting forms. The reference
to corporate sustainability reporting provided for by
the SDGs (SDG reporting), together with legislative
and regulatory interventions by EU and/or national
institutions has therefore directly involved the issue
of sustainability reporting, which CSR and ESG have
already addressed (Zaman et al., 2022).
There is no doubt that global and local and
sustainable development initiatives have raised
corporate awareness of the issues outlined so far,
but the consideration that they have a responsibility
to society is not new. Although CSR and ESG can and
are used synonymously, they cover slightly different
concepts. CSR derives from the early reasoning that
was made in the literature about the social
performance of corporations and their specific
responsibilities (Latapí Agudelo et al., 2019). When
the perception of corporate responsibility began to
be evaluated in ethical, regulatory, economic, and in
terms of meeting society’s expectations,
the expression CSR began to be widely used
the acronym ESG was coined in 2004 by 20 financial
institutions to signify that the business model of
companies and (Datta & Goyal, 2022) investors
should consider ESG elements. It is precisely ESG’s
explicit reference to corporate governance, which is
absent in CSR, which makes the concept of ESG
broader than CSR, also because it can be extended to
noncorporate settings. Thus, CSR is best defined as
self-regulation, including international self-regulation,
of the private sector, as transnational regulation,
and as the application of the broad concept of SDGs
to a narrower business context (Sheehy, 2014).
The concept of corporate sustainability has
also been drawn within the area of sustainability,
but it is markedly different from both sustainability
and CSR (Sheehy & Farneti, 2021). Corporate
sustainability derives from the effort, on
environmental motivational grounds, to include
environmental concerns in the business organization
to adapt to global trends and improve efficiency and
reputation. Moreover, again part of the literature
(Sheehy, 2014), the concept of corporate
sustainability does not extend to the ethical
foundations and international regulation that
characterize CSR, and concerning the latter, it
remains a subordinate concept.
The various initiatives in the areas of
sustainability and sustainable development, CSR
awareness, and corporate sustainability have
an enormous impact on corporate reporting since
this is, as also indicated by one of the SDGs, the first
source of information on how far the various
initiatives mentioned above have concrete
implementation. To tell the truth, even before these,
various parties emphasized the need for non-
financial reporting that would be useful for decision-
making (Aureli et al., 2019). This type of reporting is
final to dealt with by emphasizing its difference
from traditional financial statements, and it has
been referred to in several ways: social and
environmental disclosure, SED (Korca et al., 2021),
non-financial information, NFI (Gray et al., 1996),
non-financial disclosure, NFD (Venturelli et al.,
2017), CSR reporting (Tschopp & Huefner, 2015),
corporate social reporting (Guthrie & Parker, 1989),
and environmental reporting. Beyond the different
designations used, the common denominator of this
reporting lies in the focus on the environmental and
social aspects of business activity, while the reference
to governance becomes relevant only after a report
from some financial institutions with a focus on ESG
aspects. This type of reporting, although only
optional in many regulatory contexts, has spread
rapidly and gained attention from standard
setters, practitioners, institutions, academics, and
government entities (Manes-Rossi et al., 2018), in
the wake of a consensus as a relevant factor
in the success and survival of businesses. However,
the absence of international and often national laws
of reference, and the proliferation of guidelines,
reporting standards, conceptual frameworks, and
other sources, have prompted many authors to point
to the need for a rationalization of the subject
(Jeanjean et al., 2015). Other authors have focused
on the relationship between organizational and
managerial sustainability choices and non-financial
reporting (Comyns et al., 2013). Initially, non-financial
reporting appeared to be an isolated phenomenon
found in a few Anglo-Saxon nations (the United
States of America, the United Kingdom, New
Zealand, and Australia) and focused mainly on
human resource issues and a few environmental
aspects (Manes-Rossi et al., 2018), except for mining,
oil and steel companies that felt the relevance of
the environmental issue from the beginning

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56
(Hackston & Milne, 1996). Qualitative aspects
outweighed quantitative aspects with some tendency
to remark on positive news (Deegan & Gordon, 1996).
In recent years, two circumstances have
influenced the spread of non-financial reporting:
regulatory changes that have made this form of
reporting mandatory for certain subjects and
the interest officially expressed by various
institutions such as the United Nations Global
Compact (Podrecca et al., 2022), the GRI (Moggi,
2023), the IIRC (Marrone & Oliva, 2020),
the Sustainability Accounting Standards Board, SASB
(Hales, 2021) and the Task Force on Climate-related
Financial Disclosures, TFCD (Bingler et al., 2022),
and regulators such as the European Commission
(Contrafatto et al., 2020).
Mandatory non-financial disclosure (Jackson
et al., 2020) has enabled the development of many
studies related to mandatory or optional disclosure
(Cooper & Owen, 2007) although there are previous
studies on the interactions between voluntary and
mandatory disclosure (Einhorn et al., 2005). Some
studies have found an ability on the part of
voluntary disclosure to provide additional information
(Cohen et al., 2011), even as mandatory disclosure is
not the first timely source of information. Many
authors also emphasize the ability of voluntary
disclosure to reduce information asymmetries by
providing benefits to both management and
investors (Francis et al., 2005).
According to Gray et al. (1995), sustainability
and environmental reporting have developed from
three theories: decision usefulness theory, economic
theory, and social and political theory. Nevertheless,
current currents of research on non-financial
reporting are based on two main theories:
the corporate voluntary and sustainable disclosure
theory (Kılıç & Kuzey, 2019) and the legitimacy and
stakeholder theories (Guthrie & Parker, 1989).
The main assumption of the first theory is that
companies with positive environmental achievements
are inclined to provide additional information to
encourage investor choices. This incremental
information also serves to mitigate the risk of
underestimation of this information by investors
(Dye, 1985). Stakeholder theory and legitimacy
theory have their origins in economic policy theories
(Deegan, 2009). According to legitimation theory,
organizations act within an environment characterized
by norms and boundaries to gain legitimacy from
society. Underlying this need for legitimacy is
the notion of the social contract, whereby companies
provide information about their social performance
to gain social approval and legitimacy (Guthrie &
Parker, 1989). Thus, non-financial disclosure is
a means of influencing the perception of one’s
business, acting in the role of a good corporate
citizen, and legitimizing one’s actions to all
stakeholders (Joshi & Gao, 2009).
Stakeholder theory was developed by Freeman
(1984) as a strategic approach that organizations
must have toward stakeholders to develop better
performance. According to this theory, the pre-
eminence of a stakeholder is a direct consequence of
power over society, legitimacy, and urgency.
People, groups, neighborhoods, organizations, and
institutions are seen as the main current or even
potential stakeholders. Society and the environment
can also be seen as such. In this context, corporate
disclosure fosters relationships with stakeholders
and provides information to demonstrate that
corporate actions are consistent with stakeholder
expectations and demands (Cotter & Najah, 2012).
3. RESEARCH METHODOLOGY
In our research, we conducted a systematic review of
contributions submitted under the joint research
project between ISAR and UNCTAD. Systematic
review means a collection of studies or contributions
about a specific topic and is one of the main
techniques in qualitative studies. Here, we
considered all kinds of contributions submitted in
connection with the mentioned project: interviews,
presentations, web pages, essays, and articles.
In recent years, qualitative investigations such as
systematic reviews have been joined by meta-
analyses, i.e., statistical techniques suitable for
combining results from numerous studies. At
present, the available data do not allow for meta-
analysis. Certainly, a meta-analysis of the results of
the project analyzed here may be one of the possible
developments of the study.
The potential bias in the results of
the empirical analysis stems from the fact that all
applicants who have tested reporting according to
GCIs are companies that are highly motivated to do
so (in fact, an awards ceremony is even planned for
companies that try their hand at testing).
Thus, it is very likely that, in the case of
widespread adoption of GCIs with a view to
compliance resulting from being subject to
legislative obligation (so-called legal enforcement,
a theme that is taken up as a limitation in
the conclusions), the results of the analyses would
perhaps be more negative regarding the difficulty of
applying the indicators and the cost-benefit ratio of
the information.
ISAR is the Intergovernmental Working Group
of Experts on International Standards of Accounting
and Reporting, which is the UN body for concerns
about corporate governance and reporting issues.
ISAR operates through the UNCTAD which
provides administrative and substantive insights to
ISAR’s work. Thus, ISAR-UNCTAD plays a collaborative
role with member states to implement reporting
principles, standards, and best practices to improve
the quality of reporting and facilitate financial
stability, domestic and international investment, and
social and economic progress.
Major activities include the development of
documents and technical instructions on issues
related to financial and non-financial reporting.
Following the adoption of the 2030 Agenda, activity
has focused on the implementation of the SDGs in
corporate reporting.
The UNCTAD Intergovernmental Working
Group of Experts has stressed the significance of
reporting in tracking the progress of the private
sector in reaching the goals of the 2030 Agenda for
Sustainable Development, and how it can be further
improved by enhancing the quality, consistency,
comparability, and utility of sustainability reports.
Enterprise reporting holds a crucial position in
the 2030 Agenda for Sustainable Development and
its Sustainable Development Goals (SDGs).
Reporting has the potential to strengthen SDG
monitoring mechanisms by offering governments,
businesses, society, and other stakeholders the tools

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to evaluate the economic, environmental, social, and
governance effects of companies on sustainable
development. In turn, the SDGs supply a structure
for streamlining enterprise sustainability reporting,
ensuring its relevance and usefulness to all involved
parties.
As the UN’s central hub for accounting and
reporting issues, ISAR-UNCTAD plays a leading role
in leveraging the synergies between the SDGs and
enterprise reporting.
ISAR has proposed a collection of core
indicators across economic, environmental, social,
and governance domains for further deliberation.
These indicators serve as a foundational framework
for merging financial and sustainability data at
the corporate level, and for aligning corporate
reporting with the monitoring mechanism of
the SDGs and its metadata guidance on
sustainability reporting.
UNCTAD’s efforts concentrate on choosing
a select set of core quantitative indicators that are
universal and comparable. These foundational
metrics serve as the basis for reporting and utilize
existing guidelines to promote improved
comparability of sustainability reporting across
companies, sectors, and regions. The aim is to reach
a consensus on the proposed core indicators, thus
promoting increased comparability of sustainability
reports and consistency with financial reporting
frameworks, through the discussions about these
issues in the annual session of ISAR in Geneva.
4. FINDINGS
In our analysis, we considered the contributions
presented at the annual conferences from 2017 to
2022 to comprehend if the selected core indicators,
in the view of the panelists that presented
the results of their voluntary adoption were easy to
track and capable to serve as an effective reporting
system for the assessment of the SDGs achievement.
The ISAR-UNCTAD 34–35th sessions were
dedicated to the presentation of the core indicators
and the guidance for the related enterprise reporting,
named ―Guidance on Core Indicators for Entity
Reporting on Contribution Towards Implementation
of the Sustainable Development Goals‖.
According to ISAR-UNCTAD, core indicators for
enterprise reporting on SDGs had to be informed of
the following principles and concepts:
 Be relevant to at least one SDG monitoring.
 Be based on existing key initiatives, reporting
frameworks, or found in corporate reports.
 Be universal (applicable to all reporting
enterprises).
 Enable comparability across industries.
 Address issues within a company’s control
and for which it gathers data (incremental approach).
 Encourage the convergence of financial and
non-financial reporting principles and data.
 Allow for consistent measurement.
 Be appropriate for both consolidated
reporting and legal entity reporting.
Common aspects for companies in enterprise
sustainability reporting include:
 Economic impact: Gross domestic product
(GDP), taxes.
 Rational use of natural resources: Water, land,
energy, materials consumption, waste generation,
and impact on climate change (as emphasized in
Task Force on Climate-related Financial Disclosures
[TFCD], 2017).
 Rational use of human capital: Worker safety,
wages, gender considerations, training, and human
rights.
 Governance principles: Resilience to corruption.
This led to the selection of the core indicators
shown in Table 1 below for which UNCTAD then
developed the related application guidance:
Table 1. Selection of the core indicators (Part 1)
Area
Core indicators
A. Economic area
A.1
Revenue and/or (net) value added
A.1.1
Revenue
A.1.2
Value added
A.1.3
Net value added
A.2
Payments to government
A.2.1.
Taxes and other payments to the government
A.3
New investment/expenditures
A.3.1
Green investment/products
A.3.2
Community investments
A.3.3
Total expenditures in research and development
A.4
Total local supplier/purchasing programs
A.4.1
Percentage of local procurement
B. Environmental area
B.1
Sustainable use of water
B.1.1
Water recycling
B.1.2
Water use efficiency
B.1.3
Water stress
B.2
Waste management
B.2.1
Reduction of waste generation
B.2.2
Waste reused, remanufactured, and recycled
B.2.3
Hazardous waste
B.3
Greenhouse gas emissions
B.3.1.
Greenhouse gas emissions (scope 1)
B.3.2.
Greenhouse gas emissions (scope 2)
B.4
Ozone-depleting substances and chemicals
B.4.1
Ozone-depleting substances and chemicals
B.5
Energy consumption
B.5.1
Renewable energy
B.5.2
Energy efficiency

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Table 1. Selection of the core indicators (Part 2)
Area
Core indicators
C. Social area
C.1
Gender equality
C.1.1
Proportion of women in managerial positions
C.2
Human capital
C.2.1
Average hours of training per year per employee broken down by employee
category
C.2.2
Expenditure on employee training per year per employee broken down by
employee category
C.2.3
Employee wages and benefits with breakdown by employment type and
gender
C.3
Employee health and safety
C.3.1
Expenditures on employee health and safety
C.3.2
Frequency rates/incident rates of occupational injuries
C.4
Collective agreements
C.4.1
Percentage of employees covered by collective agreements
D. Institutional area
D.1
Corporate governance disclosures
D.1.1
Number of board meetings and attendance rate
D.1.2.
Number/percentage of women board members
D.1.3
Board members by age range
D.1.4
Number of meetings of audit committee and attendance rate
D.1.5
Compensation — total compensation and compensation per board member
and executive
D.2
Anti-corruption practices
D.2.1
Amount of fines paid or payable due to settlements
D.2.2
Average number of hours of training on anti-corruption issues per year per
employee
The choice of core indicators is grounded in
the shared requirements of the primary users of
SDG reporting, including investors, government, and
civil society, and takes its source from existing
frameworks and contributions of standard setters
and other international institutions in enterprise
sustainability reporting. Additionally, the selected
core indicators represent a framework that fosters
consensus-building within this domain, based on
the integration of the SDGs into business models
and strategies, mirroring the context of financial
reports where different users have common needs.
A crucial aspect to consider in the
implementation of GCI is the application of
the materiality principle. Materiality has gained
a new dimension in the context of SDG reporting,
because, when it comes to sustainability matters,
everything is significant to someone, which raises
the question about the selection of the right
perspective to be used to determine materiality in
enterprise sustainability reporting.
A large part of the following ISAR-UNCTAD
sessions was dedicated to the presentation of
selected case studies to evaluate the application of
the guidance in terms of their relevance as common
indicators, underlying data availability, and
the possibility of consistent measurement.
The case studies were conducted in different
geographical areas, countries with varying levels of
economic development, a broad range of industries,
and companies of varied sizes.
Companies participating in the case studies
represented the following industries from several
countries (both developed and developing ones):
 Agriculture;
 Academia;
 Apparel retailers;
 Chemical manufacturing;
 Commodity paper products;
 Cosmetics;
 Cutting tools;
 Education;
 Energy;
 Engineering;
 Health care;
 Hospitality;
 Garments;
 Manufacturing;
 Mining;
 Oil and gas;
 Paints and coating solutions;
 Pulp and paper;
 Retail;
 Stone-working;
 Telecommunications;
 Textiles.
An overview of the implementation of
the guidance in several companies was conducted
in Egypt.
The case studies reflected various levels of
experience and expertise in sustainability and SDG
reporting; therefore, the issues discussed below
would not be fully applicable to all case studies.
The following discussions aim to help identify
the principal areas for capacity-building in SDG
reporting and they were finalized to provide further
evidence towards building consensus on the approach
suggested in the guidance regarding baseline
indicators for reporting on the SDGs at the company
level and for data collection at the national level.
A review of the case studies provided evidence
for the following observations:
 Most companies were able to provide data on
most of the core indicators.
 Environmental and social indicators were
more difficult to report on than economic and
institutional indicators.
 Institutional coordination at the national level
continues to be a challenge.
 Regulations facilitate consistency but also
affect diversity.
 Technical capacity needs to be strengthened.
 Measurement inconsistencies need to be
addressed.
The case studies revealed that in general
the core indicators were perceived as applicable to

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all entities, irrespective of size, industry, or country,
and demonstrated an elevated level of relevance for
the indicators in the guidance.
These studies revealed that sustainability/SDG
reporting is often a new area for many companies,
with a range of challenges encountered. Some core
indicators were simple to comprehend and, as
a result, had a high rate of accurate information
provision. However, some indicators were not
reported despite the availability of information,
while others were reported without available
information.
Companies already utilizing existing
sustainability reporting frameworks encountered
fewer difficulties in presenting the core indicators,
although the sources of information used to collect
the underlying accounting data were not always
evident.
Some companies noted that an enhancement in
their data collection capacity for UNCTAD core
indicators during the study period came with
a better understanding of the approach suggested in
the guidance. This finding supports the idea that
the necessary information for reporting on core
indicators can be found in existing accounting
records, even if not readily accessible.
Nevertheless, some of the indicators were not
easy to disclose due to additional calculations in
respect of data collected according to statistical and
or accounting and financial reporting data, or
because the information required was not included
in official and published information bases for
disclosure in the entities’ reporting or internal
management information systems. This was
particularly apparent for environmental and social
indicators that were more challenging to report than
economic and institutional indicators.
For example, two indicators — B.1.1. Water
recycling and reuse and C.2.2. Expenditure on
employee training per year per employee — were
frequently identified as impossible to report.
Specific challenges mentioned included data
collection for environmental indicators, such as
measuring waste, water recycling, ozone-depleting
substances, chemicals, and renewable energy. A lack
of knowledge about information sources for
calculating greenhouse gas emissions or water stress
was also highlighted.
However, there was no systematic consistency
among companies regarding difficulties in reporting
other core indicators. In certain cases, the following
indicators were difficult or impossible to report,
while most other cases provided them: B.1.3. Water
stress; B.3.2. Greenhouse gas emissions (scope 2);
B.5.1. Renewable energy; C.3.1. Expenditures on
employee health and safety as a proportion of
revenue; C.4.1. Percentage of employees covered by
collective agreements.
This inconsistency may indicate that
the availability of accounting data for UNCTAD core
indicators is a technical issue that could be resolved
by modifying the accounting system or
implementing appropriate education and training,
particularly regarding the importance and benefits
of disclosures related to the SDGs.
Other reported difficulties in data collection for
core indicators included:
 When a company has numerous suppliers,
additional efforts are needed to establish supply
chain transparency for calculating local procurement
percentages.
 Companies may only disclose total employee
costs, making further breakdown impossible.
 Tracking the percentage of employees who
have completed business ethics training may be
a better measure than the number of hours spent on
anti-corruption training.
Several case studies highlighted issues related
to the lack of regulation mandating ESG or SDG
reporting, insufficient coordination among authorities
responsible for such reporting, and multiple entities
overseeing diverse types of companies.
The case studies also noted that indicators
traditionally required by regulations had better
disclosure rates and quality. However, capacity-
building efforts are needed to collect accounting
data and report on most suggested core indicators.
In various case studies, the concept of
materiality was emphasized and discussed during
the consultative group meeting, as some companies
cited a lack of materiality as the reason for not
reporting on specific indicators, particularly in
environmental and institutional areas.
According to ISAR-UNCTAD, the adoption of
the goals involved multi-stakeholder consultations
and agreed that certain aspects of economic,
environmental, social, and institutional activities
were material to the UN Member States.
For instance, the International Labour
Organization promotes collective agreements in
social indicators, and anti-corruption is a central
theme in the principles of the United Nations Global
Compact.
The focus on environmental indicators aligns
with the 2017 report of the Task Force on Climate-
related Financial Disclosures (TFCD, 2017), which
states that climate-related risks are non-diversifiable
risks impacting all industries. In the context of
the goals and related reporting, materiality takes on
a new meaning and dimension, as it is not specific to
an entity or industry but universal.
The core indicators covering the four areas
were initially identified through a multi-stakeholder
consultative process and intergovernmental
consensus-building, making them material for
society as a whole and the planet.
To comprehend the private sector’s
contribution to achieving the goals, all activities with
even a small impact on the environment and society
are considered material, and companies must adopt
a new concept of materiality — universal materiality.
This concept is also in line with the European
Commission’s double-materiality perspective, which
comprises financial materiality, focusing on
a company’s development, performance, and
position with investors as the primary audience, and
environmental and social materiality, which
considers the impact of a company’s activities with
consumers, civil society, employees, and an increasing
number of investors as the primary audience.
In some instances, confidentiality was another
reason for non-disclosure; even though data was
available, and companies provided certain
information to environmental and social authorities,
they did not disclose such information in their
reports.
Other identified challenges included the need
for better coordination and cooperation at
the national level among key public and private
sector stakeholders, more efforts to build national
institutional and regulatory mechanisms for SDG
reporting, and capacity-building at all levels.

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In conclusion, the case studies revealed that
most core indicators could be reported, but
consistent measurement and comparability of
reported indicators remain challenges.
The case studies demonstrated that providing
further technical guidance improved data availability
for core indicators at the company level.
Consequently, building technical capacity and
offering guidance could be essential for the further
implementation of core indicators for baseline SDG
reporting by companies. On the other hand, it must
be said that the more the companies got used to
the system of core indicators the easier they found
to prepare the Sustainability reporting based on GCI.
Capacity-building at all levels is essential for
addressing institutional and technical challenges in
adapting national corporate reporting environments
to meet the requirements of the 2030 Agenda and
effectively evaluating the private sector’s
contribution to achieving the goals.
Aligning sustainability reporting by companies
with the goals monitoring framework and its
indicators is also a significant issue at
the institutional level. This involves addressing
the lack of relevant supporting institutions, their
coordination and cooperation, technical expertise,
and adequate monitoring and enforcement
mechanisms.
Tools are needed for identifying gaps through
international benchmarking, developing action plans
for accounting reforms, and measuring progress in
priority areas. Issues related to capacity-building in
Goals-related reporting by companies should be
considered within the broader accounting and
reporting infrastructure, as such reporting is
an integral part of the national reporting
infrastructure, and high-quality reporting cannot be
achieved without the other key components of
an enterprise reporting system.
Another major challenge lies in involving and
coordinating institutions responsible for accounting
regulations with those responsible for goals-related
monitoring and implementation. Further
coordination is also necessary with agencies
responsible for environmental, social, and
governance-related regulations and developments,
as well as statistics offices.
The overall level of disclosure of core
indicators by the companies involved in the case
studies is reported in Table 2 below.
Table 2. The level of disclosure of core indicators
Core indicators
Share of companies
reporting (percentage)
Revenue
100%
Value Added
68%
Net value added
73%
Taxes and other payments to the government
95%
Green investment/products
59%
Community investments
95%
Total expenditures in research and development
91%
Percentage of local procurement
77%
Water recycling
45%
Water use efficiency
77%
Water stress
77%
Reduction of waste generation
59%
Waste reused, remanufactured, and recycled
59%
Hazardous waste
68%
Greenhouse gas emissions (scope 1)
82%
Greenhouse gas emissions (scope 2)
77%
Ozone-depleting substances and chemicals
23%
Renewable energy
59%
Energy efficiency
86%
Proportion of women in managerial positions
91%
Average hours of training per year per employee broken down by employee category
68%
Expenditure on employee training per year per employee broken down by employee category
59%
Employee wages and benefits with breakdown by employment type and gender
77%
Expenditures on employee health and safety
55%
Frequency rates/incident rates of occupational injuries
95%
Percentage of employees covered by collective agreements
64%
Number of board meetings and attendance rate
77%
Number/percentage of women board members
95%
Board members by age range
86%
Number of meetings of audit committee and attendance rate
95%
Compensation — total compensation and compensation per board member and executive
55%
Amount of fines paid or payable due to settlements
73%
Average number of hours of training on anti-corruption issues per year per employee
55%
The guidance on core indicators does not
intend to establish new reporting standards. Instead,
its purpose is to select common sustainability and
SDG indicators based on existing reporting practices
of entities and leading reporting frameworks, such
as the Global Compact, GRI, SASB, International
Sustainability Standards Board (ISSB), IIRC, European
Financial Reporting Advisory Group (EFRAG), and
others.
The guidance also highlights a business case
for entities to monitor and reduce costs and enhance
efficiency in utilizing natural resources. While
acknowledging the significance of qualitative,
narrative disclosures and understanding these
indicators in specific contexts, the guidance focuses
on quantitatively comparable indicators that align
with the macro-level indicators under the goals.
Nonetheless, the guidance does not discourage
companies from providing more information,

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whether qualitative or quantitative. Individual
businesses operating in different contexts may
choose to disclose additional information reflecting
their specific goals-related practices and addressing
the needs of their users, particularly investors and
other capital providers.
Fresh players have embraced the challenges
related to sustainability reporting, from
a jurisdictional perspective (EU) and a best practice
point of view (ISSB).
Developments in the EU often influence
the region, impacting global processes and affecting
other jurisdictions. The EU has been a leader in
transitioning from a voluntary to a mandatory
approach to sustainability reporting for large
companies since the introduction of the non-
financial reporting directive in 2014.
This approach has evolved into a more
comprehensive reporting ecosystem, and on
April 21, 2021, the European Commission adopted
a legislative proposal for a corporate sustainability
reporting directive, which was approved on
December 22, 2022. The goal is to have comparable
sustainability-related data to support public policies
related to sustainability and sustainable finance
objectives.
The corporate sustainability reporting directive
aims to establish rules to ensure that companies
report sustainability information consistently and
comparably, considering aspects such as extensive
coverage of environmental, social, and governance-
related topics; information quality; the concept of
double materiality; integration of sustainability
information into management reports; external
third-party assurance; and digital format.
The new reporting requirements would apply to
all large and listed companies, including listed small
and medium-sized enterprises. Approximately
50,000 companies would be required to report,
compared to the current 11,000. Proportionate
standards for small and medium-sized enterprises
will be developed.
The European Financial Reporting Advisory
Group is responsible for developing draft standards
under the directive. Before the proposal’s adoption,
the group had already carried out preparatory work
on key governance and standard-setting matters
related to sustainability reporting. In April 2022,
the group released the first draft of European
sustainability reporting standards based on
the proposal for public comments, which refer to
12 environmental, social, and governance-related
issues.
A second set of standards that will identify
complementary sustainability-related and sector-
specific information to be disclosed, along with
standards for small and medium-sized enterprises,
is anticipated by mid-2023. Before adopting
the standards, the European Commission will
consult with the member states expert group on
sustainable finance, the European Securities and
Markets Authority, and various other European
agencies and authorities.
On the best practice side, in November 2021,
the International Financial Reporting Standards
(IFRS) Foundation Trustees announced three
significant developments: the formation of the ISSB
to establish a global baseline of sustainability
disclosure standards for investors; a commitment by
leading investor-focused sustainability disclosure
organizations to consolidate into the new board,
including the completion of the consolidation of
the Climate Disclosure Standards Board and
the Value Reporting Foundation; and the publication
of prototype climate-related and general disclosure
requirements by the Technical Readiness Working
Group, which had been preparing for the ISSB.
The ISSB is collaborating with the International
Accounting Standards Board (IASB) to ensure
integration and compatibility between the former’s
standards and the international financial reporting
standards. The ISSB aims to build on existing
frameworks and standards, while other participating
organizations will contribute content to support
the development of standards by the board.
On March 31, 2022, the ISSB published
exposure drafts on general requirements for
disclosing sustainability-related financial information
and climate-related disclosures.
The first exposure draft sets general
requirements for sustainability reporting, stating
that the objective of sustainability-related financial
disclosures is to provide information on material
sustainability-related risks and opportunities that
are useful to the primary users of financial reporting
in deciding whether to allocate resources to
the reporting entity.
The second exposure draft, based on
the recommendations of the Task Force on Climate-
related Financial Disclosures (TCFD, 2017), requires
companies to report information on governance
processes for monitoring and managing climate-
related issues, the potential impact of climate-
related risks on their business model, strategy, and
cash flow, plans and targets for climate-related
issues, and the use of climate-related scenario
analysis to assess risks and opportunities.
Companies are also required to disclose their
scope 1, 2, and 3 greenhouse gas emissions in
absolute terms and per unit of economic or physical
output, following the greenhouse gas protocol
corporate accounting and reporting standard.
Additionally, industry-specific climate-related
disclosure requirements are included, aligning with
the SASB approach.
Materiality is considered in the context of
the information that general-purpose financial
reporting users need to evaluate enterprise value.
The reporting entity’s boundary for financial
reporting and sustainability-related financial
disclosures remains the same, and the required
information for the latter would be disclosed in
general-purpose financial reporting.
The ISSB has formed a working group of
jurisdictional representatives to ensure compatibility
between the exposure drafts and ongoing
jurisdictional initiatives in sustainability reporting.
Similar best practice attempts toward
the capacity building of a reliable and beneficial
sustainability reporting framework (SRF) can be
mentioned both at the world or regional level
(the revision of the GRI framework for it to
interoperate with other existing jurisdictional
frameworks, the beta version of a disclosure
framework issued by the Task Force on Nature-
related Financial Disclosures, the new requirements
set by the Securities and Exchange Commission (SEC)
of the United States of America in terms of public

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companies disclosures to the Federal Government
and shareholders about their impacts on the climate,
Recent advancements in sustainability reporting
indicate substantial global shifts occurring in
sustainability standard-setting and reporting
infrastructure.
Over the next 12–18 months, there is
an anticipated strong push toward harmonizing
reporting standards for corporate sustainability
disclosures.
The objective is to achieve greater consistency
among the numerous pre-existing reporting
frameworks, and it is evident that coordination
between worldwide regulators, standard setters, and
private initiatives is necessary to accomplish this.
5. CONCLUSION
This study delineates pivotal elements that guide
the evolution of sustainability reporting,
namely inter-agency collaboration, adaptability,
the heightened significance of materiality, universal
standards, integration of financial and sustainability
reporting, support mechanisms for small and
medium enterprises (SMEs), continuous improvement,
and embracement of innovative concepts such as
universal materiality.
The lessons learned from the recent
developments in sustainability reporting are
summarized below.
Coordination between global regulators,
standard setters, and private initiatives is essential
for achieving consistency and harmonization in
reporting standards and, as sustainability reporting
evolves, organizations need to be adaptable and
responsive to the changing landscape and new
reporting requirements. Businesses must consider
both financial and non-financial materiality in their
sustainability reporting, as it helps meet
the information needs of various stakeholders.
Moreover, developing global baseline sustainability
disclosure standards can improve the quality and
comparability of sustainability reports and facilitate
informed decision-making by investors and other
stakeholders.
Integrating sustainability-related financial
disclosures into general-purpose financial reporting
can provide a more comprehensive view of
an organization’s performance and risk profile, also
for small and medium enterprises. For them,
proportionate standards should be developed for
SMEs to ensure they can effectively participate in
sustainability reporting without being overburdened
by complex requirements.
As sustainability reporting standards and
frameworks evolve, organizations should
continuously improve their reporting practices to
align with best practices and meet the expectations
of investors and other stakeholders. Companies
need to adopt new concepts, such as universal
materiality, which considers the impact of their
activities on society and the environment, in
addition to their financial performance.
In this context, the role of ISAR-UNCTAD core
indicators can be beneficial to the creation of
a harmonized and modular sustainability reporting
framework (SRF).
The guidance on core indicators and
the contributions expressed by all the participants
of the ISAR-UNCTAD Sessions demonstrate the need
for a universal framework for sustainability
reporting, to facilitate the efficient allocation of
capital, where the role of ISSB as the global standard
setter for sustainability reporting is gaining more
relevance.
Nevertheless, it is also clear that a proportionate
application of standards, together with a substantial
creation of actual implementation guidance and
realistic implementation examples is the way forward
to create an effectively universally adopted SRF.
The action plan for a harmonized and effective
SFR can be broken down into three main
components: regulatory, institutional, and human
capacity.
Regulatory starts with listed companies and
the financial sector, as they have considerable
influence on the economy and can drive change,
with the adoption of a transitional approach,
allowing companies to gradually adapt and adjust to
the new framework. A comprehensive and flexible
framework, that accommodates different company
sizes and industries, shall be developed using
a building blocks approach to provide a SRF by
the ISSB to ensure global compatibility and
consistency. Rules shall promote responsible
investment by requiring companies to disclose
impacts related to the goals, fostering transparency
and accountability, and also for public sector
entities.
The institutional component shall identify or
establish a national entity responsible for
sustainability reporting and integration with
financial standard setters and designate a body to
monitor compliance and enforce sustainability
reporting requirements. Coordination among key
entities, including regulators, standard setters,
accounting firms, private sector associations,
professional accountancy organizations, and
universities shall be promoted.
Human capacity ensures the availability of
capacity-building for professionals and students by
providing resources and training opportunities
related to sustainability reporting. Partnership with
key institutions, such as professional accountancy
organizations and universities, shall conduct
training workshops that enhance the knowledge and
skills of professionals in the field and build capacity
in the public sector, enabling government officials
and employees to better understand and implement
sustainability reporting requirements. Technical
support to small and medium-sized enterprises shall
be provided, helping them navigate the complexities
of sustainability reporting and compliance.
Universities shall ensure curricula and continuous
professional development programs are up to date,
reflecting the latest developments in sustainability
reporting standards and best practices.
These actions accentuate the role of ISAR-
UNCTAD core indicators in the creation of
a modular, harmonized SRF, and UNTAD-ISAR shall
have a more than moral suasion role in building
this SRF.
The next ISAR session(s) agenda(s) should focus
on the contribution of ISAR to build a pathway for
the adoption of a harmonized SRF declined and
proportioned in terms of sensitivity, among others,
to the level of public accountability, to economic
size, and the geographical area of operations (to take

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into consideration, the instances of gradual
application of the SRF in developing countries).
ISAR could do this in its next sessions using
the experience and lessons learned with the
SMEGA 1, 2, and 3 projects for a harmonized
financial accounting framework.
In this view, UNCTAD GCI should become
the first stone of the system and Regional Initiatives
should focus on the regional SRF to be adopted to
ensure comparability of SRF across the entities
operating in the region. IFRS sustainability reporting
standards, once completed, should represent the
roof of the system and should be drafted to
guarantee complete interoperability with both GCI
and the regional jurisdictional or best practice SRFs.
The conclusions, drawn from ISAR-UNCTAD
sessions, reiterate the exigency for a globally
applicable framework for sustainability reporting.
Within this purview, the role of the ISSB as a global
standard setter for sustainability reporting gains
prominence.
However, it is also evident that the development
of an effectively universally adopted SRF demands
a balanced application of standards. This balance is
likely to be achieved by robust implementation
guidance, practical examples, and proportionate
standards.
The role of UNTAD-ISAR in formulating
an appropriate SRF, along with the alignment of
regional initiatives with global standards like IFRS
sustainability reporting standards, warrants further
examination.
This research underscores the value of ISAR-
UNCTAD’s core indicators and the GCI in shaping
sustainability reporting and in constructing
a harmonized SRF.
However, it must be acknowledged that
a considerable limitation in the implementation of
these indicators lies in the absence of legal
enforcement behind UNCTAD’s GCI.
The lack of legal enforcement potentially leads
to inconsistent application and adherence to these
core indicators. This inconsistency can, in turn,
impact the quality, comparability, and transparency
of sustainability reports, affecting the information
available to stakeholders and potentially limiting
the effective allocation of capital.
This limitation might also impede
the integration of sustainability-related financial
disclosures into general-purpose financial reporting,
a goal that is considered integral to providing
a comprehensive view of an organization’s
performance and risk profile.
In light of these findings, future research must
consider the implications of this lack of legal
enforcement and explore potential pathways to
enhance the authority and reach of UNCTAD’s GCI.
Potential strategies might include collaboration
with global regulatory bodies, the development of
globally recognized sustainability reporting
standards, and exploring ways to motivate voluntary
adherence to these indicators by selected categories
of preparers.
While the core indicators offer a significant
resource for guiding sustainability reporting,
the absence of legal enforcement limits their
effectiveness and poses challenges to achieving
a harmonized, globally recognized SRF. This
limitation should be given due consideration in
the ongoing discussions and developments
surrounding sustainability reporting.
In conclusion, this research serves as
a stepping stone toward a more comprehensive
exploration of the development and implementation
of a robust, adaptable SRF.
It invites future academic investigations to
delve into the complexities of establishing
such a framework, thereby contributing to
the advancement of sustainable practices globally.
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