Md Touhidul Alam Khan :
Sustainability is not only an environmental issue, it also takes into account economic and social issues, labour practices, human rights, economic performance, community, society, corruption, corporate governance and responsibility of product and services. In fact, a sustainable global economy is not a luxury. Without a sustainable business model, environmental and social issues will continue to badly impact our economy and compromise for our future needs. The planet and society need a sustainable global economy and an organisation needs at first a long-time strategy and success. How does it get started? The change to a sustainable economy requires organisation al change. To drive change, the organisation needs to set goals and measures how the organisation will forward.
Sustainability reporting is a key tool to help the organisation to set goals, measure progress and manage sustainability within the organisation. Reporting on the organisation’s sustainability performance will give internal and external stakeholders a clear idea of its impact and can increase the efficiency and improve the performance. And reporting enables the organisation to go forward into successful sustainable future. In a word, a sustainability report is a report published by a company or organisation about the economic, environmental and social impacts caused by its everyday activities. A sustainability report also presents the organisation’s values and governance model and demonstrates the link between its strategy and its commitment to a sustainable global economy. Sustainability reporting may be called in different names such as, a non-financial reporting or triple bottom line reporting (i.e. People, Planet and Profit) or corporate social responsibility (CSR) reporting, and more.
Sustainability reporting is being a common practice of 21st Century which was not the case before. Earlier, this practice was limited only to green and community oriented organisation s, but now, it has become the best practice among the leading organisation s worldwide. Among different standards for sustainable reporting, Global Reporting Initiatives (GRI) holds the supreme position in terms of usage by its stakeholders. Around 75 per cent of G250 companies report on sustainability report using GRI Standards.
To keep pace with the global sustainability drive, sustainable banking is also getting momentum in developing countries and Bangladesh is one step ahead in the race with wholehearted support by Bangladesh Government and regulatory bodies. As the key catalyst of growth and development, banking institutions remain at the center of an economy. The government of Bangladesh has taken many initiatives to implement SDGs and Central Bank of the country has been working hard to support that role. In 2011, Bangladesh Bank issued ‘Policy Guidelines for Green Banking’ to implement and promote green banking activities across the country.
Sustainable reporting helps an organisation manage change toward sustainable economy that combines long-term profitability while promoting social justice and taking care of environment. However, earlier, financial risk and returns were the only focus in the traditional banking practices which has been redefined with sustainable business practices and the narrow focus was shifted later towards larger stakeholder inclusiveness. A dedicated sustainability report is a reflection of the company’s commitment to the sustainability issue, which helps companies and their stakeholders to identify existing practices, strategic movement and innovative actions to make progress on sustainable economic, environmental and social ground.
Bangladesh Bank, the central bank of Bangladesh, is playing a pioneering role in promoting sustainable banking system, incorporating international guidelines/principles (UNGC, ILO, SDGs-2030, GRI etc.) into local strategies and action plans. Providing policy support, the regulatory body is guiding the banking industry toward inclusive economic practices. In addition to Green Banking Guidelines, Bangladesh Bank introduced ‘Guidelines for School Banking’ in 2013 to help young children aged up to 18 years for opening student account. Another Guideline for street children named ’10 Taka Special Account’ was introduced in 2014 to save their hard-earned cash and securing their future. To reach unprivileged and unbanked people, the central bank presented Agent Banking Guidelines in 2013 for more inclusive banking all over the country. Central bank of Bangladesh also devises inclusive strategies with Corporate Social Responsibility (CSR) guidelines. For example, in the latest CSR guideline, Bangladesh Bank instructed that the banks should utilize its CSR budget at least 30 per cent for education, 30 per cent for Health, 20 per cent for Environment and Climate change mitigation and the rest 20 per cent for other sector-developments like disaster management, infrastructure development, sports and culture, women empowerment etc. One of the most notable contributions of the central bank was to issue Environmental and Social Risk Management (ESRM) guideline for the financial industry, which ensures environment-friendly and responsible lending to the clients for business operations within the country. Investment decisions now have to pass through Environmental and Social Due Diligence (ESDD) check list which auto generate Environmental and Social Risk Rating (ESRR): high, medium or low, which indicates probable risk of the project to be financed. Thus, the management may take corrective actions with the transaction.
Therefore, top managements of the commercial banks of Bangladesh and thorough engagement of key stakeholders are intended to reinforce their effort to undertake more organized social accountability for sustainable development. Sustainability reporting has now become a mainstream activity among the financial institutions globally, but most of the banks in Bangladesh are not practising the reporting system known as Independent Annual Sustainable Reporting.
A recent study shows that only 12 per cent-15 per cent banks reported sustainability separately in the annual report according to GRI reporting guideline, but 45 per cent banks disclosed report of sustainability in the annual report separately without following GRI reporting guidelines and 55 per cent banks did not disclose the separate sustainability report in annual report which signifies the increasing trend in every phase.
Awareness to be raised among the bank facility availing entities to make them understand about the significance of sustainability and encourage them to maintaining relationship with the banks with sustainable development practices. Policy analysis is also recommended to combine the green banking reporting and sustainable reporting together to prepare a standard reporting guidelines leaving no distinguishing factors between the two standards to reach the ultimate goal of development of the country in a sustainable way for building a ‘sustainable tomorrow.’
“What you cannot measure, you cannot manage. What you cannot manage, you cannot change”- this insightful quote was stated by Peter Drucker who was a great writer, professor, and management consultant. These are not just flashy words but have deeper meaning. Anything, in business world, we do in a fashion today is subject to change according to the need in future. Sustainability reporting is therefore very crucial to manage changes towards a sustainable global economy as it tracks down our sustainable practices.
[The writer is Additional Managing Director of Standard Bank Limited. He is the fellow member of Institute of Cost and Management Accountants of Bangladesh (ICMAB) and first Certified Sustainability Reporting Assurer (CSRA) in Bangladesh].