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Running head: SUSTAINABILITY REPORTING1 Sustainability Reporting: Expanding the Scope of DisclosuresStudent’s Name:Institutional Affiliation:
SUSTAINABILITY REPORTING2Sustainability Reporting: Expanding the Scope of DisclosuresSustainability reporting has developed as a common practice among businesses of the 21st century. A sustainability report is a statement issued by an organization or corporation about the environmental, economic, and social effects resulting from it daily business operations. It also reveals a company’s values and governance model and shows the connection between its strategy and its obligation to a sustainable worldwide economy. Currently, investors, shareholders, and customers are pushing for data and evidence about organizations’ sustainabilityperformance; thus, sustainability reports have emerged as an integral part of companies’ disclosures. The Sustainability Accounting Standards Board (SASB) develops the specific standards and principles for corporate sustainability disclosure with the aim of ensuring that the disclosure is decision-useful, material, and comparable. Although companies have issued sustainability reports in the past, the methods that they have used only focused on sustainability issues. Therefore, with SABS standards, companies will publish a single document that will comprise all the necessary financial and nonfinancial information.Business Sense of Integrated Sustainability ReportIntegrated sustainability reporting makes good business sense because it adds value to companies by revealing to the shareholders, clients, employees, and regulators the ESG (Environmental, Social, and Governance) data. Today, most investors require companies to present them with this non-financial data. However, it is difficult for the investors to understand the non-financial data when presented exclusively. Shareholders and investors cannot understandhow the EGS factors add value to the business. Therefore, the integrated sustainability reporting helps to decode the non-financial information into a manner that the investors and shareholders
SUSTAINABILITY REPORTING3can easily understand. Consequently, this increases the business’ communication with the investors about their environmental and social impacts.Integrated sustainability reporting also enhances a firm’s access to capital. Studies reveal that financial reports may expose a company to new and affordable financing. By combining its sustainability reports with its financial reports, a company may succeed in convincing potential investors that it is a competitive and low-risk investment. Investors are increasingly favoring businesses that that are transparent; thus, sustainability disclosure provides them with more information connected to the companies’ cash flow from operations and return on assets.