Tag Archives: Reporting

ESG/CSR, News

Sedex identifies 10 vital data points to demystify ESG reporting

Latest report from Sedex identifies the essential business and supply chain data to support companies’ sustainability goals and effective ESG reporting

London 6 July 2022 – A new report from Sedex, the trusted partner for environment, social and governance (ESG) and sustainability data, identifies the key data to collect for businesses looking to conduct effective ESG reporting.

ESG has become a business priority, as companies respond to investors’ increased interest in social and environmental performance. But a lack of reporting standards, with varying requirements across different ratings providers and frameworks, makes it incredibly challenging for businesses to meet ESG demands efficiently.

Data and technology provide essential solutions to this challenge. Capturing the right information equips a company to achieve ESG goals and supports other sustainability activities, such as producing modern slavery statements and demonstrating tangible progress against targets.

Data to meet multiple sustainability goals

Sedex has identified the data businesses need most to meet ESG demands, and which feeds into many other sustainability-related activities. Gathering this data can save companies time, reducing duplication and effort, and helping build supply chain visibility to make more informed decisions.

The 10 data areas:

  • Air emissions
  • Water use
  • Physical waste
  • Worker demographics
  • Accident and injury occurrences
  • Worker access to freedom of association
  • Modern slavery risks and occurrences
  • Gender pay gap
  • Corruption risks and occurrences
  • Governance bodies

See Notes to Editors for full descriptions

Data-led technology and tools enable businesses to collect, store, share and report on this data at scale across global operations and supply chains. Sedex’s Radar risk tool, for example, provides over 340,000 risk scores across countries and industries for businesses to compare social and environmental risks around the world.

Jon Hancock, CEO at Sedex, says: “Data on a business’s operations, employees and supply chain is crucial for identifying and tackling social and environmental sustainability issues, and evidencing a company’s ESG impact in a credible way. This data, and the insight it brings, also supports many other business benefits – including more effective risk management, better response to supply chain disruption, and improved reputation with stakeholders including consumers.

“We empower companies to do this with our solutions, including bespoke support on a company’s particular ESG and sustainability needs, and the tools to execute activities at scale. Businesses can capture the data they need in the most efficient way.”

View the full insights report on the 10 core data points here: https://resources.sedex.com/10-data-points-for-esg-reporting/

News

Family-owned businesses report their accounts more conservatively, reveal researchers

Family-owned businesses are much more conservative when it comes to their accounting reporting than non-family corporate organisations, potentially hindering their reported profitability, but also improving the company’s long-term reputation, according to new research from Durham University Business School.

The study also found that family firms with a founder CEO are more likely to report conservatively than those with a descendent CEO.

Conducted by Dr. Hwa-Hsien Gary Hsu, Associate Professor of Accounting at Durham University Business School, alongside colleagues from the National Central University and the National Pingtung University, the study was designed to better understand the impact that family ownership has on accounting conservatism, and whether or not this makes firms more cautious and understated in their accounting reporting.

The researchers reviewed accounting data from over 5,500 financial reports issued by family firms based in Taiwan, operating between 1996 and 2015. The level of accounting conservatism of these firms was assessed through four different measures; non-operating accruals averaged over three years, good news and bad news timeliness from firms, the sum of inventory, R&D, and advertising reserves, and the aggregate effect of individual conservatism measures.

The researchers suggest the reason that family firms are more conservative is likely due to family owners being highly motivated to maintain the firm’s long-term viability by protecting its image and reputation, therefore not overstating their accounting records.

Dr. Hsu says,

“Family owners’ incentives and motivations can have a huge impact on the choice of their accounting practices. Family firm owners have a greater, long-term attachment to their companies and therefore want the company to seen in the best light possible.

This non-economic motive can drive family owners to avoid the aggressive accounting practices typically employed by corporates as these could potentially cause long-term damage to their firm’s viability and reputation. Instead, they choose to utilise the monitoring effect of accounting conservatism for enhancing or preserving their reputational wealth.”

The results of this study reveal that positive reputational effects associated with high family ownership and the presence of a founder CEO can motivate family firms to adopt accounting practices that facilitate effective monitoring. As a result, Dr Hsu says, owners’ family identity and reputation in the capital markets and society are preserved, and external stakeholders are benefited, in turn.

However, the results show when family ownership is reinforced through the use of enhanced control mechanisms, a great sense of family control and influence can drive family owners to avoid increased monitoring by using less conservative accounting. This approach allows them to exploit valuable information at the expense of external stakeholders.