Non-financial disclosure

The imperative for companies to understand and be transparent about their environmental, social and economic impacts on the world around them, and on their financial performance, is greater than ever.   And it extends beyond their own boundaries to include impacts occurring along their supply chains.

At the same time company leaders are motivated to make non-financial disclosures  to build corporate reputation with customers, suppliers and corporate regulators.

A growing body of research links financial performance and the appropriate management of material non-financial  issues and performance (otherwise known as ESG).   In fact,  many  large  public companies are being evaluated and then ranked by third party organisations such as Bloomberg and the Dow Jones Sustainability Index against their ESG performance .

The ratings, indices and research reports these agencies produce  are used by institutional investors, asset managers, financial institutions and other stakeholders to assess and benchmark corporate ESG performance and how it changes over time.

We assist clients develop their business case for non-financial disclosure by identifying the main drivers,  and recommending options for responding to the demands of investors, regulators and other key stakeholders.  The drivers selected generally relate to matters that can be influenced by the organisation, and exclude those outside of their control.

The exclusion is particularly topical at present since the world is focussed on responding to two force majeur threats in particular: climate change and the COVID-19 pandemic.  Each is presenting its own challenges for all organisations, the first with a longer term response horizon and the second with immediate health and economic stresses.

To be successful in the future, organisations across all industry sectors will eventually need to demonstrate that they have the capacity to adapt to whatever post-COVID society emerges after the current crisis period.  

On the other hand,  climate change is already one of the leading sustainability issues on the global agenda, as evidenced by its prominent placing in the report of the 2019 World Economic Forum’s  report on global risks.  This is discussed further in the climate change section of this website.

UN Sustainable Development Goals

The UN Sustainable Development Goals were adopted by 193 member states in 2015. Governments have a key role in implementing the 17 SDGs, but businesses are also critical to the acheivement of many of the goals.

The SDGs offer companies a way to link their sustainability efforts to globally agreed priorities for sustainable development.  They not only assist in the identification of material sustainability issues,  but also provide a window on areas which will likely provide opportunities for future growth.

We assist organisations to understand how they impact on the SDGs; how to integrate them into their business;  and how to build them into their communications and reporting to stakeholders.


 Progress on human rights has led to the introduction of mandatory reporting on the due diligence and remediation processes undertaken by companies to ensure modern slavery abuses do not occur in their businesses or their supply chains.

Legislation has been passed in Australia, the UK (the UK Modern Slavery Act 2015), France and the Netherlands, and collectively cover humanitarian issues such as  slavery, servitude, forced labour, trafficking in persons, forced marriage, child trafficking, debt bondage and other slavery-like practices.

In Australia, the Modern Slavery Act 2018  requires entities based, or operating, in Australia, which have an annual consolidated revenue of more than AU$100 million, to report annually on the risks of modern slavery in their operations and supply chains, and actions to address those risks.

Other emerging topics for non-financial disclosure

Other new ESG issues are emerging that include :  

  • sugar and its link to obesity;
  • deforestation, particularly as a supply chain issue;
  •  banking and ethics;
  • geopolitical instability; and
  • inequality and global equity.

We assist organisations remain abreast of slavery and the emerging ESG issues that are relevant to them,  and advise on how they can best meet mandatory and voluntary disclosure requirements. 

Progress in the adoption of frameworks to guide reliable non-financial reporting

Over 90% of ASX200 companies have made some disclosure on their non-financial performance  through their annual reports, specialized corporate responsibility or sustainability reports, or other mechanisms.   

Globally however, there is potentially a confusing array of frameworks, principles, standards, guidelines and indices, that have been developed to standardise  the methods of disclosure. The leading ones that are being adopted include:

  • The Global Reporting Initiative (GRI) Standards for Sustainability Reporting 

This remains the most frequently used framework for sustainability reporting.  It has been adopted by three quarters of the world’s largest companies, and around one third of ASX200 companies. 

The Middle Way is a Gold Member of the Global Reporting Initiative.  We have participated in their work since  2002.

  • The Sustainability Accounting Standards Board (SASB) Standards

 These Standards are for voluntary use by all companies making mandatory disclosures to the US Securities Exchange Commission. By identifying material issues and accompanying metrics for 79 specific industries, the standards also have broad application for corporate ESG disclosure, particularly where disclosure is targeted at investors.

  • The United Nations Global Compact

The UN Global Compact is the world’s largest sustainability initiative. It has grown to 13,000 organisations including 9,000 companies. There are 155 Australian members and of these one third are small or medium-sized enterprises. Organisations must issue an annual Communication on Progress disclosing progress they have made in implementing the ten sustainability principles of the UN Global Compact.

  • The UN backed Principles for Responsible Investment (PRI) 

 This network of over 1800 financial organisations, including 170 in Australia, work together to promote a sustainable global financial system through the widespread adoption of six Principles of Responsible Investment. They must report annually following the PRI reporting framework.

  • CDP

CDP (formerly the Carbon Disclosure Program) provides the most widely used platform for climate change disclosure. It is utilised by over 6,000 companies worldwide representing 60% of the market capitalisation of the world’s 30 largest stock exchanges, and nearly one fifth of the global greenhouse gas emissions.   CDP also provides disclosure programs covering water, forestry and supply chains and these are growing in terms of participation.   80 companies participate in Australia.  

  • The International Integrated Reporting Framework

The IR framework was released in 2013 by the International Integrated Reporting Council (IIRC) to provide for disclosure of non-financial information by companies in a way that is useful to investors.    

We consider  there is no one best framework for non-financial reporting.   Rather we assist companies to develop their own strategy based on an understanding of the range of available frameworks, and designed to meet their business objectives, the needs of their stakeholders and their available resources.  

We help clients to develop non-financial disclosure strategies; prepare corporate responsibility reports and other disclosures following recognised guidelines  and standards;   participate in the UN Global Compact, CDP, PRI, DJSI and other non-financial disclosure programs; and  undertake supporting activities such as materiality assessment; climate change risk analysis; benchmarking and stakeholder engagement.