Sector-specific sustainability reporting recommendations aim to prioritise a just transition, says standards-setting body.
Although investors are increasingly divesting away from coal, it’s vital that the coal industry is held to account as it transitions towards a low-carbon economy alongside other high-emitting sectors, according to Noora Puro, Manager of the Global Reporting Initiative’s (GRI) Sector Programme.
Sustainability standards setter GRI is consulting on a new Coal standard, which will provide coal companies with reporting guidance to help them respond to demands from investors and other stakeholders for transparency on ESG performance.
“The Standard is rooted on the material information needs of stakeholders and investors,” Puro told ESG Investor.
Standardised sector-specific reporting requirements allow investors to more easily compare ESG-related performance with market peers, she added.
The standard currently includes 22 sustainability topics for coal-sector corporates to report on. These largely concern climate risks, asking for transparency of exposure to air and water pollution, decarbonisation efforts and Scope 3 emissions (indirect emissions caused by activities from assets along the value chain).
However, it’s also important that coal companies are transparent about social-related issues, particularly if based in developing countries, said Puro.
“The standard covers health and safety, critical incident management, human rights and transparency on payments, to name but a few,” she noted.
It aims to support a just transition, Puro added, explaining that, when “coal operations close there needs to be continuity for workers and continuity for communities”. The Standard will ask coal companies to detail how they are preparing for these social impacts.
Companies may report to the Standard on a voluntary basis, although companies will be asked to adhere to ‘comply or explain’ rules.
GRI has also launched the Oil and Gas standard, which is expected to be finalised and published by the end of this year.
At the same time as developing the Coal standard, the standard-setting body is consulting on a standard for agriculture, aquaculture and fishing. Both standards are open to public consultation until 30 July.
“We are calling on investors and other stakeholders to make their opinions known on this draft. We want to know if it covers too much, too little, or if something is missing,” said Miguel Perez Ludena, Research Lead for the GRI Standards.
GRI plans to introduce up to 40 sector-specific standards, and is now in the process of developing the fourth standard for (non-coal) mining.
The Global Standards fund, which will finance this project, recently received financial backing from Big Four accountancy firm PwC’s multinational professional services network.
United Nations Secretary-General António Guterres has previously called for an end to the world’s “deadly addiction to coal”, demanding that all coal production stops by 2030 in developed countries, and 2040 in developing countries.