The Rio+20 conference on sustainable development, the largest event ever organized by the UN on the subject, starts this week in the Brazilian city of the same name. One of the most eagerly awaited topics and key issues on the agenda is the question of corporate sustainability reporting.
A group composed of governments, businesses and investors that lobby for the creation of a regulatory framework on sustainability reporting has negotiated the inclusion of an official section in the summit text, which will be debated by more than 100 world leaders. The campaigners are demanding a concrete measure to oblige companies to report on their environmental performance. Their hopes may well be realized by the end of this week.
One of the models sponsored by the campaign is ‘report or explain’, which is similar to the comply-or-explain rule that prevails in UK corporate governance: companies must either report on their social and environmental performance or explain why this information is not relevant to their business.
Corporate responsibility reporting is considered best practice in Europe, where most blue chip companies either publish a sustainability report or have developed an integrated reporting strategy. Smaller companies aren’t yet as consistent when it comes to sustainability reporting but may soon be obliged to comply.
Green pressure may also come directly from stock exchanges. The UN is separately backing another group, the Sustainable Stock Exchanges Initiative, which advocates disclosure of sustainability data as part of standard listing requirements.
The US, Canada and India are resisting these initiatives on the basis that mandatory disclosure of social and environmental data would add to the corporations’ regulatory burden.
