Our memories remain fresh from the lead-up to Rio+20, where civil society and the investor community were advocating for the adoption of a Convention on Corporate Sustainability Reporting which would require all listed and large private companies to integrate material sustainability issues into their annual reporting cycle and to disclose sustainability information on a report-or-explain basis. The negotiated outcome fell short of these expectations, but the action-oriented language in paragraph 47 of General Assembly Resolution A/66/288 “The Future We Want” has opened a space for governments and stakeholders to follow up on these discussions.
In the resolution, Member States call upon “industry, interested governments and relevant stakeholders, with the support of the United Nations system, as appropriate, to develop models for best practice and facilitate action for the integration of sustainability reporting, taking into account experiences from already existing frameworks and paying particular attention to the needs of developing countries, including for capacity-building.”
On June 20th 2012, shortly after the conclusion of Rio+20 negotiations, Brazil, Denmark, France and South Africa announced the formulation of a “Group of Friends of Paragraph 47” to maintain the political momentum around corporate sustainability reporting. UNEP and the Global Reporting Initiative (GRI) were invited to support their work. All four countries either have introduced legal obligations for certain companies to publish sustainability reports – or explain why they have not – or relevant stock exchange listing rules and/ or sustainability indexes. The group believes that “corporate transparency and accountability are key elements to enhancing the private sector’s contribution to sustainable development, and making sustainability reporting standard practice among companies will contribute to monitor the impacts on and the contribution to sustainable development by the corporate sector”.
Advancing corporate sustainability reporting and promoting accountability and transparency in the corporate sector is by no means a simple task. It is not yet clear whether the currently limited reporting system and practices indeed lead to increased corporate accountability. Research also suggests that many corporate executives and managers see sustainability programs as another profit drain. Many questions remain to be answered indeed, but we also see much positive momentum gathered, which roughly fall under three main categories:
promote the creation of an enabling regulatory environment, including various legal requirements at the national level as well as stock exchange rules promoted by the Sustainable Stock Exchange Initiative (SSEI)
develop guidance for sustainability reporting, building on already existing models such as the Global Reporting Initiative (GRI) guidelines or Integrated Reporting (IR), among others
integrate sustainability information in decision-making processes, including, among others, the responsible investment movement, the development of sustainability indices and ratings, the integration of ESG elements in business school curriculum, etc.
Capacity building is a cross-cutting theme required in each category, from raising awareness among policy-makers, to addressing needs of corporate seeking guidance on reporting, to educating stakeholders on how to make sense of sustainability reports and the list goes on.
It has been over nine months since Rio+20 and there have been some encouraging developments:
On November 7, 2012, the Group of Friends of Paragraph 47 released its Charter
, setting a common vision and inviting other interested governments to join. A number of countries have expressed interest so far, including Norway, Colombia, Ecuador and Tunisia. An informal stakeholder reference group is also being established with a view to ensuring multi-stakeholder participation in the work of the Group.
The category of state-owned enterprises (SOEs) has emerged as a low-hanging fruit for national legislation related to corporate sustainability reporting. Sweden and Denmark have implemented national requirements for SOEs to report on their ESG performance.
Seven stock exchanges have publicly committed to the Sustainable Stock Exchange initiative: NASDAQ, OMX, BM&FBOVESPA, Johannesburg Stock Exchange (JSE), Bombay Stock Exchange (BSE), Egyptian Exchange (EGX), Istanbul Stock Exchange (ISE) and MCX-SX.
The Global Reporting Initiative (GRI) is scheduled to launch its G4 framework at the GRI Conference in May 2013. Its Sustainability Disclosure Database has registered 12,630 sustainability reports from 4972 organizations, among which 11,034 are GRI reports.
The International Integrated Reporting Council has recently signed a Memorandum of Understanding with the International Accounting Standards Board (IASB) announcing to develop an integrated corporate reporting framework.
One short list as such cannot capture the full momentum and this is not the intention. We encourage all stakeholders to share latest relevant developments in the Corporate Sustainability Reporting Action Network soon to be created on the Sustainable Development Knowledge Platform. The potential of paragraph 47 will be uncovered by all relevant stakeholders and the UN system stands ready to support this. An informal inter-agency coordination group has been established to provide coordinated UN system support to governments, private sector and stakeholders. The group is co-led by UNDESA and UNEP, with the participation of UNCTAD, UNOP, UNDP, UNCDF, UN Women, UNOPS and the Regional Commissions. It will also seek to define an enhanced role of Major Groups and other stakeholders in this process.
For more information, please contact Chantal Line Carpentier or Meng Li at the Division for Sustainable Development, UNDESA.