Want to learn more? Consider a GRI-certified training course in sustainable management, coming soon to a city near you!
For three days I attended the Global Reporting Initiative’s Amsterdam Conference, which was humming with the GRI’s ambitious goals for increasing environmental, social, and governance (ESG) reporting by the end of this decade. But the enthusiastic buzz often stopped when the challenges involving greater American involvement became central to the conference’s numerous panel discussions.
One theme of the GRI’s conference was the desire of the GRI’s leadership, as well as many panelists and moderators, to see increased integrated reporting become a mainstream procedure for American corporate disclosure. For too long, financial reporting and sustainability reporting have been two different processes: the later, of course, voluntary in the United States. The results have been disappointing: many corporate social responsibility reports in the US have been criticized for being more of a marketing tool instead of a genuine discussion of what a company is doing to ameliorate its impact on the planet and its people.
Across the pond in Europe, however, more companies have not only become more forthcoming in their sustainability reporting, but increased mandates throughout the European Union have strengthened the trust between their companies and stakeholders, without any decrease in shareholder value. Iconic European companies such as Nestle, Philips, and Shell have been more transparent, moving to disclose financial and triple bottom line data in one report.
There’s a passionate desire to increase integrated reporting in the US. Many Europeans appreciate the innovation and resourceful for which American companies are respected. Unfortunately, a dismissive attitude towards sustainability reporting still keeps many American executives from moving forward on creating more robust, transparent EST disclosures. The reasons vary: an accounting industry that still does not “get” how to integrate the qualitative and quantitative data that complicates integrated reporting gives Europeans the sense that the American accounting industry has fallen behind. The conservative nature of American business, and the lack of any carbon tax or carbon trading system in the United States also contribute to what our Europeans see as a sclerotic drift towards increase business transparency.
Finally, the polarization of American politics does not help. Nevertheless, Americans and American businesses would be wise to acknowledge the facts about Europe: Europe as an entity is a larger economy than that of the United States. More Fortune 100 and 500 companies exist here than across the Atlantic. And European companies have grasped the notion that moving towards more sustainable policies is not just about people and the planet—the data suggests that companies are becoming more efficient and saving money by either using less energy or streamlining their supply chain–making them more competitive on the global scene.
But there is optimism the USA can not only catch up, but surpass Europe in sustainability reporting. The Securities and Exchange Commission’s recent guidance on climate change disclosure is a great first step. But many more steps, however, need to be taken.