Sustainability reporting may be a big winner of this week’s UN Conference on Sustainable Development in Rio de Janeiro. Paragraph 47 of Rio+20’s outcome document outlines the importance of organizations’ commitment to sustainability reporting, and now four governments are leading this charge.
The governments of Brazil, Denmark, France and South Africa have formed a group, “Friends of Paragraph 47,” to advance sustainability, or corporate social responsibility (CSR) reporting. The group invited Global Reporting Initiative (GRI) and the United Nations Environment Program (UNEP) to support this effort. This collaboration could give a boost to integrated reporting, which combines financial data with information on organizations’ performance on environmental, social and governance issues.
Each of these countries has had a unique role in supporting the cause for integrated reporting, or “One Report.” In South Africa, companies that list their securities on the Johannesburg Stock Exchange are required to produce a report that integrates financial and sustainability performance, and if they do not, they must submit documentation explaining why. Denmark wrote integrated reporting into legislation in 2009. Brazil’s largest stock exchange, BM&FBOVESPA in São Paulo, now issues annual integrated reports and encourages its listed companies to disclose information on issues ranging from environmental sustainability to corporate governance. France required large companies to issue integrated reports this year.
GRI has responded to Paragraph 47 with cautious optimism. The Amsterdam-based organization has called for governments and self regulating organizations such as stock exchanges to build upon the Rio agreement and make sustainability reporting a standard practice. But GRI also expressed disappointment that Paragraph 47 does not explain a “report or explain” cause as is the requirement in Denmark and within the Johannesburg Stock Exchange.
Next comes the hard part, as this “Gang of Four” will work with other governments to craft a more detailed policy in the coming months. As Rio+20 concludes tomorrow, the debate will begin over what successes were achieved and where this gathering fell short. One winner is clear, however; GRI, which has already become the global sustainability reporting standard, will become even more of a force behind the increase of more sustainable business practices in the coming years.