The Global Reporting Initiative (GRI) has urged governments to ask companies to report on their environmental, social and governance (ESG) performance or give reasons for not doing so.
Headquartered in the Netherlands, GRI is a global multi-stakeholder network of business, labour and civil society leaders and its sustainability reporting framework is widely used the world over. Its G3 Guidelines lay down the principles and indicators for reporting on economic, environmental and social performance.
In its Amsterdam Declaration on Transparency and Reporting released last week, the GRI has appealed to governments to put in place policies for companies, state-owned corporations and public investment agencies to report on ESG indicators. Ernst R Ligteringen, chief executive, GRI, adds that companies should either undertake ESG reporting or give reasons for not doing so.
Explaining why GRI is pushing for sustainability reporting during a downturn when the going is anyway tough for most companies, Ligteringen says, “The downturn is the right time for companies to report on ESG because it establishes a business case for sustainability in terms of cutting costs, improving efficiency, mapping risks and opportunities and enhancing the quality of governance.”
Saying that the lack of transparency in corporate reporting is not serving the interests of all stakeholders, the declaration goes on to add, “The root causes of the current economic crisis would have been moderated by a global transparency and accountability system based on the exercise of due diligence and the public reporting of ESG performance.”
The declaration also calls for building sustainability reporting in the new global financial regulatory framework, which will be negotiated by the G20 leaders during their April meeting. Adds Ligteringen, The governments are already playing a big role in stabilising the economy and this is the time to ensure that its done in a sustainable manner.
In fact, the declaration makes a stronger case by saying that assumptions about the adequacy of voluntary reporting must be re-examined. Explains John Elkington, a director on the board of GRI, “It indicates a necessary shift in our thinking. Most leading company are undertaking CSR and/or sustainability initiatives today, but if all companies don’t do it, then it’s difficult to bring in systemic changes. So, the government’s role is important.” The sustainability expert is also a founding partner of Volans Ventures, a social and environmental innovation firm.
The GRI declaration assumes significance because some countries are already moving in this direction. Last month, the Danish government enacted a law requiring 1,100 largest companies to report on corporate social responsibility in their annual reports from 2010 onwards. The UK has a similar law in existence since 2007. France also requires all listed companies to disclose social and environmental performance since 2001.
The signatories to the declaration included GRI directors like Mervyn King, chair, GRI; Ernst R Ligteringen, of GRI, Kishor A Chaukar, MD, Tata Industries; John Elkington, founding partner, Volans Ventures; Kumi Naidoo, secretary-general, CIVICUS; Denise Esdon, partner, E&Y, and John Evans, general secretary, Trade Union Advisory Committee to the OECD.
Source: The Financial Express
Publiahed on 17 March 2009