Corporate sustainability reporting has to become mandatory in order to reach sufficient progress towards sustainable development, writes Paul Hohnen, a consultant and Associate Fellow of Chatham House, in the The Guardian.
Governments should agree on globally valid guidelines of how companies are to report on sustainability aspects – the upcoming Rio+20 conference being perhaps the best opportunity they’ll get, he urges. This is because voluntary environmental and sustainability reporting by companies can only deliver so much.
Inconsistencies and variations in reporting quality and quantity make it difficult to compare and invest. Adding to that, “Sustainable development cannot be reached without the full engagement of the business sector. There must be transparency on the impacts of current behaviour and business should focus its unmatched entrepreneurial, technological and financial power on delivering solutions to the world’s problems.”
Faced with the monumental environmental and social challenges of an overheating world, there is no option for businesses but to work with governments and international agencies to develop a universally accepted framework, UN Secretary General‘s High Level Panel on Global Sustainability urges in its recently published report entitled “Resilient People, Resilient Planet – A Future Worth Choosing“. Its recommendation: “mandatory reporting by corporations with market capitalizations larger than $100 million”.
“Sustainability information is increasingly material to the future health of most corporations and to that of the economies and societies they work in. If we continue to rely solely on financial reporting, we risk triggering both an economic and ecological meltdown.”
However, mandatory sustainability reports are not only about making sure businesses assume responsibility and act like decent corporate citizens.
Rather, as Paul points out in the article, “Capital markets only operate efficiently if they can accurately price risk and management quality. Sustainability information is increasingly material to the future health of most corporations and to that of the economies and societies they work in. If we continue to rely solely on financial reporting, we risk triggering both an economic and ecological meltdown.”
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