core sector communique

Corporate sustainability reporting one of the main outcomes of Rio+20?

GRI welcomes the efforts of governments to encourage corporate transparency, especially in the current political climate, where countries are under pressure from the financial crisis, and where sustainability should be part of the solution.

In the final negotiation hours on 18 June, parties at the non-ministerial level achieved a preliminary agreement on paragraph 47 of the outcome document, which underlines the importance of corporate sustainability reporting. This topic has been discussed with unprecedented levels of attention, underlining the importance all parties at Rio+20 attach to sustainability and transparency in business and industry.

“The high interest of so many governments from the North and the South, from the West and the East, and from the United Nations is highly significant, promising and encouraging,” commented Ernst Ligteringen, Chief Executive of the Global Reporting Initiative (GRI).

This is an important continuation of a development that was started in 2002 when in the Johannesburg Sustainable Development Summit sustainability reporting was endorsed in paragraph 18 of the Plan of Implementation, with the encouragement for business to use the Global Reporting Initiative (GRI)’s Sustainability Reporting Framework.

Since 2002 GRI has developed into the global de-facto standard for sustainability reporting. Thousands of companies have responded to the Johannesburg call, reporting their sustainability performance, both in industrialized and emerging economies. Companies and their investors, customers, and employees have discovered the value of transparency for business, markets, and communities.

GRI responds:

· Governments, regulators and stock exchanges should not sit back, but build on paragraph 47 to develop smart regulatory measures

· The United Nations has an important role in making this happen, according to the agreement

· It is important that paragraph 47 encourages parties at Rio+20 to provide capacity building for sustainability reporting in developing countries

It will now be up to governments and other regulators, such as stock exchanges, to develop effective and smart policies to realize the general proposition of the paragraph, and ensure that the momentum is maintained to make sustainability reporting standard practice.

Paragraph 47 underlines the important role of the United Nations, which will contribute to the successful pursuit of the proposition. The United Nations Environment Programme (UNEP), one of the founding institutions of GRI, is well positioned to continue playing its key role.

GRI is also working closely with the UN Global Compact and its normative framework to help more businesses engage in sustainability and reporting.

Paragraph 47 is very relevant to business and governments in developing countries. Sustainability reporting helps companies in developing countries to monitor and explain how they relate to the social, environmental and economic issues of those countries. Sustainability reporting represents a huge opportunity for business and markets in developing countries to make themselves better and more competitive.

In this context it is important that paragraph 47 encourages parties at Rio+20 to provide capacity building for sustainability reporting in developing countries. The Global Reporting Initiative has a focused presence in emerging markets, with training programs in 70 countries and local presence in India, Brazil, China and soon Southern Africa.

However, there is also some cause for concern:

The proposition in paragraph 47 does not include a specific smart policy principle that was proposed by many: a Report or Explain approach would require all large businesses to integrate sustainability into their business and reporting cycles, or to explain their reasons if they choose not to do this (yet).

This approach is supported by many parties, including from business (e.g. WBCSD), investors (the Aviva led Corporate Sustainability Reporting Coalition) and civil society networks (e.g. Green Economy Coalition).

The absence of a specific requirement for large companies to make a decision poses the risk that they will not consider the matter in a timely manner, and that the momentum towards corporate sustainability reporting as standard practice for large companies will be slowed down.

It is important that the final Rio+20 outcome documents, to be signed by heads of state on Friday 22 June, will recognize this development and endorse measures to strengthen the momentum behind corporate sustainability reporting. This will ensure that the practice developed by thousands of pioneering organizations will be disseminated and accelerated to strengthen the benefits for sustainable development.