Carrots and Sticks Sustainability Reporting Policies Worldwide – Today’S Best Practice, Tomorrow’S Trends
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CARROTS AND STICKS Sustainability reporting policies worldwide – today’s best practice, tomorrow’s trends 2013 edition CARROTS AND STICKS 2 Sustainability reporting policies worldwide - today’s best practice, tomorrow’s trends Table of Contents Carrots and Sticks Forewords 6 Executive Summary 8 Introduction 10 What are the main trends? 13 1. A global increase in the amount of policy and regulation for organizational reporting 13 2. An increasing amount of policy is inspired by, or based on, a report or explain approach 14 3. Development, growth and harmonization of reporting frameworks 16 4. Developments in the organizations that are reporting 16 a. The main focus is on large companies 16 b. Increasing voluntary reporting by SMEs 17 c. State-owned companies 17 5. Sustainability reporting as a listing requirement for stock exchanges: a popular option for emerging and developing countries 17 6. The United Nations now requests that governments stimulate sustainability reporting through best practice 17 7. Other drivers of ‘more reporting’ 19 8. Challenges to the momentum 21 Sustainability Frameworks. Which one for reporting? 22 In-depth Profiles 25 Policies and Initiatives 37 Assurance Standards 80 Conclusions 82 The way ahead 83 Glossary 84 References 85 Disclaimer 89 Acknowledgements 90 3 CARROTS AND STICKS Project Partners United Nations Environment Programme The Global Reporting Initiative (GRI) (UNEP) UNEP represents the United Nations’ environmental conscience. The Global Reporting Initiative (GRI) promotes the use of Based in Nairobi, Kenya, its mission is to provide leadership and sustainability reporting as a way for organizations to become more encourage partnership in caring for the environment by inspiring, sustainable and contribute to a sustainable global economy. informing, and enabling nations and peoples to improve their GRI’s mission is to make sustainability reporting standard practice. quality of life without compromising that of future generations. To enable all companies and organizations to report their The UNEP Division of Technology, Industry and Economics economic, environmental, social and governance performance, (DTIE) provides solutions to policy-makers and helps change the GRI produces free Sustainability Reporting Guidelines. business environment by offering platforms for dialogue and co-operation, innovative policy options, pilot projects and creative GRI is an international, network-based organization; its activity market mechanisms. DTIE plays a leading role in three of the six involves thousands of professionals and organizations from many UNEP strategic priorities: climate change, harmful substances sectors, constituencies and regions. and hazardous waste, resource efficiency. DTIE is also actively GRI was set up in the US in 1997 by CERES, with support from the contributing to the Green Economy Initiative launched by UNEP in United Nations Environment Programme (UNEP). Its Secretariat 2008. This aims to shift national and world economies on to a new is located in Amsterdam, The Netherlands, and there are GRI path, in which jobs and output growth are driven by increased ‘Focal Points’ – regional offices – in Australia, Brazil, China, India, investment in green sectors, and by a switch of consumers’ South Africa, and the USA. GRI enjoys strategic partnerships with preferences towards environmentally friendly goods and the Organisation for Economic Co-operation and Development services. Leading outreach activities with business and industry, (OECD), the UN Global Compact, UNEP, and the International sustainability reporting has for many years been a core subject of Organization for Standardization (ISO). its work on corporate social responsibility. To achieve its mission of making sustainability reporting standard United Nations practice, GRI is: Environment Programme (UNEP) • Standardizing sustainability reporting and providing up-to- PO Box 30552 date reporting guidance Nairobi 00100 • Creating capacity through training and outreach Kenya • Promoting a Report or Explain approach to sustainability Tel: +254 20 762 1234 reporting policy Fax: +254 20 762 3927 • Supporting the development of integrated reporting www.unep.org UNEP Global Reporting Initiative Division of Technology Industry and Economics (DTIE) PO BOX 10039 15 rue de Milan 1001 EA Amsterdam 75441 Paris Cedex 09 The Netherlands France www.globalreporting.org Tel: +33 1 4437 1450 Contact: [email protected] Fax: +33 1 4437 1474 Phone: +31 20 531 00 00 [email protected] www.unep.org/dtie/ 4 Sustainability reporting policies worldwide - today’s best practice, tomorrow’s trends KPMG The Centre for Corporate Governance in Africa KPMG is a global network of professional firms providing Audit, The Centre for Corporate Governance in Africa at the University Tax and Advisory services. We operate in 156 countries and have of Stellenbosch Business School in South Africa conducts multi- 150,000 people working in member firms around the world. The disciplinary research and offers educational activities to improve independent member firms of the KPMG network are affiliated the effectiveness of corporate governance in African organisations. with KPMG International Cooperative (“KPMG International”), a The Centre’s main focus is on developing the performance and Swiss entity. Each KPMG firm is a legally distinct and separate compliance aspects of directors’ attitudes, knowledge and skills, entity and describes itself as such. KPMG’s Climate Change and and on the link between corporate governance, business ethics Sustainability Services (CC&S) professionals provide sustainability and total organisational performance. The key research areas and climate change of the Centre are responsible investment, board leadership, integrated reporting and values. Assurance, Tax and Advisory services to organizations to help them apply sustainability as a strategic lens to their business operations. The Centre for Corporate Governance in Africa We have more than 25 years of experience working with leading PO Box 610, Bellville 7535 businesses and public sector organizations which has enabled South Africa us to develop extensive relationships with the world’s leading Telephone: +27 (0)21 918 4381 companies and to contribute to shaping the sustainability agenda. Fax: +27 (0)21 918 4468 [email protected] Wim Bartels www.governance.usb.ac.za Global Head of Sustainability Assurance at KPMG Partner, KPMG Sustainability, the Netherlands Tel: +31 20 656 7783 [email protected] www.kpmg.com/sustainability 5 CARROTS AND STICKS Forewords Welcome to the third Carrots and Sticks, produced by the same With this third report since 2006 on the state of play of regulations project team as the previous editions – UNEP, GRI, KPMG and the for sustainability reporting, we seem to be halfway. The uptake of Centre for Corporate Governance in Africa. governments is tremendous since the previous 2011 research was conducted. This is both promising and encouraging. Whereas we It is exciting that in the three years since the last edition, the see governments taking their role in transparency for a sustainable practice of sustainability reporting, and public policy and future, it seems however time to start progressing towards regulation in the field, have increased sharply. Leadership in the next phase: further harmonization of reporting, to enable corporate reporting goes hand-in-hand with governmental policy improved comparison of companies’ performance on a solid and and regulation. In June 2012, the ‘Paragraph 47’ agreement on uniform basis. With the rising attention from stock exchanges sustainability reporting was one of the most successful outcomes to require disclosure and the interest from the financial world of the UN Rio+20 Summit. in integrated reporting, alignment between regulations would Thousands of companies worldwide produce sustainability create a level-playing field for business – not just for disclosure, but reports. Their quality is improving, thanks to the availability of primarily for what will make the difference ultimately: sustainable ever-better reporting guidelines. Many key stakeholders have businesses for a prosperous society. With the start of the first contributed to the development of GRI’s G4 Guidelines, which supranational initiatives in this regard, we are convinced we will make reporting easier, better, and more focused on material see the results in the next research report. Understanding every issues. Despite the many important developments outlined in company’s impact on a uniform basis will inform ultimate decision this publication, we need further action. It took twelve years for makers – consumers, investors, employees – to continue the the proportion of the world’s largest 250 companies practicing relationship with an individual business or cease it. Governments sustainability reporting to grow from 35% to 95%. Today, less can further facilitate this development. We are pleased to take part than 10% of the more than 45,000 publicly traded companies in this journey with our knowledge and expertise. that are required to disclose their annual accounts report on their Wim Bartels sustainability performance. Global Head of Sustainability Assurance at KPMG Sustainability, the Regulators need to use the current momentum to stimulate or Netherlands mandate sustainability disclosure. This publication may be one of the many steps needed to make this happen. Teresa Fogelberg 6 Deputy Chief Executive, Global Reporting Initiative Sustainability