Corporate Sustainability Accounting WHAT CAN and SHOULD CORPORATIONS BE DOING?

FULL REPORT Corporate Sustainability Accounting WHAT CAN AND SHOULD CORPORATIONS BE DOING? PETER UTTING WITH KELLY O’NEILL FULL REPORT Corporate Sustainability Accounting WHAT CAN AND SHOULD CORPORATIONS BE DOING? PETER UTTING WITH KELLY O’NEILL Research and writing by Peter Utting with Kelly O’Neill. Comments and suggestions provided by the Project Team (Ilcheong Yi, Samuel Bruelisauer and Kameni Chaddha) and Advisory Group (Margie Mendell, Mark McElroy, Bill Baue and Sonja Novkovic). Produced by the UNRISD Communications and Outreach Unit, with design and layout by Sergio Sandoval. Corporate Sustainability Accounting: What Can and Should Corporations Be Doing? is one of the main outputs of phase one of the UNRISD research project Sustainable Development Performance Indicators (SDPI). The project aims to contribute to the measurement and evaluation of the performance of economic entities—both in the for-profit sector and in the social and solidarity economy—in relation to the vision and goals of the 2030 Agenda. The project aims to assess the adequacy of existing methods and data associated with sustainability accounting; expand the scope of sustainability measurement, disclosure and reporting beyond for-profit enterprises to encompass enterprise models in the social and solidarity economy (SSE); and identify and test a set of indicators that can effectively measure impacts, while ensuring that the economic behaviour of enterprises and other organizations contributes to maintaining environmental and social resources at the thresholds required for sustainable development. UNRISD’s SDPI project (2018-2022) is funded by the Center for Social Value Enhancement Studies, Republic of Korea. For more information, visit www.unrisd.org/sdpi The designations employed in this publication and the presentation of material herein do not imply the expression of any opinion whatsoever on the part of UNRISD concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. For a list of any errors or omissions found subsequent to printing, please visit www.unrisd.org/sdpi ISBN 978-92-9085-113-4 November 2020 Copyright © United Nations Research Institute for Social Development (UNRISD) and the Center for Social Value Enhancement Studies. CORPORATE SUSTAINABILITY ACCOUNTING: WHAT CAN AND SHOULD CORPORATIONS BE DOING? Preface This report was drafted in 2019. To borrow are key—both for improving the social or a phrase from politics, a week is a long time sustainability performance of corporations, in the field of corporate social responsibility and for assessing progress through disclosure (CSR) and sustainability disclosure. Normally and reporting. this is evident in the steady stream of new standards, reporting guidelines and best The CSR agenda has paid insufficient practices that companies are urged to adopt. attention to the necessary transformation of But periodically a high-profile corporate certain structural conditions that reproduce scandal, disaster or a global crisis will reveal unsustainable development. It has missed the limits—indeed, hypocrisy—of mainstream the big picture, focusing instead on steps efforts to improve corporate sustainability that companies can take to do a bit less disclosure and performance, and will prompt harm in relation, for example, to working a major reassessment. Think Enron, the Rana conditions and environmental protection— Plaza factory collapse, the BP Deepwater incrementalism instead of transformative Horizon oil spill, Volkswagen’s vehicle change. And it has assumed that any initiative emissions scandal, and the global financial associated with improved performance crisis of 2008-2009. represents progress along a sustainable development pathway, ignoring the need to Fast forward to early 2020 and we are now measure progress in relation to sustain ability in the midst of a global health crisis, the thresholds and patterns of fair allocation. 1 Paul Polman, inter viewed Covid-19 pandemic. As with other crises, by Ethical Corporation on 20 March 2020. this will be a time when many corporations As with the global financial crisis, the present Available at will step up to the plate with initiatives that crisis will likely give rise to calls for a new http://www.ethicalcorp. com/paul-polman- attempt to cushion the blow for employees twenty-first century social contract. Some coronavirus-acid-test- and local communities, or that foster public- leaders in this field are calling on companies stakeholder-capitalism private partnerships that assist governments not only to provide immediate assistance 2 Richard Edelman. and the wider citizenry. In short, CSR will to workers, producers, con sumers and local “Covid-19: World Economic Forum likely receive a big shot in the arm, adding communities, but also to be part and parcel and Edelman fill the more content to the ever-expanding portfolio of “a real tipping point on what responsible information void”. 11 1 March 2020. Available at of corporate policies and practices that business should look like” or “to adjust its https://www.edelman. has characterized CSR over three decades. approach and become more strategic and less com/insights/covid- 19-world-economic- But as this report reveals, such a trajectory operational and focus its planning on the forum-and-edelman-fill- leaves unresolved a series of issues that long term”.2 information-void 3I UNRISD Unfortunately this didn’t happen following have disclosure and reporting often focused the global financial crisis and it is unlikely on the issue of whether wages comply with to happen now, unless the focus of attention minimum wage regulations or industry within CSR and sustainability disclosure norms, rather than the living wage? And, shifts towards the set of core issues highlighted as occurred with the global financial crisis, in this report. Fundamentally, they relate to how can we avoid fuelling income inequality, skewed patterns of distribution of resources reflected in extreme CEO-worker pay ratios, and structures of inequality, both vertical (for via a stimulus or bailout agenda that results in example, income and wealth) and horizontal share buy backs and inflated CEO bonuses? (for example, gender and ethnicity); skewed power relations, and hierarchical as opposed In relation to gender equality, under to democratic or participatory governance Covid-19, employees are now urged to work arrangements; and growth and business from home via teleworking. This places models that generate acute environmental in sharp relief the chronic failure of the externalities that threaten both people’s well- CSR agenda to promote multiple forms being and the health of the planet. of support for employees with caregiving responsibilities—responsibilities that explain This report suggests that certain advances in much of the workplace disadvantage that the field of environmental disclosure are now women face in pay and promotion. Given the addressing the perverse relationship between narrow focus on a few weeks of pre- and post- the growth model, or capital accumulation, at natal care, both companies and standard- the enterprise level on the one hand, and the setting organizations have failed to recognize environment on the other. This is evident, for that such responsibilities are, in fact, a long- example, in calls not only for improvements term lifecycle issue. related to resource intensity, but also for “absolute decoupling”. Such developments Regarding corporate taxation, as national are far less apparent in relation to the social health systems struggle under the strain, why and political or governance dimensions of are the tax strategies and lobbying efforts of sustainable development. corporations often centred on reducing levels of corporate taxation or resisting increases in The Covid-19 crisis highlights where or how income and wealth taxes, thereby depriving cor porate sustainability disclosure has missed national and local governments of the the mark when it come to the big picture essential fiscal resources needed to maintain issues. Part 2 of this report focuses on five adequate health services and social security? such issue areas: fair remuneration, gender equality, corporate taxation, labour rights Concerning labour rights, as workers around and corporate political influence. the world are laid off, their vulnerability might have been mitigated had their As regards fair remuneration, the current bargaining power not been eroded during crisis has left us wondering why so many recent decades. This has partly been due of those who are putting themselves at risk to the flexibilization of labour markets that in order to provide us with essential goods globalization demanded and corporate and services are paid so poorly. Whether in lobbyists encouraged. Furthermore, the rich or poor countries, millions of people pandemic raises the spectre of subcontracted, have no savings to cushion the blow of part-time and freelance labour, with few if any unemployment. And many cannot afford labour rights, becoming even more pervasive the luxury of social distancing, as they must than before. continue to work outside the home to put food on the table. Why, for so long, has Indeed, as the Covid-19 crisis exposes the there been so much corporate resistance to fragility of global supply chains, and prompts paying workers a decent wage as reflected a sharp decline in carbon emissions and in the concept of a “living wage”? Why pollution, both

Load more