The discussion paper presents a proposal for a Corporate Sustainability Reporting Convention to be established at Rio+20. The Coalition organising the proposal is convened by Aviva Investors, and currently represents investors with assets under management of approximately US$2 trillion. In addition, it includes professional bodies, NGOs and other highly relevant stakeholders, including inter alia: the Association of Chartered Certified Accountants; the Global Reporting Initiative; the UN Global Compact; the UN Environment Programme Finance Initiative; the UN Conference on Trade and Development; the UN-backed Principles for Responsible Investment (with over $30 trillion in assets under management by their members); and, the Carbon Disclosure Project (which itself acts on behalf of 551 institutional investors holding US$71 trillion).
The core elements within the proposed Convention include:
- A commitment by UN member states to develop national regulations, formal codes or listing rules that encourage the integration of material sustainability issues within the annual report of all listed and large private companies.
- Establish an opt-out for those companies that elect not to prepare such a report: they would be required to explain their rationale to their shareholders, creditors and other stakeholders (also known as operating on a report or explain basis).
Government commitments at Earth Summits in 1992 and 2002 of Agenda 21 and the Rio Principles, outline the key role of the private sector in sustainable development, providing the foundation for a Convention in 2012. Subsequently, the Convention urges governments to commit to greater corporate transparency, consistent with paragraphs 24 and 104 of the Rio+20 Zero Draft.
The Convention would be flexible adaptable, and procedural, setting out the essential goals and steps needed to introduce widespread corporate sustainability reporting. Due to the differences in national accounting standards and legal regimes, the nature of implementation (reforming corporate law, changing listing rules etc) would be nationally determined, to allow the appropriate system for each country to be implemented. The convention would also not dictate the form that the report takes. This would be determined by corporate boards referring to the considerable amount of existing guidance (e.g. GRI, UN Global Compact). Companies will be fully entitled not to report, with the option of instead publishing an explanation as to why the board considers such a report and reporting strategy to be unnecessary.
Markets are driven by information, and non-financial reporting helps companies to better integrate social and environmental issues into business operations and strategies. Numerous reports have determined that providing the relevant information on the long-term sustainability of enterprises to investors, governments and stakeholders, has quantifiable corporate benefits in the medium and long term.
HOW YOU CAN CONTRIBUTE
The full paper is available here. We are very interested in receiving input and comments on our papers to help guide and inform the Dialogue process. We are interested to know:
- How can corporate sustainability reporting strengthen private sector responsibility and accountability?
- What can governments do to advance this agenda and develop the role of the corporations in sustainable development?
- Do you have any suggestions to strengthen this particular proposal?
- What do you consider a successful corporate social responsibility and accountability outcome at Rio+20?
Please go to our Forum to voice your opinions on these topics, and any other aspects you consider relevant to the Dialogue. We hope to encourage discussion to successfully integrate this knowledge into the Dialogue.