Article published on June 18, 2012, in the newspaper Valor Econômico

By Marcos Bicudo and Marina Grossi (*)

The success of a company that directs its business strategy toward sustainability is directly proportional to its degree of transparency in disclosing socio-environmental indicators. Inspired by this axiom of the corporate sector, the World Business Council for Sustainable Development (WBCSD) and the Global Reporting Initiative (GRI) will present a proposal to the UN at Rio+20 to encourage large companies around the world to publish sustainability reports.

As the WBCSD representative in Brazil, the Brazilian Business Council for Sustainable Development (CEBDS) advocates for the Brazilian government to be more aggressive. Therefore, it sent a letter of recommendation to President Dilma Rousseff urging the Brazilian government to enact a law mandating the publication of sustainability reports for large public and private companies operating in Brazil.

While seemingly controversial, the initiative will encounter little resistance, at least among Brazil's leading companies. Of the 74 corporations associated with CEBDS, for example, the majority voluntarily publish sustainability reports applying the GRI methodology, a global benchmark and recognized as the most advanced in technical terms. Furthermore, the number of companies producing reports in Brazil using this methodology is increasing. From 2009 to 2010, this number jumped from 80 to 134, an increase of 68%. The global average growth, on the other hand, was only 22% in the same period.

On the global stage, Brazil is very well positioned in this regard. It currently ranks third in the number of companies publishing sustainability reports using the GRI, accounting for 7% of the global total in 2010. Companies headquartered in Brazil trail only those based in the United States (10%) and Spain (9%). However, we have much room for improvement, especially in the broader context of the business sector. Among the 533 companies listed on the Bovespa, for example, only 56 publish sustainability reports, a percentage of 10.5%.

We are convinced that if we approve the proposal in question, we will trigger a very powerful multiplier process. The influence of large companies in the value chain will disseminate this practice among their suppliers, providing benefits to a vast network of stakeholders. To reinforce this trend, we also suggest that the government adopt measures to encourage small and medium-sized companies to begin this process.

The proposal submitted to the Presidency of the Republic contains two other important recommendations: the adoption of a regulatory model inspired by the "report or explain" concept, which allows companies to justify non-publication and which is already a consensus in global discussions on the subject; and the promotion of a broad discussion, involving the main actors involved in the process, over a 12-month period, on the regulatory model to be adopted from 2014 onwards.

We also believe it's crucial that the information published in reports be technically consistent. This is the best way to prevent companies from falling into the trap of so-called greenwashingCompanies should only make public what they can prove and what has been audited by independent, reputable consultants.

Recent research has revealed that more than 701% of consumers surveyed in the United States and Europe choose to purchase products and services from companies that engage in social or environmental responsibility. These studies indicate that consumers are increasingly interested in observing product certifications, the origin of raw materials, and other requirements. This is an inexorable trend that, sooner or later, will be regulated by the market.

The prospective study "Visão Brasil 2050 – a new agenda for the country's business," which will be launched by CEBDS on June 22, at 11 a.m., at Riocentro, in a side event of the UN Conference, points to this inevitable trend. The mandatory reporting will be a step toward the integration of financial and sustainability reporting, as the document points out. Vision 2050 of the WBCSD, which inspired the publication of the CEBDS. Incorporating sustainability indicators into the financial statements of large public and private companies operating in the country is the next step in the process.

This CEBDS recommendation also demonstrates that the business sector, with a medium- and long-term vision, is willing to contribute to the challenge of planning the future we want for our country. The commitment to making the production and publication of socio-environmental indicators mandatory represents an essential measure of transparency for deepening the relationship between government, business, and society and for creating a shared agenda.

In addition to the benefits accruing to the company, which will gain a leading position in the market and increase the value of its intangible assets, sustainability reports will be crucial for Brazil, as they will provide figures for calculating GDP.

In the very near future, the criteria used to measure the level of development of nations will not be limited to simple mathematical calculations of imports, exports, production of goods, etc. More complex variables will be included in this accounting, such as emission levels, water reuse, social inclusion processes, among other performances that integrate the multifaceted concept of sustainability.

The evidence that sustainability reports are essential for business, the economy, society, and the environment is more than sufficient to support a government measure regulating their publication, a factor that will contribute to catalyzing the transition to the sustainable development model.

(*) Marcos Bicudo is a charmain of the Brazilian Business Council for Sustainable Development (CEBDS)

Marina Grossi is the executive president of the Brazilian Business Council for Sustainable Development (CEBDS)