A successful post-2015 development agenda will require a robust, inclusive and transparent monitoring and accountability framework. Accountability extends beyond the sphere of government and applies to all stakeholders reporting on their role in implementing a universal development agenda. And that is what I am going to do today: talk about corporate accountability.
There is a unique dynamic bringing together two global currents, two movements: 1) the movement of business and stakeholders behind the increasing integration of sustainability issues into business and 2) the growing practice of accountability developed in the area of Sustainability Reporting in recent years, coupled with the global intergovernmental monitoring of the Sustainable Development Goals (SDGs).
The reality is that the private sector is diverse. Fortunately, the number of companies that value the importance of their social and environmental performance is growing. But this perception is still far from universal. The United Nations Global Compact, the World Business Council for Sustainable Development (WBCSD) and the Global Reporting Initiative are the central global players in advancing this practice. We have joined forces in a new Alliance to establish a strong correlation between this growing practice in companies and their stakeholders and the SDGs. We call our alliance Post-2015 Business Engagement Architecture and we were proud when UN Secretary-General Ban Ki-moon launched it in September 2013.
The plan is to develop private sector guidance that will help companies improve their sustainability management and reporting in line with the global sustainable development goals and targets. The Alliance partners will work together to add a chapter to the GRI global standard to link to the upcoming SDGs. This could provide an important element; a key piece of the puzzle in developing the Monitoring and Accountability Framework for the Post-2015 Development Agenda. It would mean that the wheel would not have to be reinvented, and that thousands of companies would bring their commitment and expertise to the post-2015 implementation field.
So what is the current global accountability mechanism, used today as standard practice by thousands of companies on every continent? The topic of private sector accountability has been high on the agenda for more than two decades. The driving factors for this have been a lack of public trust and a more restrictive operating license for companies. Opportunities for the establishment of a green economy and new markets have also emerged. There is no accountability without transparency – thus sustainability reporting has become a key accountability tool for many companies and their stakeholders. stakeholders.
It was in this way that the Global Reporting Initiative (GRI) was born. It began as a multi-stakeholder movement led by business, civil society, trade unions, the World Bank, and several foundations. The United Nations Environment Programme (UNEP) welcomed GRI as a hub for collaboration and facilitated its creation as an independent international organization, headquartered in the Netherlands (and now with satellite offices on every continent). GRI has established important partnerships through Memoranda of Understanding with intergovernmental organizations such as the United Nations Global Compact (UNGC), the OECD, and UNCTAD , where GRI actively contributes to the Intergovernmental Working Group on International Accounting and Reporting Standards (ISAR). Over the years, investors and stock exchanges have increasingly engaged in the accountability and sustainability reporting of businesses or disclosure , as they say. An important initiative launched in Rio in 2012 is the Sustainable Stock Exchanges Initiative , organized by UNEP/FI, Global Compact and UNCTAD.
Governments first addressed environmental reporting at the United Nations Conference on Environment and Development in 1992. In the Conference’s Agenda 21, they agreed that business and industry should be “encouraged to adopt and report on their environmental metrics, as well as their use of energy and natural resources”. Building on this, the World Summit on Sustainable Development also highlighted the importance of reporting, noting the need to strengthen corporate environmental and social responsibility and accountability, including through actions such as ‘public reporting on environmental and social issues’.
In 2002, in United Nations World Summit on Sustainable Development in Johannesburg, the GRI released the first version of its Guidelines. These were created as a “de facto” standard through a formal process multi-stakeholder, with all stakeholder groups and geographic regions represented. The GRI was referenced in the World Summit Implementation Plan. The 18th paragraph of the Report reads as follows:
Enhance corporate environmental and social responsibility and accountability. This would include actions at all levels to: (a) Encourage industry to improve social and environmental performance through voluntary initiatives, including environmental management systems, codes of conduct, certification and public reporting on environmental and social issues, taking into account initiatives such as the International Organization for Standardization (ISO) standards and the sustainability reporting guidelines of the Global Reporting Initiative, taking into account principle 11 of the Rio Declaration on Environment and Development; (b) Encourage dialogue between businesses and the communities in which they operate and other stakeholders; (c) Encourage financial institutions to incorporate sustainable development considerations into their decision-making processes; (d) Develop workplace-based partnerships and programmes, including training and education programmes.
The GRI Guidelines consist of accountability principles and standards of disclosure or indicators in the environmental, social, economic and governance spheres. Examples of themes in the standard of disclosure are employment, gender equality, human rights, climate change, biodiversity, pollution, water use, corruption, as well as payments to governments and local communities. All of these themes are based on key United Nations conventions related to sustainable development (e.g. the Universal Declaration of Human Rights, to the three Rio Conventions, many ILO conventions, It is CEDAW). In addition, the GRI guidelines provide reporting language for three of the most important international regulatory frameworks: the ten principles of the Global Compact, you OECD Guiding Principles for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights.
In May 2013, GRI launched the fourth generation of the world's most widely used and comprehensive sustainability reporting framework, its Sustainability Reporting Guidelines – G4. The launch marked the culmination of an extensive two-year stakeholder consultation and dialogue with a diverse audience of hundreds of experts from around the world. The G4 places the concept of materiality at the heart of sustainability reporting. This means encouraging organizations to report only on issues that are relevant to their organization, based on a dialogue with their stakeholders. stakeholders. This approach, in turn, will result in sustainability reports that are more strategic, focused, credible and easier for stakeholders to navigate. Such reports will focus on issues that are critical to achieving the organization’s core objectives and managing its economic, environmental and social impacts. An organization may monitor many sustainability indicators, but should report only on the most relevant ones.
The result is impressive. Currently, 5,800 companies worldwide measure their sustainability performance and can be held accountable through their public reports. Most of them (3,600) are officially registered as GRI reporting companies. However, 5,800 companies represent only a small fraction of the approximately 80,000 large companies in existence. The only major factor that can accelerate corporate accountability is government policy. Governments use different policies to increase the adoption of sustainability reporting, ranging from incentives such as transparency awards (e.g. in the Netherlands), credit and investment lines, and voluntary guidelines, to regulations and mandatory reporting. As the “Carrots and Sticks“A study by UNEP, GRI and Stellenbosch University has shown that there has been a marked increase in policies to encourage reporting. The most recent data – collected from 45 countries – indicates that there are 180 regulations, of which more than 70% are mandatory.Research carried out by Harvard Business School revealed that mandatory corporate sustainability reporting increases companies' social responsibility.
In the past month alone, there have been three major examples of government policy and regulation in this area:
A EU directive on non-financial and diversity disclosure by certain large companies and groups was approved last month by the European Parliament and introduces measures that will strengthen transparency and accountability for around 6,000 companies in the European Union. Public-interest companies with more than 500 employees will soon have to report information on the environment, anti-corruption, corruption and human rights issues based on the “report or explain” principle. The statement will have to include a description of the policies, consequences and risks related to these issues. However, there will be no restrictive requirements on the reporting framework – companies will have to use internationally recognised frameworks (such as the GRI). The EU regulation is modelled on Danish national reporting legislation.The Danish government conducted an annual survey of the effectiveness and impact of this legislation, conducted by Copenhagen Business School in collaboration with the Danish Business Authority. The results are quite encouraging. More information is available on business performance in sustainability and human rights; and motivation on the part of companies is high.
The State Assets Supervision and Administration Commission of the State Council of China is currently working on an updated document called “Suggestions on Fulfilling the Social Responsibilities of State-Owned Enterprises.” Its first iteration was made in 2008 when they invited a team of experts to review the first draft and providefeedback. The head of the China GRI Focal Point was included in the consultation process.
India has introduced legislation on corporate social responsibility (CSR) spending, which was launched on April 1 this year. The “The Companies Act 2013” requires companies – including foreign companies – with a minimum net worth of $500 million and net profit of at least $5 million to spend 2% of their profit on CSR. An estimated 8,000 companies are covered. All these rules will have a multiplier effect on corporate accountability.
The Paragraph 47 Friends Group is a government-led initiative that was born in June 2012, following the recognition of the importance of corporate sustainability reporting in paragraph 47 of the outcome document of the 2012 United Nations Conference on Sustainable Development (Rio+20) – “The Future We Want”. The group, initially formed by countries that were pioneers in the practice of sustainability reporting, such as Brazil, Denmark, France and South Africa, now has ten government representatives. UNEP and GRI support the group in the form of a secretariat and provide technical support and guidance together with the other actors.
As I explained above, the Alliance partners will work together to add a chapter to the global GRI standard to make correlations with the upcoming Sustainable Development Goals (SDGs). This adaptation of the Sustainability Reporting Framework will provide businesses, stakeholders and governments with a tool to assess and create dialogue about their contribution to the SDGs. Governments will be able to use the information disclosed and reported by companies at an aggregate level to assess the performance of companies in their countries. But they will also be able to use it to obtain information about foreign companies investing in their countries. And civil society and consumer or research organizations will be able to use the data to develop benchmarks of business by sector, by region.
The preparatory work is now in full swing. We cooperate with the Sustainable Development Solutions Network (SDSN), which maps and develops performance indicators for government and national levels. Performance indicators for companies require a specific methodology. This addition to the global standard would include new elements, depending on the objectives that are agreed upon. One example could be more explicit or detailed disclosure of the financial contribution of companies to the post-2015 means of implementation. This would help governments, auditors general and other stakeholders to track and review the contributions of businesses in their own countries. There is also cooperation with the United Nations Statistics Division: here the ambition is to facilitate the capture of the private sector’s contribution to sustainable development in macroeconomic indicators developed to measure progress on the SDGs. Sustainability reporting could help with publicly disclosed data from companies.
In short: the private sector is a huge force in a post-2015 development agenda. It is critically important that companies around the world measure, monitor and publicly report their contribution to the SDGs – both in terms of financial contribution to the means of implementation and in terms of their core business impact. Let’s take today’s corporate accountability framework for sustainability reporting and transform it into a post-2015 Corporate Accountability Framework. GRI, as a member of the Business Architecture Alliance, and its many partners, is ready to help make this happen.
Translation by Marina Santa Rosa (CEBDS) of the speech by Teresa Fogelberg, CEO of GRI, during the General Assembly on 01/05.
