Paragraph 47: international perspectives one year on - ACCA

26 Pages·2013·1.71 MB·English

Paragraph 47: international perspectives
one year on
About ACCA
In order to capture stakeholder
and national perspectives on
paragraph 47 (the reporting
outcomes of Rio+20), ACCA held a
series of focus groups in Australia,
Canada, Hong Kong, South Africa,
ACCA (the Association of Chartered Certified
Accountants) is the global body for professional UAE, and the UK. The participants
accountants. We aim to offer business-relevant, first-
represented a range of
choice qualifications to people of application, ability
and ambition around the world who seek a rewarding stakeholders in corporate
career in accountancy, finance and management.
sustainability reporting.
Founded in 1904, ACCA has consistently held unique
core values: opportunity, diversity, innovation, integrity
and accountability. We believe that accountants bring
value to economies in all stages of development. We
aim to develop capacity in the profession and
encourage the adoption of consistent global standards.
Our values are aligned to the needs of employers in all
sectors and we ensure that, through our qualifications,
we prepare accountants for business. We work to open
up the profession to people of all backgrounds and
remove artificial barriers to entry, ensuring that our
qualifications and their delivery meet the diverse needs
of trainee professionals and their employers.
We support our 162,000 members and 426,000
students in 170 countries, helping them to develop
successful careers in accounting and business, with the
skills needed by employers. We work through a network
of over 89 offices and centres and more than 8,500
Approved Employers worldwide, who provide high
standards of employee learning and development.
ABOUT ACCA’S GLOBAL FORUMS
To further its work, ACCA developed an innovative
programme of global forums which brings together
FOR FURTHER INFORMATION
respected thinkers from the wider profession and
academia around the world.
Rachel Jackson
Head of Sustainability, ACCA
Global Forum for Sustainability
[email protected]
In the context of increasing environmental regulation
and the need for businesses to identify and manage a
Gordon Hewitt
more diverse range of risks, the goal of the Global
Sustainability Adviser, ACCA
Forum for Sustainability is to articulate and
[email protected]
communicate the relevance of sustainability issues for
the business community and the accountancy
www.accaglobal.com/sustainability
profession. It monitors international trends and
developments in sustainability and leads ACCA’s
contribution to policy development in this area.
© The Association of Chartered Certified Accountants
J2uly 2013
Contents
Introduction 4
Stakeholder perspectives 7
Reporting status 10
Country perspectives: Is the paragraph 47 wording strong enough to change corporate behaviour? 12
Country perspectives: If paragraph 47 were to be implemented, what would be the key challenges? 14
Country perspectives: Paragraph 47 and the needs of developing countries: how can they be considered? 16
Country perspectives: Which current models and frameworks represent best practice? 18
Recommendations 20
References 22
Appendix: The focus group delegates 23
PARAGRAPH 47: INTERNATIONAL PERSPECTIVES ONE YEAR ON 3
Introduction
Paragraph 47
‘We acknowledge the importance of corporate
sustainability reporting and encourage companies,
where appropriate, especially publicly listed and large
companies, to consider integrating sustainability
information into their reporting cycle. We encourage
industry, interested governments and relevant
stakeholders with the support of the United Nations
system, as appropriate, to develop models for best
practice and facilitate action for the integration of
sustainability reporting, taking into account
experiences from already existing frameworks and
paying particular attention to the needs of developing
countries, including for capacity-building.’
‘PARAGRAPH 47’, THE FUTURE WE WANT (UNCSD 2012).
4
ABOUT THIS REPORT RIO+20 Included within the document was an
acknowledgment of the importance of
ACCA wanted to capture stakeholder The United Nations Conference on corporate sustainability reporting as a
and national perspectives, as well as Sustainable Development (Rio+20) took tool for enhancing sustainable
levels of understanding of paragraph 47, place in June 2012 and brought development. Over the six-month
to ensure that any developments reflect together world leaders, along with negotiating period, the wording was
balanced and international views. ACCA thousands of participants from significantly weakened from its original
therefore held a series of focus groups governments, the private sector, NGOs state. There was strong and wide
in six countries around the world, and other groups, to shape a collective campaigning by many organisations,1
including: approach to reducing poverty, including ACCA via its policy paper
advancing social equity and ensuring Making a Difference at Rio+20 (ACCA
• Australia environmental protection. 2012), calling for a strengthening of the
• Canada original wording. Although a number of
• Hong Kong At Rio, and at a number of preliminary national delegations wanted to have the
• South Africa negotiations in the months preceding text excised from the document
• UAE the June conference, negotiations entirely, it is encouraging that even the
• UK. focused on the text of the conference weakened text remained in the final
outcome document – The Future We document. The text as it stands keeps
The focus groups brought together a Want (UNCSD 2012). The document set corporate sustainability reporting on
total of 49 experts in sustainability and out a common vision for eradicating the political agenda, and it does make
corporate reporting, who represented a poverty and unsustainable patterns of reference to future support from the UN
range of stakeholder groups, including: production and consumption, and system. Further to that, the Group of
identified the range of actors (including Friends of Paragraph 47 (GoF) has used
• corporates the private sector) necessary to engage the text as a catalyst for action on the
• accountants when addressing such wide reaching topic of corporate sustainability
• reporting and CSR specialists and complex issues. reporting and is actively looking to
• investors recruit new members.
• NGOs.
This report presents the key opinions
expressed during both the six focus
group discussions and in response to a
questionnaire that was circulated, from
stakeholder and national perspectives.
It represents the majority view, and may
not be shared by all participants
involved.
1. Such as the Corporate Sustainability Reporting
Coalition (CSRC), a coalition of financial
institutions, professional bodies, NGOs and
investors that is being convened by Aviva. ACCA is
a member.
PARAGRAPH 47: INTERNATIONAL PERSPECTIVES ONE YEAR ON 5
GROUP OF FRIENDS THE POST-2015 DEVELOPMENT
AGENDA
In order to promote and advance best
practices on corporate sustainability While negotiations at Rio+20 failed to
reporting, the governments of Brazil, result in a global policy framework on
Denmark, France and South Africa sustainability reporting, there is
formed the Group of Friends of potential for stronger agreements to
Paragraph 47 (GoF) at the Rio+20 come out of the post-2015 development
conference. The GoF is being agenda. At present, the UN is working
supported by the United Nations with governments, civil society and
Environment Program (UNEP) and the other partners beyond the expiry of the
Global Reporting Initiative (GRI) and Millennium Development Goals (MDGs)
aims to create a platform where the in 2015.
providers of corporate sustainability
reports (companies) can communicate The process followed on from Rio+20,
with the users of reports (investors and and is due to continue through 2013
other stakeholders), reporting standard- and 2014. In order to inform the
setters, UN agencies and civil society process, the UN formed a high-level
groups. In doing so, the GoF is seeking panel of experts, who published a set of
to progress corporate sustainability recommendations in May 2013.
reporting on a government level, in a Included were a number of references
manner that unites the needs of a range to corporate sustainability reporting,
of stakeholders (UNEP 2013). Specific including calls for a mandatory ‘comply
efforts of the GoF include: or explain’ regime to be phased in for
all companies with a market
• creating a ‘roadmap’ for further capitalisation above $100 million
promotion of corporate equivalent.
sustainability reporting (CSR),
including options for capacity
building in developing countries
• drawing up a broad inventory of
existing best practices in the field of
CSR that can serve as models
• engaging additional governments
with the GoF.
Since its creation in June 2012, the GoF
founding members have been joined by
the Norwegian and Colombian
governments.
6
Stakeholder perspectives
This section presents COMMON PERSPECTIVES There are changing pressures to
report.
common and specific
Sustainability reporting will help. The stakeholders considered that the
stakeholder perspectives All stakeholder groups thought that current main drivers of sustainability
greater levels of sustainability reporting reporting were stakeholder pressure
that were expressed
would help efforts to address global and marketing benefits. When asked
across the six focus environmental and social issues. They what the expected key drivers would be
groups. It represents the saw a need for a focus on corporate in five years’ time, stakeholder pressure
performance (and on better was still important, but legislation had
majority view, and may management) to ensure that companies emerged as a key driver.
not be shared by all make progress on addressing their
environmental and social impacts. The need to use current frameworks.
participants.
Current reporting frameworks should be
Government regulation is important. used to inform and develop international
The majority of stakeholder groups best practices on sustainability
thought that government-led action reporting. These frameworks were
was an important means of increasing viewed as extremely useful and well
the quantity and quality of corporate established, so it would be inefficient to
sustainability reporting. Many try and ‘reinvent the wheel’.
companies would not attempt to issue
sustainability reports without there Rio+20 was a missed opportunity.
being some form of regulatory or There was disappointment at both the
legislative requirement to do so. level of government commitment at the
Regulations can be seen as a means of Rio+20 summit and the final text of
‘kick starting’ wider adoption of paragraph 47, which is too weak to
sustainability reporting before catalyse any corporate action. This was
companies begin to understand the seen as a missed opportunity to send a
reputational, commercial and strong message to corporates
performance benefits of doing so. underlining their part in sustainable
Nonetheless, a box-ticking approach development. It was argued that
should be avoided, any legislation governments paid more attention to
should be carefully thought through, addressing the fallout from the financial
and stakeholders should be consulted crisis and euro debt crisis, themselves
during their development. symptoms of an unsustainable
economy, than trying to make any
progress on sustainable development.
Paragraph 47 has too few friends.
There was surprise at the low number of
countries joining GoF, and stakeholders
thought that the EU, Korea and many
more Latin American nations could have
been more vocal supporters of
paragraph 47.
PARAGRAPH 47: INTERNATIONAL PERSPECTIVES ONE YEAR ON 7
Stakeholder perspectives, continued...
CORPORATE PERSPECTIVES ACCOUNTANT PERSPECTIVES REPORTING AND CSR SPECIALIST
PERSPECTIVES
Reporting alone is not sufficient. Behaviour is influenced by reporting.
Reporting is an important way in which Reporting tends to drive corporate There is a need to involve industry
companies can address environmental behaviour as it forces companies to groups.
and social problems, but reporting measure their environmental and social Although governments should play an
alone will not be sufficient. Companies impacts, and this provide better important role in determining what
need to commit to the development visibility that facilitates managing companies should report, industry
process, and reporting should flow out performance. groups should also be closely involved.
of wider corporate initiatives. Ideally, governments would collaborate
Market mechanisms are more with industry groups in developing
Let the company decide. effective. reporting standards, and take a
A number of corporate stakeholders felt Market mechanisms, such as stock regulatory position to ensure
that companies would be better left to exchange disclosure requirements, are compliance with the standards.
decide for themselves the level and more effective tools for increasing the
scope of reporting, rather than being quantity of sustainability reporting than The right data must be measured.
subject to regulation. This view regulatory/legislative factors. Laws and Greater levels of sustainability reporting
diverged from that of other stakeholder regulations tend to require companies would help global efforts to address
groups, who largely thought that to meet a minimum standard, while environmental and social problems, but
greater levels of regulation would be an market mechanisms provide scope for companies would need to collect the
important means of increasing the level companies to differentiate themselves right kind of data and present them in
of sustainability reporting. by going further than set standards. manner that is consistent, comparable
and reliable, to ensure that reports are
useful to the company’s stakeholders.
8
INVESTOR PERSPECTIVES NGO PERSPECTIVES
Guidance and assistance are needed. More than reporting is needed.
Companies need guidance and While many countries have seen an
assistance to help determine the scale increase in the level of reporting,
and scope of reporting. This would environmental and social problems
ensure better consistency and have also increased. Greater levels of
comparability, providing investors with transparency allow stakeholders to
a greater insight into the role of the understand a company’s impacts, but
corporate sector in causing and solving they can only be minimised through
sustainability problems, which would specific corporate action.
then inform investment decisions.
GRI is preferred.
NGOs preferred the Global Reporting
Initiative (GRI) reporting framework to
all others, as it encourages companies
to take into account and report to a
wider range of stakeholders.
PARAGRAPH 47: INTERNATIONAL PERSPECTIVES ONE YEAR ON 9
Reporting status
CANADA
Canadian companies, along with those in many countries
around the world, have an increasing awareness of the role
that corporate information disclosure and transparency can
play as an instrument for enabling better corporate
economic, environmental and social performance. This is
demonstrated well by the fact that 79% of Canadian
companies published some form of sustainability disclosure
in 2011, an increase from 62% two years earlier (KPMG 2011).
Although sustainability disclosure in Canada is predominantly
a voluntary process, there are a few mandatory reporting
standards that focus mainly on environmental impacts and
liabilities.
The Canadian government has not historically shown
leadership in sustainability issues in recent years, with the
country opting to withdraw from the Kyoto protocol in 2011
and drawing criticism at the Rio+20 conference. The role of
industry and accounting bodies will therefore be important in
setting standards for sustainability reporting in Canada. This
may change in the future, as the federal government in
Canada is making moves towards greater transparency for the
extractives industry as a means of ensuring better
governance of natural resources.
UNITED KINGDOM
Levels of sustainability reporting in the UK are very high by
global standards, with 97 of the companies listing on the
FTSE 100 producing sustainability reports in 2011 (Pilot 2011).
The fact that so many companies are producing reports
demonstrates that the corporate sector in the UK is aware of
the importance of sustainability to its long-term success. SOUTH AFRICA
Many companies in the UK go beyond producing a
sustainability report, with 56% of the FTSE 100 companies South Africa has been a leader in sustainability reporting,
integrating corporate responsibility into their group strategy driven largely through the corporate governance codes
(Pilot 2011). This high level of reporting is due in part to the developed by the King Committee on Corporate
laws and regulations set by government, as the UK has a Governance. In recent years, the Johannesburg stock
range of mandatory and voluntary standards, codes and exchange (JSE) has included within its listing requirements
guidelines for sustainability reporting. that companies must adopt the principles detailed in the
King III report and report their progress on a ‘comply or
explain’ basis in their annual report. As a result, South Africa
became the first country with mandatory integrated
reporting for listed companies.
South African delegates were strong supporters of
sustainability reporting at Rio+20, as a means of enhancing
global development efforts. South Africa was also a founding
member of the GoF. As a result, South Africa is in a position
to influence international efforts to spread best practice on
corporate sustainability reporting around the world.
10