UN study proposes new guidelines for corporate reporting on environment labour rights

A “carrots and sticks” approach coupling mandatory regulation with voluntary standards will lead to better reporting by corporations of their performance in non-financial areas such as environmental protection, labour standards, human rights and anti-corruption measures, according to a new United Nations study released today.“It is clear that regulation by itself cannot provide all the answers,” UN Environment Programme (UNEP) Executive Director Achim Steiner told an international conference in Amsterdam at the launch of new guidelines for reporting on key elements of the UN Global Compact, Secretary-General Kofi Annan’s six-year-old initiative to advance good corporate citizenship and responsible globalization.“It needs to be balanced by appropriate market measures and voluntary action. There is both a public and a business case for non-financial disclosure and sustainability reporting in particular,” he added of the report – Carrots and Sticks for Starters – jointly prepared by UNEP and Global Sustainability Services of KPMG, a worldwide network of professional firms providing Audit, Tax, and Advisory services.The study gives an overview and analysis of current trends and approaches in mandatory and voluntary standards for so-called sustainability reporting and corporate responsibility. It argues that balanced regulation should highlight the importance of a publicly recognized set of performance indicators and stresses the need for independent verification, stakeholder engagement, and the role of government in enforcing a level playing field and introducing incentives such as relieving reporting companies from obligations to report separately to individual government departments.“The idea of a sustainability report is still a novelty in many parts of the world,” Mr. Steiner said. “We still have some basic, foundational work to do in introducing to thousands of large companies the value of systematically quantifying non-financial performance, using it as a management tool and communicating about it publicly.” The new guidelines, introduced at the Global Reporting Initiative (GRI) Sustainability Reporting Conference, make reporting simpler and include requirements to describe management approaches and progress. Their online format is aimed to make reported information more easily comparable for investors and financial analysts.“Accountability and transparency are vital ingredients for gaining public confidence and a societal ‘license to operate’”, Mr. Steiner said. “From the global to the local, agreed frameworks for reporting are the basis upon which we build in moving closer to achieving these objectives. The GRI has played a leading role in helping all of us in addressing this challenge.”