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March 13, 2012

Momentum Grows for Integrated Reporting
    by Robert Kropp

With the Rio+20 Conference on Sustainable Development three months away, numerous voices speak out on the need for governments to mandate sustainability reporting by large companies. -- A report entitled Re silient People, Resilient Planet: A Future Worth Choosing, issued by the UN High-level Panel on Global Sustainability in January, lists among its 56 recommendations one that states, "Governments should promote and incentivize the inclusion of long-term sustainable development criteria in investment and transactions conducted by companies, including financial transactions."

"Business groups should work with Governments and international agencies to develop a framework for sustainable development reporting, and should consider mandatory reporting by corporations with market capitalizations larger than $100 million," the recommendation continues.

In addition, the recently published Zero draft of the Future We Want document by the United Nations Conference on Sustainable Development (UNCSD) calls for "a global policy framework requiring all listed and large private companies to consider sustainability issues and to integrate sustainability information within the reporting cycle."

The draft document was published in advance of the Rio+20 conference, to be held in Rio de Janeiro in June. The objective of the conference, according to UNCSD, "is to secure renewed political commitment for sustainable development, assess the progress to date and the remaining gaps in the implementation of the outcomes of the major summits on sustainable development, and address new and emerging challenges."

The Corporate Sustainability Reporting Coalition, a network of investors organized by Aviva Investors, has contributed its expectations for a meaningful outcome to the conference as well.

"It is now almost twenty years since the first Earth Summit," the Coalition states. "If a Sustainable Green Economy is to be reached, the time has now come for sustainability reporting to become standard practice."

The Coalition has called on governments "to develop a Convention that mandates company boards to consider sustainability issues, and to integrate those issues that they consider to be material within the reporting cycle, in their Annual Report and Accounts or explain why if they do not."

At a meeting held earlier this month, Steve Waygood, chief responsible investment officer at Aviva, described the recommendations for integrated reporting by the High-level Panel on Global Sustainability as "a huge step forward."

Waygood recommended that companies required to report be expanded to include large unlisted companies. He also suggested that companies observe a comply or explain provision by which the must explain to stakeholders why they have not chosen to integrate sustainability into their reporting.

At the meeting, Craig Bennett of Friends of the Earth took issue with the voluntary aspects of comply or explain.

"If anyone stood up and said companies should voluntarily report on financial matters, they would be laughed out of the room," Bennett said. "So why not on their social and environmental reporting?"

Waygood also noted that satisfactory frameworks for integrated reporting by companies already exist, citing the Global Reporting Initiative (GRI) as an example.

GRI was instrumental in the 2010 formation of the International Integrated Reporting Committee (IIRC), and is a member of the Corporate Sustainability Reporting Coalition as well. Its G4 Guidelines for sustainability reporting will, GRI states, "provide companies with a stepping stone towards integrated reporting and, in the context of the IIRC's framework, help users formulate content for integrated reports."

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