by Tarcia Hendricks

The Global Reporting Initiative

Sustainability reporting policies: today's best practice, tomorrow's trends

More governments worldwide are insistent that companies disclose information on climate change and labour standards

The University of Stellenbosch Business School’s Centre for Corporate Governance in Africa (CCGA) is a project partner with the Global Reporting Initiative, the United Nations Environment Programme and KPMG Climate Change & Sustainability Services. 

“The report confirms that more governments worldwide are beefing up their requirements for companies to disclose information on topics such as climate change and labour standards. The reliability of information reported - for example greenhouse gas emissions - is key as governments start to introduce new market-based schemes for climate change and other issues,” says Dr Cornis van der Lugt, Senior Research Fellow at the USB’s CCGA. 

According to him, South Africa is taking the lead, along with Brazil and China, in having requirements for reporting and social responsibility being advanced via its stock exchange. Like some European countries, the Chinese government is also making sustainability reporting mandatory for state-owned companies - a model that South Africa may need to consider to advance efficiency in public services.

Van der Lugt adds: “At the GRI Conference where the report was launched on Friday, international participants showed high interest in progress made in South Africa with implementation of reporting requirements set by the Johannesburg Stock Exchange, as well as leading innovation by South African corporates in integrating annual financial and sustainability reporting.

Like the Carrots & Sticks report, discussions also reflected the need to align international and national standards in accounting and reporting in the same way that governmental departments need to streamline their requirements for companies to disclose performance data. 

The "Carrots and Sticks" series of reports were initiated in 2006 by Van der Lugt and Daniel Malan, Director of the Centre for Corporate Governance in Africa. Published in 2006 by KPMG and UNEP, the first edition of the report covered voluntary and mandatory requirements for disclosure in 19, mainly OECD (Organisation for Economic Co-operation and Development) countries, but also including South Africa and Brazil.

The second edition, published in 2010 by KPMG and UNEP with the Centre and the Global Reporting Initiative (GRI), covered 32 countries and listed 151 initiatives of which 62% were mandatory. The third edition, published this year by the CCGA and its international partners, covered 45 countries - many OECD and emerging markets - and lists 180 initiatives of which 72% are mandatory. 

Updates on country level legislation and self-regulatory requirements for reporting of environmental, social and governance (ESG) information are provided by GRI national networks and national offices of KPMG. The main role of the CCGA has been to join analysis of the collected information and co-author overall conclusions about international trends.

The series of reports shows increasing introduction of mandatory requirements, typically by legislators in OECD markets and by stock exchanges (such as the JSE) in emerging markets. Generic requirements are complemented by thematic initiatives such as the Carbon Disclosure Project and sectorial initiatives such as codes for the banking sector.

Research by the CCGA in this field supports policy formulation, harmonization of financial and non-financial reporting standards as well as convergence among ESG standards in Africa, emerging markets and beyond.



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Issue 68