hankyoreh

the Chief Executive of the Global Reporting Initiative

“Transparent social reports make corporate sustainability possible.”

This was a remark made at the 2008 international Amsterdam Global Conference on Sustainability and Transparency by the Global Reporting Initiative, an organization that sets the global standard for sustainability reporting. Some 1,000 entrepreneurs, financial experts, scholars and non-governmental organization activists participated in the conference, held from May 7 to 9. If a company reports with transparency its activities in the fields of the environment, labor and human rights, a company’s internal and external sustainability could increase, participants said. The scope of “corporate transparency,” which generally focuses on accounting, is spilling over into a kind of “social transparency.”

Corporate transparency is a fundamental requirement for the efficient operation of the market economy. In other words, if an investor has correct information about a company, money can be invested efficiently and the overall efficiency of the economy will increase. However, the current global trend is that corporate transparency is emerging as an important factor in social fields, in addition to being part of traditional corporate fields such as accounting and anti-corruption monitoring. As a result, companies may have to be prepared to make public their efforts to facilitate sustainable management, including reductions in greenhouse gas emissions or reports on the number of irregular workers they hire. This is because investors and consumers alike are increasingly basing their stock investment and consumer purchase decisions on a company’s level of social responsibility.

To inform the public of the efforts a company is making to that end, activists are increasingly calling for the government to mandate that companies publish sustainability reports. Furthermore, if the government were to require that companies file these reports in a standardized format, it would help investors and consumers make their decisions. For example, Sweden requires some 60 state-run companies to file sustainability reports. Asian nations such as China and Indonesia are increasingly requiring state-run firms and big companies to issue sustainability reports as well. Swedish Deputy Prime Minister Maud Olofsson said, “As accounting rules are commonly held around the world after standardization, there should be a global standard for social reports.”

Transparency in sustainability reporting will eventually rely on market demand. However, there are signs of change from consumers and the financial industry, two of the biggest markets for companies. A survey of some 2,000 investors, consumers and NGO activists conducted by the GRI found that 90 percent of respondents, who read sustainability reports from various companies, said their views about the companies were affected by the reports. Goldman Sachs executive Andrew Howard said that a company’s environmental and social achievements act as a barometer, demonstrating how the company manages itself in the long term.

Please direct questions or comments to [englishhani@hani.co.kr]