While general expectations are decidedly low, might Rio deliver progress on reporting standards?
In the run-up to the Rio Earth Summit, leading companies are holding back in predicting any kind of breakthrough agreement comparable to the historic 1992 Earth Summit. Restraint and “mildly hopeful” sentiments are the overriding tone, even though, for the first time, some workable large-scale programmes now exist.
The question is whether Rio can drive wider adoption of sustainability – and on this front the expectations are generally pessimistic.
“I wish governments were forcing a new framework, but I don’t yet see the ability of governments to come to big global agreements,” says Mike Barry, head of sustainable business at UK retailer Marks & Spencer. “Bringing in 40 to 50 businesses to discuss the sustainable future at events such as the Davos World Economic Forum are more likely to get business moving forward.”
There are perhaps a few chinks of light, however.
Resource framework
Where Rio could potentially assist business is in providing a structural framework for establishing natural resource targets to replace or supplement the soon-expiring Millennium Development Goals, says Susanne Stormer, vice-president for corporate sustainability at Novo Nordisk. “That proposal has been tabled and it is not going to materialise entirely from Rio, but that is what I hope to see,” Stormer says.
Also in Stormer’s top three wish list are further expansion of Puma’s environmental profit and loss account and a concerted effort to back an international policy framework for mandatory reporting proposed by the Corporate Sustainability Reporting Coalition.
The mandatory reporting initiative, backed by the UN Global Compact, asks UN member states to develop a convention requiring all listed and large private companies either to integrate sustainability issues within their annual report and accounts, or to explain why they have not done so.
It is backed by a group of financial institutions, professional bodies, NGOs and investors, but has gone nowhere in negotiations in New York. The talks have stripped the flexible “comply or explain” element, leaving Steve Waygood of Aviva Investors to lament the initiative’s low chance of passage. “Currently, 75% of companies do not report on sustainability issues at all,” Waygood says in a recent blog.
“An international convention would level the playing field and engage more companies on the journey towards business sustainability,” Waygood says. “Without this convention – at the current rate of progress – it will be decades before sustainability reporting is common practice across global markets. Unless this is solved, we, as investors, will not be able to play the part that the international community would like us to play.”
Both Barry and Stormer say they back the initiative. Klaus Leisinger of the Novartis Foundation for Sustainable Development is less excited, though. He says: “As a member of the Global Compact, Novartis reports extensively in the context of its communication on progress, as well as in its annual report and standalone GRI report. I cannot see an advantage for duplicative efforts.”
Backers say that because the initiative is seen as being a mandatory imposition on private companies, many have responded with scepticism, Stormer says. “There is pressure for this coming from investors but there would also have to be recognition by companies that there’s a potential upside.