Civil society and trade unions are today urging the European Commission to introduce new regulation requiring companies in both industrialized and developing countries to report on their environmental, social, human rights and governance impacts.
The Global Reporting Initiative, the European Coalition for Corporate Justice, and the European Trade Union Confederation are making the calls as the Commission closes its consultation on non-financial disclosure by companies.
The organizations have each submitted replies to the consultation asking for new regulation to bring non-financial reporting by medium and large companies in line with the needs of contemporary society.
Companies stakeholders, including directly affected communities and the public at large, need comprehensive and credible information on corporate social and environmental impacts to identify problems with and monitor progress of the companies they deal with.
Investors also need such information since they are increasingly concerned with the environmental and social policies and risk management strategies of the companies they invest in.
The current system does not create a level playing field among business, as in most EU countries reporting by companies on their non-financial impacts is voluntary. A number of companies currently publish voluntary reports on the environmental, social and governance impacts of their business. However, because of their voluntary nature, these do not always provide a full picture of a companys activities.
Mandatory, standardized reporting would ensure that reports are comparable and that all companies would have an equal advantage: since all organizations would be required to report on the same issues, whether their impact is positive or negative.
Teresa Fogelberg, Deputy Chief Executive at the Global Reporting Initiative, said:
Although reporting on sustainability impacts is becoming increasingly commonplace, it is still not a mainstream activity. At the Global Reporting Initiative, we produce guidelines that enable all companies and other organizations to produce comparable reports on their sustainability performance. We are not asking the European Commission to reinvent the wheel, but to look at what many big companies are already doing and create new regulation that requires all large and medium sized companies to be transparent about the impact they are having on the world. Only then can we follow a clear path to a sustainable economy.
Filip Gregor, Chair of the Board of the ECCJ said:
A companys environmental and social impacts are a crucial part of its business. We need a mandatory system that allows investors and other stakeholders to assess the companys performance. That means that information should be based on clear indicators, covering core areas including human rights, environmental standards and corruption risks. These will allow a companys performance to be compared with other companies in the sector and allow investors and others to assess the companys exposure to risk.
John Monks, General Secretary of the ETUC said:
Workers are deeply concerned with the employment, social and environmental impacts and policies of their companies, both as employees and as citizens. It is high time that companies be required to provide information on these impacts on the basis of comprehensive and comparable standards. Workers should be involved not only in the process of developing these standards at the supranational level but should also have a right to engage management on this issue at the company level.
The GRI, ECCJ and ETUC call for regulation that must ensure:
Mandatory reporting, using clearly defined indicators developed with the involvement of stakeholder groups
Reporting throughout the supply chain
Objective information on whether the company has been involved in, or risks being involved in, violations of international standards for human rights and environmental protection
The UN Special Rapporteur on Business and Human Rights, John Ruggie, has highlighted some gaps in corporate governance.  The Commission should draw on his recommendations in developing regulation and ensure that all relevant stakeholders, including business, workers and civil society, are fully consulted during the process.