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September 16, 2004
Report Advocates Breaking Down Barriers to Global Corporate Sustainability Reporting
    by William Baue

An Association of Chartered Certified Accountants and report tracking sustainability reporting worldwide finds its growth hampered by obstacles.

Last week saw the release of a report gauging the status of corporate sustainability reporting throughout the world. Looking back, the report recognizes significant growth in such reporting, but looking at the present and future, the report laments a number of obstacles blocking greater uptake of what it considers a necessary development for companies. The report comes from the Association of Chartered Certified Accountants (ACCA), which established the world's first environmental reporting awards in 1990, and, the world's largest directory of corporate non-financial reports.

"Global progress in sustainability reporting is indisputable," states the report, entitled Towards Transparency: Progress on Global Sustainability Reporting 2004. "In a relatively short space of time much has been achieved, but we should not assume that the task is even half completed."

"The number of companies reporting is insignificant when compared with the total number of businesses operating in the world today," adds the report, which pegs the number of companies worldwide producing sustainability reports at 1,500 to 2,000.

Obstacles identified by the report include lack of consistency in approaches to external assurance, which hampers credibility; weak support from governments guiding or mandating sustainability reporting; and slow buy-in by mainstream investors.

"While pressure is being increasingly brought to bear by socially responsible investors, [support for sustainability reporting] has yet to be taken up seriously by mainstream investors," the report states. "We need to identify the dynamics of successful reporting and work to develop the necessary initiatives, codes, regulations, and other factors which will remove the blockages in slower regions and business sectors."

Toward this end, the report includes profiles of exemplary sustainability reports in each of the geographic regions covered: Africa and the Middle East, the Americas, Asia and Australasia, and Europe. Profiles, culled from winners of ACCA reporting awards that now cover 20 countries, address issues such as reporting processes, assurance mechanisms, and the business case for sustainability reporting.

For example, the report cites a statistic from the Anglo American Platinum (ticker: ANANP) of South Africa sustainability report that the company's HIV/AIDS program for employees saved the company 42 million rand in 2003 and may save 1,400 lives a year.

"[T]he cost of reporting itself is minimal . . . our employees and shareholders increasingly require that we are socially and environmentally responsible," said a company spokesperson. supplies robust statistics tracking past and current trends in sustainability reporting. While information on developed economies (such as Western Europe and North America where sustainability reporting is advanced) is readily available, data and analysis of sustainability reporting in developing regions is more rare and hence of great interest.

For example, the report reveals how Brazil is one of the only South American countries with significant sustainability reporting. This trend resulted from promotion of social reporting by the Brazilian Institute of Social and Economic Analysis in the late 1990s and the Ethos Institute for Companies and Social Responsibility publishing a corporate social responsibility reporting guide in 2001.

Furthermore, Global Reporting Initiative (GRI) guidelines, the primary standard-setter for sustainability reporting, have been translated into Portuguese for Brazilian audiences. Brazil accounts for 3 percent of sustainability reports produced in the Americas from 2001 to 2003, based on a sample of 708 reports tracked by Chile, Mexico, Costa Rica, Argentina, Venezuala, and Colombia combined account for less than 3 percent, while Canada accounts for 31 percent and the US accounts for 63 percent.

GRI guidelines have also been translated into Japanese and Russian, through perhaps for opposite reasons. The expansion of socially responsible investing (SRI) in Europe and North America created a ripple effect in Japan encouraging corporate transparency and driving sustainability reporting. Japan accounts for almost half (49 percent) the 893 sustainability reports tracked by in Asia and Australasia in 2001 to 2003.

Russia, which accounts for only 0.2 percent of the 1,964 European sustainability reports tracked in 2001 to 2003, represents a significant potential for increased sustainability reporting as a developing economy with a huge population base. Integration into the global economy is driving sustainability reporting elsewhere in Eastern Europe, as GRI guidelines are being piloted in the Czech Republic, Croatia, and Hungary, which jointly account for just over 1 percent of reports in 2001 to 2003.


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