Applause!!! Europe Requires Sustainable Reporting for Large Public Companies
By Michael Schweibinz
The European Parliament has passed a historic law that will require major businesses to include sustainability factors as part of their annual financial reports. By 2017, all publicly traded companies that employ over 500 workers will be required to abide by this new standard. No doubt, this new law will reverberate through smaller companies as well, as they grow and prepare to pass the 500-worker threshold.
These "public interest companies" must:
- Report on environmental, social and employee-related, human rights, anti-corruption and bribery matters.
- Describe their business model, outcomes, and risks of their policies regarding these topics, as well as their diversity policy for management and supervisors.
This new European law will undoubtedly encourage the global economy to transition towards a more “sustainable, low-carbon economy for the future.” It’s also likely to inspire businesses to adopt acknowledged reporting frameworks such as the Global Reporting Initiative (GRI), Sustainability Reporting Guidelines, and the U.N. Guiding Principles on Business and Human Rights.
Experts are predicting that the number of firms using ESG reporting will more than double compared to the current scenario, “and they will do so on their policies, risks and result in relation to society, the environment and human rights.” Today, 2,500 businesses voluntarily produce sustainability reports; by 2017, that figure will of likely reach nearly 7,000.
At First Affirmative, we loudly applaud the approval of this policy. We have long held the view that one the best ways to improve business conduct and impact is with more transparency. The wise words of former Supreme Court Justice Louis D. Brandeis ring as true today as they did in 1913 when he wrote: “Sunlight is said to be the best of disinfectants.”
And we agree with Richard Howitt, the European Parliament Rapporteur on Corporate Social Responsibility, that “the law will prevent corporate scandals and make a leap in the transition towards a sustainable, low-carbon economy for the future.”
At First Affirmative, we understand that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?
Posted: April 30, 2014