It’s time for transformative change towards greater market transparency. As our latest report, The Transparent Economy, raced to completion, Harvard Business Review published a cover story called ‘Leadership in the Age of Transparency.’ The introductory text was designed to worry many in the Boards and C-suites of major corporations: “Consumers know everything about your company,” it ran, “not just its carbon emissions but its countless other ‘invisible’ effects on the globe. That has changed the rules of business forever.”
More than 50 percent of executives consider sustainability—the management of environmental, social, and governance issues—“very” or “extremely” important in a wide range of areas, including new-product development, reputation building, and overall corporate strategy, according to a recent McKinsey survey.
Yet the uncomfortable, inconvenient truth is that most companies are not taking a proactive approach to managing sustainability: only around 30 percent of executives told McKinsey that their companies actively seek opportunities to invest in sustainability or embed it in their business practices.
This is the context for the current program of work, which explores how sustainability reporting fits into the wider drive for a transparent—and ultimately sustainable—economy.
Much progress has been made, but we are still a long way from the desired Transparent Economy we envision. So why is this important? In headlines, sustainability will not be achieved without broader and deeper forms of accountability (across companies, sectors, economies and generations), and these new forms of accountability cannot be achieved without new forms of transparency and stakeholder engagement.
After two decades of sustainability reporting, the foundations appear to have been laid for a continuing expansion of GRI-based reporting. If the best of current practice were to spread—for example Denmark’s “report or explain” requirement of companies—things could move both fast and far. Much, however, will depend on the wider economic and political contexts.
The GRI community—according to our recent new survey[i]—wants to see environment, social and economic disclosures, in that order. Most interestingly, respondents want to know where a reporting company thinks it needs to collaborate and partner. Environmental issues (68%) still slightly eclipse social issues (65%), with economic issues (51%) significantly behind. Happily, a spectacularly low result (3%) was recorded for the suggestion that only areas that can be related to financial results should be included.
[i] The survey was conducted online during February/March 2010. [2292] survey invitations were sent out, with [447] respondents completing the survey—a [20%] response rate.
