Voluntary corporate reporting is not sufficient!

Madrid, 29 November 2011 – Non financial reporting has proved to be a very important tool in encouraging companies to implement corporate social responsibility (CSR) policies. Multinational companies have a substantial influence on the planet and on human life, and corporate non financial information disclosure is a way to ensure that companies behave responsibly and are held accountable to the community in which they operate. It is important that the latter be able to assert their social, environmental and human rights.

Despite the recognised importance of environmental, social and governance information reporting, European Governments and a majority of companies have argued that regulations on non financial reporting should be limited to voluntary standards and self-regulation. However, reality shows that voluntary initiatives are not sufficient: today, under non mandatory reporting legislations, only 2500 out of 42000 European large companies have successfully conducted non financial reporting on an annual basis.

A recent study has confirmed that soft laws do not lead to a serious improvement in corporate non financial reporting. Commissioned by the Danish research group DanWatch, the study investigated the reaction of companies to the introduction in 2009 in Denmark of a flexible legislation on company reporting. Looking at the reports of 50 major Danish companies, the study found that the number of companies reporting on CSR issues increased only marginally and that mandatory non financial reporting is a necessary step towards initiating a real change in companies’ CSR policies.

More precisely, the study found that the reporting on key CSR issues solely increased from 13% in 2008 to 21% in 2010, with more than one in four companies surveyed found to have no corporate social responsibilities in place. The 2009 Danish legislation has been considered as one of the most advanced forms of flexible reporting: this study shows that it simply fails to deliver the objectives it was created for.

In April 2013 the European Commission made a proposal amendment to the Accounting Directive to require companies operating in the European Union to include a non financial statement covering environmental, social, human right, anti corruption and bribery and diversity matters. Although Access Info and its partner association ECCJ welcome this initiative, the two organizations have drawn the attention of European decision makers on the fact that the proposal contains too much flexibility, something that could inhibit the efficiency of the legislation under negotiation.