The business case for sustainability reporting
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Society expects corporate citizens to pay their dues and report periodically to society about how they are managing these issues and contributing to sustainable development. Moreover, businesses should be reporting on the risks posed to them by dwindling natural resources and sustainability issues such as climate change, as well as reporting on how they plan to deal with the risks in their business strategy.
CSR or sustainability reporting should be a fundamental analysis of the impact a company has on the environment and the society in which it operates. And it makes good business sense. Companies that address sustainability are building a competitive edge over companies that ignore the issues.
Sustainability reporting is a sensible way of presenting a company’s case, showing that it is being accountable for its actions. Research has shown that there are eight areas in which a business can benefit from good corporate citizenship:
- Reputation management
- Risk profile and risk management
- Employee recruitment, motivation and retention
- Investor relations and access to capital
- Learning and innovation
- Competitiveness and market positioning
- Operational efficiency
- Licence to operate.
The new reality of corporate governance
The new reality of corporate governance is that capitalisation of companies has changed. From the providers of capital being the wealthy families of the world, the individual has become the provider of capital indirectly through pension funds. A beneficial download of dematerialised scrip indicates throughout the world that on the great stock exchanges, the major shareholder is, in fact, the pension fund, says Professor Mervyn King.
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