Why businesses need sustainability strategies and 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 sustainability.
Some of the evolving issues in implementing sustainability strategies include:
- An enhanced awareness of the threats posed by environmental mis-management and rapid economic development
- More detailed information and understanding about the effects of physical phenomena such as global warming, deforestation and water shortages
- Growing concerns about social and demographic factors, such as employment practices, health and safety, disease management and poverty and exploitation
- More effective communication, so that people are better informed and, in many cases, have a greater sense of conscience; and
- Increased empowerment of a wide range of different stakeholders who can influence an enterprise directly or indirectly.
CSR should be a fundamental analysis of the impact a company has on the environment and the society in which it operates. Moreover, 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 and showing that the company is being accountable for its actions. 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.
Research conducted in Europe in the 1990s, prior to the GRI guidelines being issued, showed that CSR disclosures varied from country to country and industry to industry. They also found that larger companies were more likely to make disclosures than smaller ones.
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.
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Sustainability Reporting
Today financial reporting is, but one dimension of an organisation’s responsibility to report to society. Indeed financial reporting on its own does not provide the user with sufficient information to assess organisational total performance.
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The growing need for expanded corporate reporting
"There is no doubt that the world we knew before the global economic meltdown will not return. The causes of the meltdown will not disappear, and lurking behind them is another set of even more fundamental issues facing humanity. "
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