As more than 100 national leaders - and a supporting cast of thousands - turn their attention to South Africa and the upcoming World Summit on Sustainable Development, it seems appropriate to ask where the global accounting and auditing profession stands on the issue of sustainable development.
In the ongoing debate about reform of financial reporting, one important point has been lost. However, accurate and complete they may be, financial reports use only economic data on past performance as the basis for assessing management ability and future corporate health. Such reporting will be of limited value until it provides a truly three-dimensional picture of companies’ vital signs.
As the summit will doubtless highlight, this should include information about how the corporate sector is contributing to the alleviation of poverty and the improvement in social and ecological systems.
In a world facing challenges and change from many quarters, companies’ labour, social and ecological policies and activities, for example, may say far more about future performance than data on last year’s turnover.
Happily, the framework for reporting such data has been developed. The Global Reporting Initiative ‘sustainability reporting guidelines’, used globally by more than a hundred leading companies, provide information which should meet the needs of boards and CEOs, employees, shareholders, analysts and the wider public. A new 2002 version has been approved and will be published this month.
Corporations have nothing to lose – and indeed much to gain – from increased disclosure as advised by the GRI. The maxim ‘what you can’t measure, you can’t manage’ should encourage CEOs, investors, analysts, and the community, to develop a better understanding of the true signs of corporate performance.
Directly or indirectly, this month’s WSSD seems set only to amplify calls for further action on corporate disclosure.