Sustainability reporting in the EU
04 April 2013

​Europe plays a pivotal role in driving sustainability disclosure at a global level. Recently, the European Parliament took steps to progress the implementation of the EU strategy 2011-2014 for Corporate Social Responsibility (CSR), by adopting two European parliament resolutions on CSR. This advancement by the European Parliament marks an important development in government activity around corporate transparency and CSR policy in Europe.
​Sustainability reporting has been recognized as being key to achieving the EU’s sustainable growth objectives and there appears to be growing consensus amongst stakeholders that a flexible ‘report or explain’ approach to sustainability reporting, based on the use of internationally-recognized frameworks, is what is needed to increase comparability and transparency among companies.

On 6 March, GRI attended a high-level event at the European Parliament on ‘Transparency, reporting and disclosure on non-financial information: the implementation of the European Union’s strategy on Corporate Social Responsibility’. The event brought together representatives from the European Parliament, the European Commission, the Council of the European Union, national governments, and a wide variety of stakeholders from different sectors, to discuss the future of CSR, sustainability reporting and the disclosure of non-financial information in the EU.

Co-hosted by members of the European Parliament and moderated by GRI Chief Executive, Ernst Ligteringen, the event provided a platform for multi-stakeholder engagement and dialogues across various sectors. There was general acknowledgment of the ever-increasing demand for transparency and sustainability by consumers and investors, and companies present at the event stressed that they primarily report to address these increasing demands.

Arlene McCarthy, Member of the European Parliament (MEP), opened the event’s debate, stressing the need to engage this situation, and referred to the role of governments and legislators in providing guidance. Fellow MEP, Cecilia Wikström added that a ‘comply or explain’ approach to sustainability reporting policy would address this need without creating unnecessary burdens or restrictions.

During the debate, existing policy approaches to sustainability reporting, such as the Danish and French models, were mentioned as examples of good practice that show how smart policies can benefit society and business.

“It was very promising to see such a great turn-out of key stakeholders at this event,” says GRI’s Senior Manager Policy and Government Affairs, Pietro Bertazzi. “The event was a unique opportunity for different actors to come together to discuss the need for greater transparency. GRI is committed to facilitating the dialogue on sustainability reporting in the EU and looks forward to the upcoming launch of the European Commission’s proposal on non-financial disclosure.”

During the event, it was acknowledged that the use of internationally-recognized guidelines and tools makes sustainability reporting accessible and brings value to organizations, and the GRI Guidelines were acknowledged as being an excellent Framework to follow.

The issue of materiality in sustainability reporting was brought-up, and participants agreed that to ensure real transparency and sustainability, companies need to focus on what is material to them and their stakeholders, and thus only disclose information that is relevant and meaningful. It was further agreed that using the existing sustainability reporting models is fundamental to providing comparability and avoiding fragmentation of the current CSR system.

Concerns regarding the burden of reporting were also raised. These concerns were in particular regard to small and medium companies, and large companies operating outside of the EU. Representatives of the private sector and government pointed-out that there is evidence that reporting brings many advantages, but that at the same time, policy should not overburden SMEs and instead target large companies only. The policy may however inspire more companies to disclose their sustainability information.

Participants asked about the current development of integrated reporting and its relationship with sustainability reporting and GRI’s Guidelines. It was clarified that the IIRC framework will not create new indicators, but will rather offer advice and principles on how to integrate financial and non-financial information using existing reporting standards and guidelines like GRI’s.

Lastly, the European Commission’s renewed strategy for CSR was welcomed by stakeholders. In line with this, GRI recently released a ‘non-paper’ on a smart approach to policy on non-financial information disclosure, which is currently going through a process of public consultation.

Sustainability reporting is a vital part of achieving smart, sustainable and inclusive growth. GRI welcomes the initiatives of the European Parliament in matters of CSR and looks forward to continuing to work together to pursue greater strides in EU CSR policy.