"Sustainability reporting: panacea or pacifier?"
In the European Union, the finishing touches are being put on a comprehensive package of regulations that will bring about a landslide in the external reporting of companies. In addition to annual financial reporting, a large part of the business world will in the near future also have to report on - what is called - sustainability aspects of business operations. In his farewell lecture on 8 September, Professor Ruud G.A. Vergoossen, Professor of International Financial Accounting, will indicate what opportunities and threats he sees with regard to sustainability reporting. He will also discuss the role of the accountant.
This sustainability reporting means, among other things, that company boards must indicate how it ensures fair and honest business, how the health and other interests of employees are protected, how (possible) harmful consequences of business activities for the environment are prevented or mitigated and – conversely – how, for example, environmental aspects such as climate change and declining biodiversity, influence the performance and future prospects of the company.
It should also describe existing and potential negative effects occurring in the company's value chain, as well as the measures taken and their results to prevent, remedy or mitigate those effects. In addition to the activities of the company itself, this value chain also includes the activities of the business relations (both upstream and downstream) and the production and supply chains involved.
Reach the goal
The ultimate goal of sustainability reporting is to encourage and motivate companies to organize their business activities in such a way that they contribute to a better, sustainable society that takes into account the people and the environment in a broad sense. However, the question is whether that goal will be achieved through sustainability reporting as it will be shaped in the near future. In other words: is sustainability reporting a panacea or the key to achieve a sustainable society or is it just a pacifier or a farce that will make no contribution to it at all?
Not a pacifier
Sustainability reporting is not a panacea, nor is it a pacifier. Sustainability reporting can contribute to the creation of a sustainable society, but only if companies report in a clear and balanced way on relevant sustainability aspects (environmental, social, governance; ESG) of their business operations. Greenwashing and window dressing must be avoided, but this is only possible with the help of stringent, unambiguous, but above all practically applicable regulations and an accounting profession that is adequately equipped to monitor compliance with these regulations. The regulations are new and anything but crystallized, and for the accounting profession, which has recently come under fire, there is still a world to be won.
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