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CONTEXT
Companies face mounting pressure to reveal information about their environmental and social performance and actions. In response to pressures for transparency—from regulators, activists, communities, and shareholders—many companies adopted corporate sustainability reporting—defined here as, beyond-the-law environmental and social disclosures in annual and/or stand-alone reports. By the end of the 1990s, corporate sustainability reporting had become common business practice, mainly among multinational corporations operating in environmentally-sensitive industries.
Wary of voluntary disclosures, business critics question the societal value and impact of non-financial reports. Should we trust, they ask, a company’s self-evaluation of its environmental and social fitness? Clearly, there have been instances of suspicious and even false sustainability claims—what some condemn as “green washing”—but the depth, sophistication, and comparability of corporate environmental reporting improved notably in the past years as the practice has matured. The creation of the Global Reporting Initiative (GRI) (http://www.globalreporting.org) at the end of the 1990s marked a watershed in sustainability reporting—by offering the first set of internationally agreed guidelines for preparing the reports. More recently, the GRI has worked with industry experts in the development of sector specific guidance.
Many surveys have shown that the practice of corporate sustainability
reporting is far more mature among companies operating in developed
countries than among southern firms. The report Toward Transparency
(see link above) shows that of the sustainability reports published
between 1990 and 2003, nearly 60 percent come from Europe, 20 percent
from the Americas (mostly the U.S. and Canada), 20 percent from
Asia and Australasia, and 2 percent from Africa. Recently, however,
companies in the South have begun publishing sustainability reports.
A 2004 study (see link below) included seven companies from several
developing countries as top 100 sustainability reporters in the
world: Brazil (3), South Africa (3), and India (1). While these
reporters still represent a minority in the ranking, the number
was even smaller in the past.
FOCUS ON LATIN AMERICA AND SPAIN
This project seeks to stimulate the debate over corporate sustainability
reporting in Latin America and Spain. While this practice still
represents terra incognita, especially in Latin America, companies
are becoming more transparent than in the past. Today, a growing
number of companies in both Latin America and Spain—especially large
corporations—disclose more environmental and social information
in their annual reports and/or stand-alone environmental reports.
BEYOND ENGLISH
The Empresa Informa site promotes good practice in sustainability reporting among the producers, users, and analysts of the environmental and social reports in Latin America and Spain. The site will go through at least two phases:
- Phase 1: Spanish. We will first promote virtual
dialogues and ideas exchange among experts in Latin America
and Spain. Despite their strong historical, cultural, and business
links, the incidence of Latin America-Spain debate on corporate
environmental practices, including reporting, is surprisingly
low. Given the unique opportunities for cross-fertilization
(e.g., large Spanish affiliates operating in Latin America),
we see the potential benefits of a transatlantic dialogue on
best practices in sustainability reporting.
- Phase 2: Portuguese. We will add a Portuguese
version once the bilingual site is fully operational. Brazil’s
experience in sustainability reporting is instructive for the
rest of Ibero-America and offering a trilingual site might facilitate
a regional dialogue, especially within Latin America, that remains
untapped.
RESEARCH
Monica Araya is the researcher in charge of corporate
sustainability reporting at Yale Center for Environmental Law &
Policy (YCELP)—and the founder of the Empresa Informa Forum. Several
research papers will be posted in the website by the end of 2005
and the data from her dissertation on corporate environmental reporting
in Latin America will be available as an online database by 2006.
In her doctoral research, she studies the determinants of the
variability in the levels of corporate environmental reporting among
corporations—local and foreign—that operate in Latin America.
The statistical analysis focuses on both incidence and quality of
corporate environmental reporting. The qualitative case studies
focus on Brazil, Chile, and Mexico.
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