This article was published in Living Ethics: issue 86 summer 2011
With a membership of more than 132,000 finance, accounting and business professionals across the globe, CPA Australia is one of the world’s largest accounting bodies. John Purcell, CPA Australia’s Policy Adviser on environmental, social and governance disclosure, reflects on the role of government, business, civil society and leadership in the area of responsible business practice.
The role of government is multi-faceted. It can show leadership through having its departments and agencies produce sustainability reports, and develop its own procurement practices toward environmental and socially responsible ends. Regulation is an obvious area of consideration for government. Australia does have robust laws in relation to the environmental and social impact of business. Government likewise gives legislative weight to comprehensive financial reporting and related governance practices.
Regarding sustainability reporting and integrated reporting, government’s precise role is less clear. Action needs to be taken that, on the one hand, raises expectations as to greater uptake and quality but, on the other hand, does not discourage innovation and experimentation. It is vital also that government remains engaged with, and participates in, key international reforms and developments in both reporting and corporate conduct.
As St James Ethics Centre’s Responsible Business Practice in Australia report highlights, penetration of sustainability reporting remains low in total terms and there is an absence of deeply embedded understanding of the changing nature of responsible business practice. Individual businesses will over time gain greater appreciation of the very sound business case for sustainability which drives competitive advantage and reputation. There is certainly a role for both professional and business associations in communicating the ideas and ideals of responsible business practice, in building their members’ competencies, and in dealing with civil society.
CPA Australia’s report The Social Responsibility of Corporations: recent trends and future developments in the promotion of responsible business practices recommends that government agencies should be required to prepare sustainability reports in accordance with the current Global Reporting Initiative Guidelines and incorporate these into their annual reports to the Commonwealth Parliament.
While this would be challenging, I think we need to strive for this outcome. Integrated reporting and the development of Global Reporting Initiative G4 Guidelines will be transformational and inprove environmental, social and governance disclosure. These developments arise in relation to a growing recognition of the very positive value of transparency and legitimate interests in regard to the way in which natural, social and economic assets are used. Government agencies are likewise subject to these types of development. Also, as concepts such as ‘report or explain’ gain acceptance and traction, government agencies are likely to be further affected.
CPA Australia’s report also recommends the establishment of a Sustainability Commission to set sustainability targets for Australia and monitor performance to promote consistency across the various tiers of government. A Sustainability Commission could function as a coordination point while also developing understanding and dissemination of the work currently being undertaken by the OECD in the area of Green Growth.