Page 178 - Sustainability Communication Interdisciplinary Perspectives and Theoritical Foundations

14 Corporate Sustainability Reporting 161

In recent years ‘smart regulations’ have become more prominent that consider
voluntary and mandatory reporting to be a spectrum rather than conflicting posi-
tions and that hold regulations (by a variety of institutional bodies such as govern-
ments, accounting regulators or securities regulators) unfold their highest potential
when designed as complementary approaches that enhance sharing relevant infor-
mation (Buhr 2007). Smart regulations make use of a variety of forms for regulating
sustainability reporting (e.g. mandatory regulations, incentives, endorsements, and
agreements/non-enforceable contracts with regulators; Gunningham and Grabosky
1998). One of the most recent examples is Denmark, which introduced new legisla-
tion requiring companies to disclose CSR information or to explain why they could
not (report-or-explain approach) and, by exempting companies from reporting that
have acceded to the UNGC and issue COPs, promotes a stronger connection of the
various initiatives while counteracting the proliferation of national standards.
An area that has yet not been addressed by many government regulators is the
assurance of sustainability reports. With a few exceptions (e.g. Swedish state-owned
companies since 2007), and in contrast to financial reporting, companies are not
required to subject their sustainability reports to external assurance. Developments
in assurance and auditing of sustainability reports are described next.

Assurance, Assessment, and Auditing

Verification of published information is common and is often required for financial
reports but in recent years sustainability reports have received greater attention as
well (Kolk and Perego 2010; KPMG 2008). The aim of assuring, assessing and
auditing information disclosed in corporate reports is to help improve their credi-
bility. The G3 guidelines of the GRI (2006) recommend the assurance of sustain-
ability reports and make it compulsory for those companies aiming at achieving the +
level of compliance. A survey of the 100 largest companies from 22 countries by
KPMG (2008) showed that 45% issue a separate non- or extra-financial report; and
of these, 39% had their reports verified. Assurance of sustainability reports has
however not achieved equal prominence in all countries. There are considerable dif-
ferences in the number of assured sustainability reports, with France (73%) and
Spain (70%) leading the way and countries such as Romania (4%), United States
(14%) and Canada (19%) providing only low levels of sustainability assurance. This
is probably largely due to the overwhelmingly voluntary nature of assurance of
sustainability reports and the lack of a generally accepted standard in this field. The
Federation des Experts Comptables Europeens (FEE) and the national accountancy
bodies have been particularly proactive in putting pressure on the International
Auditing and Assurance Standards Board to develop an international standard or
guidance document for assurance of sustainability reports (UNEP et al. 2010).
The current assurance landscape is characterised by a wide variety of national
and international initiatives. The UNEP et al. update (2010) on trends in approaches
to sustainability reporting identifies a total of 14 assurance standards. The two