Mandatory Sustainability Reporting?

Last week the Global Reporting Initiative that has led the movement behind Sustainability Reporting (which goes by several other names as well) called for reporting to be mandatory in light of the recent financial crisis and even lower lack of trust in business that this is generating. This is a real change from their previous position that reporting should be voluntary; though they did encourage reporters to use certain criteria.

However, I think what needs to happen is not just for reporting to be compulsory, but that the contents of Reports needs to be mandated in one specific (and new) way. Every company should have to set a level of risk and be required to report any event or activity that is above that level from both a historic perspective, and future perspective.

Thus a Report would say:
"Last year there were 9 events or actions (etc) that represented a significant risk to the business. These 9 events were xxx and we responded by yyy, and to prevent these happening again we have/will do zzz"

"We expect this year, that the major risks will be around ffff, ggg and hhh. Thus we are doing iiii to prevent them".

Right now Reports are too opportunity focused and are not really providing investors (or other stakeholders) with a real assessment of their CR related risks (or indeed business risks, depending on how you define CR). There needs to be a degree of honesty from companies about what has gone wrong in order to ensure stakeholders the company is dealing with this.

In this sense, CR reports could be a very useful, strategic and forward-looking, activity that is adding real value. I still struggle to find many reports that mention any of the negative aspects of a company's work.

Whether the kind of CR report I mention needs to be publicly available is not particularly important. Of course the report needs to be (legally) available to regulators and to investors -and as such, this report does not need to be succinct -instead it needs to be comprehensive and large companies are going to need to, presumably, have long reports if there were so many activities that breached the threshold (that should be set by the company through a stakeholder dialogue that meets some minimum legal level).

If a company chooses to make the report publicly available (and easily navigable online), this would be a bonus; though I would expect certain contents would need to be kept our of the public-eye for privacy, regulatory and competitive reasons.