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As delegates gather this month for the 2008 Global Reporting Initiative conference in Amsterdam, Ethical Performance offers readers a sneak preview of the Editorial Comment for its 200th issue in June 2017.
Two decades after its establishment in 1997, the Global Reporting Initiative is being wound up. Sipping tap water – the European Union outlawed bottled water in 2011 owing to its carbon footprint – delegates are resigning themselves to a foregone conclusion: the integration of corporate financial and non-financial statements into a single online report has rendered their organization redundant. The recently-formed Integrated Accounting Standards Board will now assume responsibility for all aspects of company reporting in the main financial markets – Beijing and New York.
However, the board’s victory may be short-lived. Its insistence that non-financial information in the integrated company report be audited to a level only just below that required for financial data, is causing perturbation in the Big Two global accountancy firms.
Partners there note that the successful legal actions which brought one auditor to its knees in 2012, and led to the hasty merger of two others a year later, were both instigated by institutional investors who had lost millions because they relied on audited greenhouse gas emissions data that ultimately proved unreliable. As a judge pointed out at the time, this was not a failure to uncover fraud as in the collapse of Arthur Andersen almost two decades ago, but of inadequate procedures and metrics.
At this rate, we will soon be down to the Big One – hardly an acceptable state of affairs.
Those with long memories will recall an obscure lawsuit filed in California by US activist Marc Kasky in the early years of this century against Nike claiming that the retailer’s statements about workplace practices in its supply chain were misleading. Nike settled out of court, admitting no liability, and paid $1.5million (£750,000) to an ethical supply chain monitoring body. Today that sum seems terribly small beer compared with the billions that misleading statements can now cost. Even in the early days, lawsuits had a chilling effect on corporate disclosure. Perhaps the advocates of voluntary reporting were right after all. Is it too late to turn back the clock?
Two decades after its establishment in 1997, the Global Reporting Initiative is being wound up. Sipping tap water – the European Union outlawed bottled water in 2011 owing to its carbon footprint – delegates are resigning themselves to a foregone conclusion: the integration of corporate financial and non-financial statements into a single online report has rendered their organization redundant. The recently-formed Integrated Accounting Standards Board will now assume responsibility for all aspects of company reporting in the main financial markets – Beijing and New York.
However, the board’s victory may be short-lived. Its insistence that non-financial information in the integrated company report be audited to a level only just below that required for financial data, is causing perturbation in the Big Two global accountancy firms.
Partners there note that the successful legal actions which brought one auditor to its knees in 2012, and led to the hasty merger of two others a year later, were both instigated by institutional investors who had lost millions because they relied on audited greenhouse gas emissions data that ultimately proved unreliable. As a judge pointed out at the time, this was not a failure to uncover fraud as in the collapse of Arthur Andersen almost two decades ago, but of inadequate procedures and metrics.
At this rate, we will soon be down to the Big One – hardly an acceptable state of affairs.
Those with long memories will recall an obscure lawsuit filed in California by US activist Marc Kasky in the early years of this century against Nike claiming that the retailer’s statements about workplace practices in its supply chain were misleading. Nike settled out of court, admitting no liability, and paid $1.5million (£750,000) to an ethical supply chain monitoring body. Today that sum seems terribly small beer compared with the billions that misleading statements can now cost. Even in the early days, lawsuits had a chilling effect on corporate disclosure. Perhaps the advocates of voluntary reporting were right after all. Is it too late to turn back the clock?
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