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All state-owned companies in Sweden will be required to produce annual sustainability reports from 31 March 2009.
In the first move of its kind in the world, the Ministry of Enterprise, Energy and Communications announced last month that the regulation would apply to all 55 Swedish companies with some element of state ownership.
Each will be expected to file independently assured reports in accordance with Global Reporting Initiative (GRI) guidelines.
Minister for enterprise and energy Maud Olofsson, who is responsible for the ruling, said she wanted state-owned companies 'to set an example and to be at the leading edge' of sustainability and good practice. She added that the government would like to see all large Swedish companies reporting in this way, and that the new regulation showed the 'highly pitched ambitions' it had in the field.
In many European countries privatization has dramatically reduced the size and scale of public sector businesses, but in Sweden state-owned companies remain important to the economy, having around 190,000 employees and an estimated value of SEK675billion (£51bn, $102bn).
Among businesses affected are telecoms firm TeliaSonera, lottery operator Svenska Spel, Nordea Bank, credit market company Venantius and railway firm SJ.
The 40 wholly state-owned companies will have to start work this spring in order to meet the 2009 deadline. In the case of the 15 partly owned businesses, the government will negotiate with the other shareholders to try to ensure that sustainability reporting is adopted.
The ministry has not said what action it will take if a state-owned company ignores the order, but expects its wishes to be implemented on the principle of 'comply or explain', with companies permitted to deviate from the guidelines only 'if a clear explanation and justification of this departure is provided'. Compliance with the guidelines will be 'assessed and reported on' in the government's annual report on state-owned companies.
The reports need only be posted online in PDF format at the same time as the annual report, either as a separate document or in the annual report. The GRI requires companies to declare the extent to which their non-financial reports adhere to its guidelines, from grade C through to A, with A being the highest grade.
According to the GRI, which described the decision as a landmark in sustainability reporting, 26 Swedish companies already use its guidelines when compiling their sustainability reports. They include TeliaSonera and energy company Vattenfall, the two biggest corporate earners for the state.
Birgitta Erlandsson Segerstrom, director of corporate social responsibility at TeliaSonera, which is 43.5 per cent owned by the Swedish government but already reports annually using the GRI guidelines, said the new regime would lead to changes in the governance structures of state-owned businesses, because they now had to take account of a wider range of corporate responsibility issues. 'Sustainability issues will now be something that the board of directors will have to deal with at the corporate strategic level,' she said.
Staffan Soderberg, manager of sustainability at the private sector Swedish civil engineering company Skanska, said: 'This is a major decision, as in Sweden we have a lot of large and important state-owned companies. Some already report on sustainability, but the government made a specific reference to GRI and that's interesting.'
Soderberg added that the regulations would 'most definitely' influence private sector companies that do not already produce non-financial reports, especially those with contracts to supply state-owned enterprises.
Henrik Sundstrom, vice president of environmental and sustainability affairs at Electrolux, welcomed the move, which he said would ensure that state-owned companies 'begin to live up to the expectations of their stakeholders'.
In the first move of its kind in the world, the Ministry of Enterprise, Energy and Communications announced last month that the regulation would apply to all 55 Swedish companies with some element of state ownership.
Each will be expected to file independently assured reports in accordance with Global Reporting Initiative (GRI) guidelines.
Minister for enterprise and energy Maud Olofsson, who is responsible for the ruling, said she wanted state-owned companies 'to set an example and to be at the leading edge' of sustainability and good practice. She added that the government would like to see all large Swedish companies reporting in this way, and that the new regulation showed the 'highly pitched ambitions' it had in the field.
In many European countries privatization has dramatically reduced the size and scale of public sector businesses, but in Sweden state-owned companies remain important to the economy, having around 190,000 employees and an estimated value of SEK675billion (£51bn, $102bn).
Among businesses affected are telecoms firm TeliaSonera, lottery operator Svenska Spel, Nordea Bank, credit market company Venantius and railway firm SJ.
The 40 wholly state-owned companies will have to start work this spring in order to meet the 2009 deadline. In the case of the 15 partly owned businesses, the government will negotiate with the other shareholders to try to ensure that sustainability reporting is adopted.
The ministry has not said what action it will take if a state-owned company ignores the order, but expects its wishes to be implemented on the principle of 'comply or explain', with companies permitted to deviate from the guidelines only 'if a clear explanation and justification of this departure is provided'. Compliance with the guidelines will be 'assessed and reported on' in the government's annual report on state-owned companies.
The reports need only be posted online in PDF format at the same time as the annual report, either as a separate document or in the annual report. The GRI requires companies to declare the extent to which their non-financial reports adhere to its guidelines, from grade C through to A, with A being the highest grade.
According to the GRI, which described the decision as a landmark in sustainability reporting, 26 Swedish companies already use its guidelines when compiling their sustainability reports. They include TeliaSonera and energy company Vattenfall, the two biggest corporate earners for the state.
Birgitta Erlandsson Segerstrom, director of corporate social responsibility at TeliaSonera, which is 43.5 per cent owned by the Swedish government but already reports annually using the GRI guidelines, said the new regime would lead to changes in the governance structures of state-owned businesses, because they now had to take account of a wider range of corporate responsibility issues. 'Sustainability issues will now be something that the board of directors will have to deal with at the corporate strategic level,' she said.
Staffan Soderberg, manager of sustainability at the private sector Swedish civil engineering company Skanska, said: 'This is a major decision, as in Sweden we have a lot of large and important state-owned companies. Some already report on sustainability, but the government made a specific reference to GRI and that's interesting.'
Soderberg added that the regulations would 'most definitely' influence private sector companies that do not already produce non-financial reports, especially those with contracts to supply state-owned enterprises.
Henrik Sundstrom, vice president of environmental and sustainability affairs at Electrolux, welcomed the move, which he said would ensure that state-owned companies 'begin to live up to the expectations of their stakeholders'.
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