A step in the right directionOctober 2009
Has Sweden’s regulation on the sustainability reporting duties of state-owned firms been effective? The GRI’s Teresa Fogelberg offers her considered assessment
When Sweden’s Ministry of Enterprise, Energy and Communications announced in late 2007 that it was to require all state-owned companies to issue sustainability reports, it didn’t come as such a huge surprise to many in the corporate responsibility field. Sweden is, after all, regarded as a progressive nation. But since that announcement, what has actually happened?
The first step the ministry took was to issue reporting guidance based on the Global Reporting Initiative (GRI) framework, which meant that reporting of state-owned companies could be compared to other businesses in their sectors – state-owned or otherwise – within Sweden and beyond.
This comparability was deemed crucial, as devising new Swedish-only guidance may have allowed the ministry to see how its companies were performing against one another, but not against the vast majority of others in the world.
The second step was to get the state-owned companies on board, and this has gone well. Such businesses are required to report or explain why they have not, and so far more than 89 per cent have taken the former route by issuing GRI documents. Before the requirement came into force last year, only 14 per cent of such companies reported, so the impact has been dramatic. This year the state-owned wine and spirits monopoly, Systembolaget, even replaced its annual report with a sustainability document that includes financial data.
The ministry has told us that it has been surprised and pleased that companies have embraced the measure with such enthusiasm, but that the next step for the government will be to encourage improvements in the quality of the reports.
So far they have varied in their scope – some focus more on environmental disclosures, some on societal impacts, depending on the context of the company’s operations – but it’s been encouraging to see that many of the businesses have used stakeholder dialogue to decide what issues are material.
Of course, it’s still early days – the reports are only just out and the Swedish government is continuing to assess their quality. It will feed back to the companies prior to the next reporting cycle. But already a knock-on effect on private listed companies is discernable, as the number issuing GRI reports has increased to 25 of the 100 largest listed Swedish companies from 15 last year.
And the knock-on effects appear to go beyond Sweden. Denmark recently passed a law under which the largest 1100 companies there will be required to include environmental, social and governance data in their annual reports. Norway has released a white paper outlining how companies can make use of existing sustainability reporting frameworks. But it’s not just Scandinavia: in China the authorities have issued a directive encouraging state-owned companies to report on CSR. In GRI’s view, it’s about time too.
Teresa Fogelberg is deputy chief executive of the Global Reporting Initiative
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