Over 50% of ‘sustainability’ claims unverified, says FEE

Date: 13/02/03

By Karen Carstens

The inclusion of social and environmental indicators as a measure of firms' sustainability is a growing trend in Europe.

However, FEE, which groups 41 professional bodies from member states and 14 other countries representing a total of 500,000 accountants, called for such reports to be properly certified.

"The relevance of non-financial reporting continues to grow," said FEE President David Devlin.

"Key stakeholders, such as fund managers, increasingly use sustainability reports for their financial decision-making.

"It is essential that reporting companies raise stakeholder confidence by demonstrating their desire to enhance the quality and credibility of their sustainability reporting with third party, independent assurance provision."

Or, as Lars-Olle Larsson, chairman of a FEE sustainability assurance sub-group convening last week in Brussels, put it: "They're not going to believe what a company is reporting unless it's independently assured."

Although such verification remains voluntary in most member states, Larsson predicted it will eventually become mandatory. France, for example, recently passed legislation requiring companies to conduct such evaluations, whereas Germany has no legislation yet in the area.

"It will take time to develop the criteria," said Larsson.

He represents FEE on the Global Reporting Initiative (GRI) which seeks to develop such criteria. It was established in 1997 by the Coalition for Environmentally Responsible Economies and the United Nations Environment Programme with the aim of developing applicable guidelines for reporting on the economic, environmental and social performance of corporations - and eventually for any business, governmental or non-governmental organisation.

Although they may need to work alongside technical experts from other fields, Larsson said that accountants - with adequate additional training - remain the best people for the job.

But he did not deny that big accounting firms such as KPMG and Ernst & Young wouldn't mind the extra work.

"Of course we (accountants) want more business.

"Accounting firms have been recruiting environment people for several years now."

The inclusion of social and environmental indicators as a measure of firms' sustainability is a growing trend in Europe. However, FEE, which represents professional bodies from Member States and 14 other countries, has called for such reports to be properly certified.