Headline: Developing uniform sustainability reporting standards

Experts from all over Germany, Austria and Switzerland at the IASS
Experts from all over Germany, Austria and Switzerland have come together at the IASS to advance the integration of the most relevant sustainability reporting standards into a uniform legal standard. IASS/ C. Felber

In December 2019, twenty-five experts from Germany, Austria and Switzerland gathered at the IASS in Potsdam to tackle an ambitious project:  The development of a common statutory standard based on leading sustainability reporting standards.

During my tenure as an IASS Fellow in 2018, I submitted a proposal to the institute’s so-called “Incubator” for the development of a unified ethical reporting standard on par with the requirements for financial statements. The project, which spans three parts, was the first Incubator proposal to be approved. I will be leading this project in my role as an Affiliate Scholar.

In the first part of this project we will examine a dozen of the most widely used and well-known sustainability reporting frameworks in order to identify their strengths. These frameworks will then be compared against an "external parameter” based on social criteria that will be developed for the project.

In the second part, an attempt will be made to develop a new superstandard that combines the strengths of existing standards to create an “all-in-one solution". The third part will aim to revise the European CSR Directive on the basis of a legally binding standard developed in the second part of the project.

The new directive should establish ethical reporting standards equivalent to those for financial reporting:

  • a uniform and legally binding standard
  • that includes an external auditing component
  • with legal implications.

All this would facilitate the introduction of progressive tariffs and trade agreements to deter climate-harmful production practices.

B.A.U.M. GmbH München-Berlin issued a call for tenders for the preparation of a study in the project’s initial phase. The acronym stands for Bundesdeutscher Arbeitskreis für Umweltbewusstes Management e.V. (German Environmental Management Association). The B.A.U.M. team has given the project the nickname "PuNa": Mandatory Reporting for Sustainability and Public Welfare.

The study compared a range of reporting standards, including the Global Reporting Initiative (GRI), the United Nations Global Compact, the UN and OECD reporting guidelines, ISO 2600 Guidance on Social Responsibility, the European Eco-Management and Audit Scheme (EMAS), the German Sustainability Code (DNK) and the Common Good Balance Sheet. The external criteria ranged from participatory development, applicability and comprehensibility, measurability and comparability to the legal framing of standards and their coupling with incentives such as progressive taxation and customs regimes or their prioritization in public procurement and business promotion schemes. The broader political goal is to transform the externalisation of costs – a competitive advantage in our existing economic model – into a competitive disadvantage. Parallel to this, the internalisation of costs and the externalisation of benefits should be transformed into competitive advantages.

Workshop at a table with different interest groups

The workshop at the IASS on 16 December brought together experts from scientific institutions as well as representatives of other standards such as the GRI and DNK. They were joined by representatives from institutions and companies that apply these standards, including the GLS Bank, Weleda and Taifun-Tofu as well as business associations such as the Bangladesh Minority Watch (BDMW).

Discussions focussed initially on the adoption of normative reporting objectives – such as climate stability, biodiversity protection, gender equality or distributive justice – instead of a "best-in-class" approach or the pursuit of objectives based on the internal logic of individual organisations.

A second round of discussions focussed on the ten social criteria – the so-called "exogenous parameters” – and numerous suggestions for their improvement were made.

In the afternoon, the participants formed working groups to address the second part: The harmonization of the standards, their institutional embedding, scientific evaluation, practical application and communication as well as their motivation.

Some of the participants have signed on as sponsors for the second project phase. The IASS has generously supported the initial phase of this project and now the consortium will be expanded in an effort to increase its legitimacy, competence and visibility. The IASS will remain on board – and quite possibly at the forefront of this project.

Interested parties are welcome to contact me: Christian.Felbe(at)iass-potsdam.de

 

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