A4S activities at the UN Conference on Sustainable Development, Rio+20
What was Rio+20 all about?
The United Nations Conference on Sustainable Development took place in Brazil from 20th to 22nd June 2012, following months of preparatory negotiations. World leaders, along with thousands of participants from governments, the private sector, NGOs and other groups came together to shape a move towards a sustainable economy that provides a better life for all within the ecological limits of the planet.
Prior to the start of the UN conference, a number of events focused on the vital role that the private sector has to play in helping to deliver a sustainable economy. United Nations Global Compact held a Rio+20 Corporate Sustainability Forum with over 2,000 attendees from business and civil society from 16th to 18th June. Following this, as the official representative of Business & Industry at Rio+20, the Business Action for Sustainable Development day on 19th June was attended by more than 800 companies, major international business associations, a diverse range of NGOs, and government decision-makers.
What was A4S calling for at Rio+20?
A4S was involved in a number of events as part of the wider conference to engage stakeholders in the accounting for sustainability agenda.
Measuring What Matters: A Coherent Global Framework – Aligning performance indicators for global sustainable development, national Beyond GDP metrics and improved corporate reporting
A4S held an official side event at Rio Centro on 20th June. The event sought to drive collaboration between the key actors involved in developing performance measurement systems and metrics at a global, national and corporate level. The meeting was attended by over 250 stakeholders, including governments, UN organizations, businesses and a wide range of NGOs.
The event focused on three major proposals being discussed at the conference:
- The momentum for a set of global Sustainable Development Goals
- Proposals for a set of national performance metrics that go ‘Beyond GDP’
- The call for more integrated and robust corporate reporting that helps to redefine business value
Our proposition was that in order for these metrics to be transformational, they need to be aligned against the same broad objectives such that they work together to drive change.
Work on improved performance measures has been ongoing for some time, and was a key part of the conference discussions. However, in order to be transformative, the goals at each level of our economy must be aligned such that they are mutually reinforcing.
By aligning the information used by governments, businesses, investors and other stakeholders around the same broad objectives, decisions made at each level of our economy should reinforce, rather than contradict, those at other levels.
Following the side event there was further support for a working group to link the processes to develop performance measurement systems and metrics at a global, national and corporate level. This support builds upon the agreement to form a working group at a meeting held in London on 30th May 2012 hosted by HRH The Prince of Wales.
Speakers at the side event included:
- His Royal Highness the Prince of Wales (via video message below)
- Caroline Spelman, Secretary of State for the Department of Environment, Food and Rural Affairs, UK
- Paula Caballero, Director for Economic, Social and Environmental Affairs for the Ministry of Foreign Affairs, Colombia
- Majid Al Suwaidi, Lead Negotiator, Ministry of Foreign Affairs, United Arab Emirates
- Dasho Karma Tshiteem, The Secretary of the Gross National Happiness Commission of the Royal Government of Bhutan
- Oliver Greenfield, Convenor of the Green Economy Coalition
- Philippe Joubert, Senior Advisor, World Business Council for Sustainable Development (WBCSD)
- Paul Druckman, Chief Executive Officer, International Integrated Reporting Council (IIRC)
- Ernst Ligteringen, Chief Executive, Global Reporting Initiative (GRI)
The side event was organized by His Royal Highness The Prince of Wales’s Accounting for Sustainability Project, The International Integrated Reporting Council, The Green Economy Coalition and Stakeholder Forum.
Watch the video message from His Royal Highness The Prince of Wales below.
‘Taking Account of Nature: What Changes Corporate Behavior?’ TEEB for Business Coalition
A4S co-convened an event on valuing natural capital in business, which was attended by around 50 people from business, governments, and key NGOs working in this area. The interactive workshop explored some of the key initiatives helping business to value ecosystems and biodiversity dependencies along with the resources that businesses need in order to account for natural capital.
The event created further support and guidance for the TEEB for Business Coalition which is seeking to move forward the process to create methodologies for businesses to internalize ecosystem and biodiversity impacts and dependencies.
- Pavan Sukhdev – TEEB Study Leader
- Peter Bakker – World Business Council for Sustainable Development (WBCSD)
- Jessica Fries – The Prince’s Accounting for Sustainability Project (A4S)
- Paul Druckman – The International Integrated Reporting Council (IIRC)
- Margaret Adey – The Cambridge Programme for Sustainability Leadership (CPSL)
The event was convened by His Royal Highness The Prince of Wales’s Accounting for Sustainability Project, the Cambridge Programme for Sustainability Leadership, the World Business Council for Sustainable Development, Business for the Environment, The International Integrated Reporting Council, WWF, and The Institute of Chartered Accountants England and Wales.
The UK Pavilion
As part of the Rio +20 conference, all member states had the opportunity to take a pavilion at a large exhibition ground as part of a major public diplomacy opportunity. Over 50,000 participants from governments, business, NGOs, and civil society were estimated to have passed through this special pavilion area. A4S was asked by the Foreign and Commonwealth Office to exhibit at the UK pavilion where Sarah Nolleth presented the Project’s work to Nick Clegg the UK Deputy Prime Minister.
A4S was involved in a number of events on Integrated Reporting with the IIRC, including an event at the Corporate Sustainability Forum, building on the already strong momentum within the business and investor community.
What are were the key outcomes from the UN conference?
The conference produced an outcome document entitled The Future We Want which sets out what was agreed at the conference. Key outcomes most relevant to the accounting for sustainability agenda are summarized below:
- Agreement to develop a set of global Sustainable Development Goals (SDGs) in key priority areas to complement the existing Millennium Development Goals after 2015. A working group of 30 representatives from the five United Nations regional groups will be formed who will present a proposal for a set of SDGs to the General Assembly in 2013. It was recognized that once set, progress towards the achievement of the goals needs to be assessed and accompanied by targets and indicators.
- Launch of a programme to develop new national indicators of progress that go beyond GDP. This will draw on a number of initiatives already underway.
- Support for integrating sustainability into corporate reporting – “We acknowledge the importance of corporate sustainability reporting and encourage companies, where appropriate, especially publicly listed and large companies, to consider integrating sustainability information into their reporting cycle. We encourage industry, interested governments and relevant stakeholders with the support of the United Nations system, as appropriate, to develop models for best practice and facilitate action for the integration of sustainability reporting, taking into account experiences from already existing frameworks and paying particular attention to the needs of developing countries, including for capacity building”. A number of governments including the UK, Brazil, Denmark, France and South Africa made supporting statements on this topic during the conference. The UK also announced the introduction of mandatory carbon reporting for all quoted companies from 2013.
In addition to the formal UN outcome document over 700 Rio+20 voluntary commitments were made by governments, UN bodies, the private sector, civil society and NGOs and registered on the UN website. Collectively, these tangible commitments mobilize more than $500 billion in actions towards sustainable development.
- Business has crucial role to play in sustainable development as the primary means of investment and implementation. Business recognizes the need for urgent action to address sustainability challenges and is actively moving forward, with or without formal action at the international level, but urges government to engage with the private sector to address this need. New ways of measuring and rating the performance of both companies and countries are required.
- Sustainability needs to be integrated into the core of business strategy. New concepts of value and profit need to be created so that the true performance of a company can be reported and assessed.
- Companies and investors recognize the urgent need to change the parameters for commercial decision making so that the value of natural resources can be better integrated into decisions, and investments directed into long-term sustainable growth paths for businesses. There was broad support for the development of methodologies to allow companies to properly assign economic value in relation to the ecosystems services and natural capital they impact or depend upon. Over 50 countries and over 100 private companies made commitments to begin to factor the value of natural assets like clean air, clean water, forests and other ecosystems into business decision-making and countries systems of national accounting.
- Integrated reporting, to report a forward-looking performance and strategy, is essential.
- Voluntary standards will not be enough – smart policy frameworks are needed to scale up the integration, valuation and reporting of sustainability globally
- At government level, dialogue with business around SDGs is required, to avoid breakdown in actionable targets and projects.
What does this mean for finance teams?
Although the official Rio+20 outcome document has been criticized for not being sufficiently ambitious, the discussions in the lead up to and during the conference highlighted the growing tide of businesses and governments that recognize that sustainable development is key to future global prosperity. The key role of the private sector was emphasized throughout the discussions. The number of businesses represented at the conference and the depth and breadth of commitments made by the business community illustrates that executives increasingly understand the business case for sustainability. The importance of improved performance metrics and decision making tools was repeatedly emphasized, in particular the role of natural capital accounting and integrated reporting in redefining the way business value is measured and communicated.
A range of stakeholders including regulators and investors emphasized the importance of driving corporate sustainability through improved accounting and disclosure. For example, five stock exchanges committed to promote long-term, sustainable investment in their markets by working with investors, companies and regulators to promote long-term sustainable investment and improved environmental, social and corporate governance disclosure and performance among companies listed on their exchange.
Senior finance professionals can increasingly expect to see their roles change as organizations seek to embed sustainability into both decision making and reporting, with the same rigor as currently used for financial data. As regulators and other stakeholders continue to see the vital role accounting for sustainability has in driving prosperity, more demands will be placed upon the accounting functions in this regard.