The intensifying and unremitting demand for greater corporate transparency has resulted in new, more stringent governance obligations and more onerous financial disclosure requirements, particularly in the USA and the UK. The passage of the Sarbenes-Oxley Act in the USA demands greater transparency with respect to corporate risk exposures. In the UK, the Operating & Finance Review (OFR) has changed the current financial reporting standards for listed companies. Both the Sarbenes-Oxley Act and the OFR regulations place more emphasis on environmental disclosures.1 The increased emphasis on the adequacy of corporate disclosures, particularly concerning environmental and governance issues, has been the subject of a recent report by SustainAbility in conjunction with Standard & Poor’s and UNEP.2 This report comments on how sustainability reporting and financial reporting are converging. It is discussed in greater detail below. Substantial changes in the investment industry are leading to greater interest in social and environmental issues; for example, regulations now require pension funds to disclose how their policies take account of environmental and social concerns. Share prices increasingly value brand, regulation and intangible assets. Shareholders, securities analysts and lenders are also demanding more accurate information. Environmental liabilities are more visible than ever, prompting corporations to improve the way they manage, contain and transfer risks.
Download the full report: Corporate behaviour, how environmental risk and corporate governance are shaping change – or are they?