Arguments for both voluntary and mandatory standards for sustainability reporting

This new KPMG and UNEP report provides a balanced consideration of voluntary and mandatory approaches to sustainability reporting. A key proposition in the report is that the voluntary versus mandatory debate does not imply an “either / or” position, but rather finding a balance between regulation in certain high risk or high impact areas, and allowing industry associations or individual companies to make decisions in other areas.

Overview and analysis of current trends and approaches in mandatory and voluntary standards for sustainability reporting

UNEP; KPMG Global Sustainability Services / UNEP Division of Technology, Industry and Economics (DTIE) , 2006

This report provides an overview and analysis of current trends and approaches in mandatory and voluntary standards for sustainability reporting. It summarises arguments in favour of both voluntary and mandatory approaches, and suggests key considerations for public and private sector decision-makers in addressing different regulatory approaches and possible policy mixes. It also provides a listing of reporting and related standards in mainly OECD countries, including the European Union (EU), as well as the emerging market economies of Brazil, India and South Africa.

Arguments in favour of voluntary standards include:

  • sustainability reporting is young and evolving and will therefore require time to mature. Mandatory standards will stifle innovation and not ensure moral buy-in
  • public regulators are often not acquainted with company or industry issues or might avoid difficult issues for political reasons

Arguments in favour of mandatory standards include:

  • not enough companies are taking up voluntary approaches, that the use of regulated guidelines and codes can add to the credibility of reports and help ensure a minimum level of disclosure
  • voluntary reports tend not to disclose negative information, and that mandatory reporting will ensure the development of a central and comparable source of data for use by investors and other stakeholders
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