The emerging corporate sustainability reporting system: what role for workers’ representatives?

In the past few years a number of important initiatives have been launched to try to ensure that companies provide accurate information about their impacts on the environment and society. In 2022 the EU legislators approved the Corporate Sustainability Reporting Directive (CSRD), which provides a legal basis mandating sustainability reporting by large EU companies.1 At the international level, the International Sustainability Standards Board (ISSB), a private initiative launched in 2021, has started work on voluntary reporting standards. And in the United States, the Securities and Exchange Commission (SEC) has asked for input on corporate reporting requirements on environmental, social and governance issues. These initiatives are in response to the growing societal expectation that corporate reporting should go beyond financial issues. As the dimensions and consequences of climate change become clearer, pressure on corporations to disclose not only their impacts on the environment but also their plans for reducing their negative impacts is increasing. Furthermore, growing awareness of child and forced labour in supply chains and in-work poverty has increased expectations that companies should report on human rights and working conditions. Although all of these initiatives are aimed at reducing ‘greenwashing’ and satisfying stakeholders’ needs for credible information on companies’ impacts on people and planet, there are significant differences between them regarding the role of workers’ representatives.2 These initiatives highlight three fundamental questions that are currently being debated. First, for whom is sustainability reporting intended? Is it primarily for investors or for other ‘users’, including trade unions and NGOs? Second, which stakeholders should be involved in the development of rules for sustainability reporting: auditors, investors and companies, or a broader set of stakeholders? And third, which stakeholders should be involved in sustainability reporting at the company level? How these questions are answered will be crucial for defining workers’ representatives’ role in sustainability reporting and in the relevance of sustainability reports for workers. This report focuses on the two initiatives most relevant to EU companies: the mandatory system regulated by the CSRD, and the private initiative centred on the ISSB. It starts with the ISSB, which is intended primarily for investors and defines no explicit role for trade unions and works councils. It contrasts this with the CSRD, which includes the right for workers’ representatives to 1175607 TRS0010.1177/10242589231175607TransferVitols news2023