Don’t exaggerate the benefits of transparency
27 maart 2009
This advice seems to be very much in line with the recommendations in The Netherlands on how to include ESG in the Dutch Code of Corporate Governance. Given the objectives of the GRI this declaration, which is also aimed at influencing the emerging global financial regulatory framework being developed by leaders of the G20, makes sense.
However, in the declaration the GRI board also concludes that: “The root causes of the current economic crisis would have been moderated by a global transparency and accountability system based on the exercise of due diligence and the public reporting of environmental, social and governance (ESG) performance”.
It is tempting to believe this, but I really wonder whether one should. To me it seems to be an unrealistic view on “what could have been”. And a too positive view on the benefits of reporting. I believe the root cause of the current problem is to a large extent a moral issue, which wouldn’t have been different in a different reporting regime. When values are being neglected, reporting will be poor regardless what the rules demand. I appreciate that the GRI markets its own objectives; they should. But exaggeration or simplification of the benefits of transparency, will lead to poor conclusions and solutions. In turn this could result in a suboptimal redesign of the current frameworks. Wouldn’t that be a waste?
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I indeed agree with the fact that the importance that is placed on transparency by many governments and or bigger donors involved in the industry of development aid and social entrepreneurship. Many start-up companies in the Western world fail to make