Why is reporting important?
The UNGP encourage the use of reporting to disclose information about how organisations identify, manage and address adverse human rights impacts and harms.
Reporting is important for organisations and for states, because it facilitates the monitoring of how organisations comply with their human rights duties and manage human rights risks. Reporting is, above all, a key instrument for stakeholders and society in general, because it is a way of releasing information about actual or potential human rights risks of the activities of organisations. Reporting also increases accountability and transparency of organisations. The Belgian Code of Corporate Governance (principle 9) requires corporations to ensure adequate disclosure of their corporate governance information, although it does not explicitly refer to human rights issues.
Reporting is also important to guarantee accountability to stakeholders, as they can use this information to demand action from organisations to address actual or potential human rights adverse impacts.
It is also an important tool for organisations, because it is a systematic self-assessment exercise that serves to identify weak points inside an organisation and in its relations with partners or its value chains. However, it is also important to promote systematic reporting by all kinds of organisations, as many of their activities can have adverse human rights impacts.
Non-financial reporting is not new. On environmental issues, the 1992 Rio Earth Summit marked a point of departure with respect to the number of sustainability reporting requirements, even if they have not always been mandatory disclosure requirements. According to the Insights from the Reporting Exchange: ESG Reporting Trends (2018), at this moment over 1000 reporting requirements have been introduced by national and supra-national authorities. This means that the original objectives of the tool can also represent a challenge or even an obstacle. The Reporting Exchange refers to ESG reporting which is identified with the concept of non-financial reporting.