The Sustainability Code – A New Approach Linking Economy and Society towards Sustainability
| DOI | http://doi.org/10.1111/1758-5899.12206 |
| Author | Yvonne Zwick |
| Published date | 01 November 2015 |
| Date | 01 November 2015 |
The Sustainability Code –A New Approach
Linking Economy and Society towards
Sustainability
Yvonne Zwick
German Council for Sustainable Development
Governance is in transition wherever you look: the inter-
action of politics, economy and the civil society is chang-
ing fundamentally. Facilitating sustainable development
requires for all players to adjust to new forms of govern-
ance. The crowded, carbon and resource-constraint
world, demographic changes and the actual fiscal stress
ask for new forms of governance beyond what we know
as administrative regulation and corporate responsibility.
Therefore, the concept of sustainability must neither
be seen as philanthropy or an add-on to corporate com-
munication, nor must it be perceived as a mere tool to
minimize risks. Of course, minimizing risks remains a stra-
tegic task, but the next step in sustainability manage-
ment is about realizing chances and opportunities, about
new business cases and job machines. Advanced corpo-
rate thinking should produce long-term visions for busi-
ness in a broader perspective. Integrated management
combines strategic entrepreneurial efforts to solve eco-
nomic, environmental and societal challenges. Integrated
thinking should produce long-term visions for investment
and take into account environmental and social criteria
on an equal footing with financial statements. These
issues are currently empowered by an EU Directive on
non-financial reporting and diversity, which will boost
the whole development.
The Sustainability Code fits perfectly well into this pic-
ture. The Code is a transparency standard that shows
how information should be structured and prioritized
against and what is core sustainability management. It
works with a ‘comply-or-explain’approach. A set of 20
criteria and selected key performance indicators (16 from
the European Federation of Financial Analysts Societies,
EFFAS, and 28 from the Global Reporting Initiative, GRI)
provide guidance on how information should be struc-
tured. The Sustainability Code lays focus on realizing
chances and opportunities for business with help of
sustainability management and makes visible, what is
state-of-the-art within a company, whether it is coping
with sustainability issues or not (yet).
The Sustainability Code sets an example in content
and process. The German Council for Sustainable Devel-
opment facilitated an intensive dialogue process among
stakeholders from companies, capital market and civil
society to develop this standard. It is an example for
modern policy making, for soft, cooperative law. As such,
the Code is a means to fulfil the EU Directive on non-
financial information and diversity and enjoys the politi-
cal recognition of Chancellor Merkel.
The initial point for the Council’s work on the Sustain-
ability Code was the financial crisis in 2008/2009. Main-
stream investors addressed the German Council for
Sustainable Development with the pledge to find a way
to mainstream environmental, social and governance
(ESG) criteria beyond the niche. They saw a window of
opportunity, as a vast over- and under-estimation of
companies’values, risks and opportunities became evi-
dent on the capital markets. If only 20 per cent repre-
sented in financial reporting are considered, there is
another 80 per cent of relevant information below the
surface –the so-called ‘intangible assets’. Our question
was: how can we describe these non-financials and
achieve a 360°perspective of the companies’values?
In parallel we have seen an increase in sustainability
engagement of leading enterprises in recent years. In Ger-
many, more enterprises than ever associate themselves
with the transition towards a sustainable economy. An
indication is the increasing number and quality of sustain-
able development reports of corporations and small/med-
ium enterprises, SME. Nevertheless we have perceived a
reporting fatigue: a large majority of companies are not
taking the high-hanging hurdle of reporting on the one
hand and companies are complaining about intransparent
sustainability ratings and rankings with their big variety of
criteria, questions and questionnaires raising the efforts of
Corporate Social Responsibility (CSR)- departments.
Frontrunners and leaders should continue to share the
competitive advantages while others should be encour-
aged to access the new practise of developing chances
in a sustainable economy. Therefore, the future belongs
to an educated sustainable development (SD) reporting
along shared and binding criteria that has effects on
markets and mindsets.
Global Policy (2015) 6:4 doi: 10.1111/1758-5899.12206 ©2015 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 6 . Issue 4 . November 2015 481
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