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SIO calls for securities and accounting reforms to provide for mandatory social and environmental reporting

In briefs to the Quebec Public Finance Committee and the Canadian Institute of Chartered Accountants, the Social Investment Organization has called for reforms to require publicly-listed companies to disclose their social and environmental risks and opportunities.

In its brief to the Quebec Public Finance Committee, SIO calls on the committee to make three key recommendations:

	That the Quebec Securities Commission work with securities regulators across Canada to require companies to have codes of conduct and the code include social and environmental responsibilities
	That the Quebec Securities Commission work with securities regulators across Canada to require companies to make regular disclosures of social and environmental risks
	That the Quebec Securities Commission work with securities regulators across Canada to require audit committees of publicly-listed companies to review their social and environmental risk management systems.

Such rules would be modeled on British rules requiring public companies to identify social and environmental risks and to employ risk management systems to address them.

"In the last few months, much attention has been focused on the shaken confidence of the world's capital markets resulting from the corporate abuses of Enron, WorldCom and other companies," states the brief. "As socially responsible investors, we believe this crisis of confidence involves more than just accounting and auditing abuses. We believe that these examples of corporate malfeasance are indicative of a larger underlying problem in which corporate management emphasizes short-term profit and short-term capital appreciation at the expense of stakeholders, including investors."

"Corporate reporting on social and environmental issues holds the potential to reduce risk and enhance long-term shareholder return. Social and environmental disclosure is increasingly viewed as an element of good corporate governance."

The brief also calls for mandatory disclosure of socially responsible investment policies at pension funds registered in Quebec as well as policies to improve investor access to community loan funds.

The brief to the Canadian Institute of Chartered Accountants is in response to a paper issued by the CICA clarifying management responsibilities under accounting standards for Management Discussion & Analysis (MD&A).

"Our members are very interested to see strengthened governance requirements through accounting standards, such as the MD&A Guidance, as well as improved securities regulations, such as the Canadian Securities Administrators (CSA) continuous disclosure rules now under discussion," states the brief.

To obtain a copy of the Quebec Public Finance Committee brief in English or French or a copy of the the MD&A brief, visit our Policy and Advocacy page.

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