Sustainability reporting : the role of financial institutions

Environmental damage caused by a company can lead to degradation of the environment and to financial consequences for a company. Non-financial reporting can benefit not only stakeholders, consumers and environmental interest groups but also the business itself, as companies that engage in voluntary sustainability reporting may gain commercial benefits. This article argues that financial institutions may use their corporate capital policies to ensure that there is effective reporting by companies on environmental issues. These policies are likely to be based on voluntary global initiatives that require those involved in the financial sector to accept a level of responsibility for the environmental and other effects that result from their provision of capital to corporations or specific projects.