Are public companies about to face mandatory disclosure rules about corporate social responsibility? According to the Ontario Securities Commission, the answer is no; at least not yet.
A report prepared by the Hennick Centre for Business and Law at York University and by Jantzi-Sustainalytics for the OSC calls for regulators to encourage companies to report more information about their social practices. At the same time, it shuns the need to adopt new rules forcing higher disclosure standards saying leadership and guidance is more appropriate at this stage.
One issue is that there’s no clear consensus about what social reporting factors are most relevant. Another is that existing rules require that only that material information must be disclosed.
The report goes as far to conclude that regulators like the OSC should encourage companies to be more open; to disclose whether they even have social policies and to evaluate their effectiveness.
The adoption of more formal rules surrounding corporate social responsibility would result in heightened transparency. At the same time, it could place additional reporting burdens on small cap companies.
For now, the status quo remains. However, as investors rally for increased disclosure in all areas of business, this is one aspect that companies may want to keep a close eye on. Even in the absence of formal requirements, taking a proactive stance with this type of communication can be beneficial, boosting credibility and providing additional means to build shareholder trust.