The Global Reporting Initiative in Denmark: Emperor’s New Clothes or Useful Reporting Tool?

Abstract

In his 1776 magisterial An Inquiry Into the Nature and Causes of the Wealth of Nations Adam Smith argued that personal self-interest combined with ‘a certain propensity in human nature … to truck, barter and exchange one thing for another’ (Adam Smith 1976: 25) had resulted in the division of labour that according to Smith was the cause of the great improvement at his time of the productive powers of labour. Today the prevailing understanding of the role of business in society has changed. Business operating in less developed countries is increasingly held accountable for the protection of human rights, labour, the environment, etc., and therefore seeks to increase transparency on corporate action with respect to these issues. A range of certificates and auditing procedures has emerged in the name of the triple bottom line and sustainability accounting, which goes beyond financial accounting to include social and environmental performance. Much time, effort and money are spent producing these reports. Are these initiatives useful new reporting tools or are they akin to the emperor’s new clothes as part of a corporate image campaign?

My thanks to Katrine Plesner for research assistance and to Danisco, Dansk Standard, Grundfos, Novo Nordisk and Novozymes for their helpful input.