Sustainable reporting can prepare private sector for smooth LDC graduation: Experts

During the upcoming LDC transition, environmental compliance and labour rights are two issues that will figure prominently for Bangladesh’s overseas market access, experts said on Saturday.

They said sustainability reporting, which is a standard that publicly discloses a company’s environmental, social, and governance practices, will be critical to this end.

In Bangladesh, there is a need to have an institutional framework to promote and guide this practice for the sake of stronger and sustainable private sector growth, they said.

These observations were made at a dialogue titled “Sustainability Reporting by the Private Sector in Bangladesh: Expectations and Experience” hosted by the Citizen’s Platform for SDGs, Bangladesh, in partnership with United Nations Development Program (UNDP), Bangladesh and United Nations Environment  Program Poverty-Environment Action at the BRAC Centre Inn in Dhaka.

Towfiqul Islam Khan, senior research fellow of CPD, delivered the keynote presentation. The dialogue was moderated by Dr Debapriya Bhattacharya, convenor of the Citizen’s Platform for SDGs, Bangladesh and distinguished fellow of Centre for Policy Dialogue (CPD).

Bhattacharya said that sustainability reporting is significant in the process of LDC graduation and SDG. “We should include a strategy paper in the LDC. Otherwise, we can’t achieve northern values. We also should focus on relational data,” he said.

He also mentioned two types of failures: regulatory failure and market failure and Bangladesh has to understand this concept more clearly for a deeper dive into sustainability. Everyone should be included in the process of achieving sustainability regarding the general masses, he noted.

“University Grant Commission should also take steps to include sustainability in curricula. Citizens of Bangladesh can be included in the process of achieving sustainability with the help of the private sector, political leaders, and development workers. Among all stakeholders, large corporate entrepreneurs are the lead representative of sustainability. He requested corporate leaders to come up with their visions for strengthening sustainability,” said Bhattacharya.

Saber Hossain Chowdhury, chairman of the Standing Committee on the Ministry of Environment, Forest and Climate Change, said that they should talk about the importance of sustainability reporting and how it can benefit the private sector.

“To this end, there are three motivations for the private sector: cost reduction, profitability, and increased income,” he said.

Chowdhury also said the process should start from the micro-level industry, and that is the key. ‘Sustainability’ can be the theme of the next budget if private sectors can influence the government with their recommendations, he said.

“Consumers should also be included in the process of promoting and implementing sustainability. Finally, he suggested everyone should adopt and promote sustainability not only as a process but also as a culture,” he added.

Professor Mustafizur Rahman, a distinguished fellow of CPD recommended that companies make a business case out of it as a part of company valuation to make it more quantifiable.

Amitabh Chakraborty, additional director of the Sustainable Finance Department of Bangladesh Bank, said that the central bank has been emphasising sustainability since 2008.

“Though Bangladesh Bank has promoted sustainability reporting, no formal regulation is currently in place. They are expecting to publish a structured report on sustainability within 2030,” he said.

Prasenjit Chakma, an assistant resident representative of UNDP Bangladesh, said that they must figure out the regulatory status of the reporting process, whether it should be voluntary or mandatory, and measure the awareness level among the companies as well as consumers.

“The role of UNDP here can be setting a regulatory standard and proposing a draft policy setting,” he said.

Asif Ibrahim, chairman of the Chittagong Stock Exchange, regretted that most Bangladeshi companies do not have the required human resource expertise or experience to prepare sustainability reports.

Keynote presenter Towfiqul Islam Khan of CPD said sustainability reporting helps the private sector ensure that short-term profits do not turn into long-term liabilities, but in Bangladesh, there have been limited efforts to collate the sustainability reports prepared by the private sector because of sustainable development goals (SDGs) and review them under a single framework.

“The sustainability reporting can inform the policymakers as regards the state of the sectors and contribute to developing sectoral and national policies in the form of a formal and useful instrument as the country prepares itself for the LDC transition,” he added.

Khan pointed out that 49 DSE-listed companies (15%) out of 320 submitted sustainability reports in 2019, with only 11 following the standard reporting framework (3%). The presentation identified several challenges in this context, including lack of awareness, dearth of capacity, absence of culture, weak corporate governance, unavailability of strong regulatory guidance and vague incentives for the private sector in Bangladesh, he said.

He recommends a gradual move toward mandating sustainability reporting from the present practice of voluntary measures.

Some other business leaders also contributed to the dialogue. They include Kamran T. Rahman, senior vice president of the Metropolitan Chamber of Commerce and Industry, Fazlul Haque, former president of BKMEA, Shams Mahmud, former president of DCCI, Zaved Akhtar, CEO of Unilever Bangladesh and Ferdaus Ara Begum, CEO of BUILD.