Voluntary Disclosure: What it means and how it can bolster compliance

What is Voluntary Disclosure?

Voluntary disclosure is information that a company chooses to share that goes beyond legal requirements. Voluntary disclosure can include a variety of topics including financial reporting, risk management disclosure, sustainability and corporate governance. It is typically viewed positively, and is a sign of transparency, accountability and trust by the company.

Key Takeaways

• Voluntary disclosure is when a company discloses information beyond what is legally required of them

• The information could be on a variety of topics including financial, sustainability and risk management

• Voluntary disclosure can help companies to establish a positive reputation and build trust

• Voluntary disclosure can also be a tool to help with risk management and to ensure that stakeholders are making informed decisions

Building a Positive Reputation: Voluntary Disclosure and Corporate Social Responsibility

To further prioritize transparency, companies may use voluntary disclosure to share more about their corporate social responsibility activities. Corporate social responsibility is when companies make an effort to operate in ways that improve society and the environment as a whole. By voluntarily sharing about their CSR initiative, not only can companies prioritize transparency but they can also further establish a positive reputation for themselves not only with employees, but also investors and stakeholders.

Using Voluntary Disclosure as Risk Management  

Through voluntary disclosure and sharing more information then legally required, companies are able to turn voluntary disclosure into a tool for risk management. Disclosing information earlier can help alert stakeholders to risk before it grows into a larger problem. Doing so also helps to create realistic expectations for stakeholders of the current stake of the company and how risks are being identified and managed. Reducing uncertainty around risk in short, can help companies and their investors and stakeholders make informed decisions.

Conclusion

Voluntary disclosure is when a company chooses to share information that goes beyond legal requirements. It could include information related to financial reporting, risk management, sustainability and more. Voluntary disclosure can help companies to build a positive reputation for themselves while also getting to share more about their corporate social responsibility initiatives. Finally, voluntary disclosure can also aid with risk management and making sure that all stakeholders have the information about risks required to make informed decisions.