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1. Do you think corporations should support GRI? Why do they do it?
2. What are the Principles on which GRI is based?
3. Do you agree with Mallen Baker’s view of GRI?
4. Do you think that GRI will succeed?
5. What steps should GRI take to ensure its success? |
Standardization of CSR Metrics
Sustainability has come into use as a word that covers both environmental reporting and workplace reporting. The issue is the sustainability of individual corporations, the existing capitalist system, and the world as a whole.
The UN Global Compact and the World Business Council for Sustainable Development (WBCSD) are working together in this area. They are sharing experience and learning in the area of the most effective performance models and tools to integrate the universal principles of the Global Compact into business strategy. The WBCSD has also launched a sustainability reporting portal that brings together different aspects of company reporting from across the world. The reporting portal, at , provides visitors with an understanding of the issues and information companies are discussing in their sustainable development reports. Additionally, the Caux Roundtable has also sought to address global reporting and sustainability issues by starting from basic principles of human organization.
Today, the field is crowded with numerous rating and evaluation services. Because criteria and available data vary by country, GRI was convened by CERES in 1997 as a multi-stakeholder, international harmonization program with the goal of making sustainability reporting as rigorous and universal as financial reporting. It cut its formal ties with CERES in 2002 and is now an independent NGO that partners with the UN Environment Program (UNEP).
GRI described itself in April 2002 as follows: “The GRI was established to develop, promote, and disseminate a generally accepted framework for sustainability reporting - voluntary reporting on the economic, environmental, and social performance of corporations and other organizations. Its mandate as an international standards body is to make sustainability reporting as routine as financial reporting while achieving the highest standards of consistency and rigour."
The GRI is a potentially important undertaking. It has developed a set of measures that can be used for businesses throughout the world, allowing for variation among industry sectors. Dozens of global companies are piloting the draft GRI metrics. The GRI Sustainability Reporting Guidelines identify specific information needed to report on environmental, social and economic performance, incorporating eleven principles for companies and other entities:[1]
Accuracy: Reports should achieve the degree of exactness and low margin of error in reported information necessary for users to make decisions with a high degree of confidence.
Auditability: Reported data and information should be recorded, compiled, analyzed, and disclosed in a way that would enable internal auditors or external assurance providers to attest to its reliability.
Clarity: The reporting organization should be aware of the diverse needs and backgrounds of its stakeholder groups and should make information available in a manner that is responsive to the maximum number of users while still maintaining a suitable level of detail.
Comparability: The reporting organization should maintain consistency in the boundary and scope of its reports, disclose any changes, and re-state previously reported information.
Completeness: All information that is material to users for assessing the reporting organization's economic, environmental, and social performance should appear in the report in a manner consistent with the declared boundaries, scope, and time period.
Inclusiveness: The reporting organization should systematically engage its stakeholders to help focus and continually enhance the quality of its reports.
Neutrality: Reports should avoid bias in selection and presentation of information and should strive to provide a balanced account of the reporting organization’s performance.
Relevance: Reports should include information appropriately important to the particular aspect, indicator, or piece of information, and is above the threshold at which information becomes significant enough to be reported.
Sustainability Context: The reporting organization should seek to place its performance in the larger context of ecological, social, or other limits or constraints, where such context adds significant meaning to the reported information.
Timeliness: Reports should provide information on a regular schedule that meets user needs and comports with the nature of the information itself.
Transparency: Full disclosure of the processes, procedures, and assumptions in report preparation are essential to its credibility.
As with financial reporting, the centerpiece of GRI reporting is a CEO statement and some key environmental, social and economic indicators. In addition, GRI requires a profile of the reporting entity, descriptions of relevant policies and management systems, stakeholder relationships, management performance, operational performance, product performance and a sustainability overview.
Example: GRI’s First Indicators
The GRI has not been an instant success. Critics charge that its search for broad consensus has resulted in a dilution of rigor. SustainAbility reports that CSR reports doubled in length in 2002 but have not provided more useful information.[2] Others charge that the greatest shortcoming of the direction that the GRI has taken so far is that it hasn’t adequately recognized the enormous quality differential between reports with and without verification, and between verification with and without certified auditors against multi-stakeholder standards. GRI requirements lag far behind the reporting and verification described earlier in this chapter. Since GRI is in its infancy, it has the potential to take corrective actions.
Excerpt from “The GRI – Raising the Bar Too High?” by Mallen Baker (October 2002)[3]
The GRI has released the latest version of its guidelines … against a backdrop of resistance to the framework from some companies who see it as setting the bar unrealistically high, whilst [it is] nevertheless seen as the only game in town by a broad range of stakeholders who are desperate for a global agreement on what constitutes social reporting.
Following its earlier draft, the GRI received quite a bit of feedback from both companies and other organizations. What shone through was the continuing will amongst the various stakeholders that the GRI should succeed. …
Nike commented: "The depth of the questions is overwhelming at times, however the flexibility allowed by the structure makes the GRI more digestible and tenable than most surveys. It can also serve as a useful catalyst in engaging internal leaders in substantive discussion around governance and triple bottom line accountabilities."
Deloitte Touche were more critical: "We do believe that the core indicators required by the 2002 Exposure Draft are too voluminous and will discourage too many organizations from even attempting to report under the GRI Guidelines. …We are concerned that the GRI is proceeding down a path of attempting to make a sustainability report be everything to everyone rather than focusing on how the reporting entity's sustainability performance can be measured overall.”
The GRI now has 50 core indicators. … of those 50, no less than 16 - nearly a third - ask merely for a policy and/or process to deal with an issue. How such an indicator translates into performance that can be tracked year on year is anybody's guess. Most external stakeholders wanting information about a company's performance on child labour will be more interested on whether the company has actually in reality employed children anywhere in its supply chain rather than whether it has a policy on the subject. …
The basic structure of the indicators promises a lot of useful information. Economic, environmental, social - covering a broad range of potential stakeholders. But then it is by no means clear what some of the resulting measures are actually for. … Many of the indicators - particularly in the environment sphere - are well-considered, and give valuable information. And it is not surprising that achieving agreement on this takes time - the standards for financial reporting were not born in a day after all. …
The danger for the GRI is that businesses are impatient to move forward - and if they are to embrace reporting, which many of them are starting to do, they want to see the value. … Alternatively - and this is quite a likely option - businesses will realise that reports need to focus only on those audiences who are used to gaining their information from reports - mostly the financial sector. And the rules for such reports will more quickly be established through a dialogue between the companies and those audiences. Then they will have to work out just how they communicate with the other audiences - the local communities, the employees and the customers. …
The only thing lacking from the debate at the moment is what would seem to be the appropriate sense of urgency. Windows of opportunity do not stay open forever.
[1] Deloitte and Touche has suggested an additional principle, namely a clear view of quality indicators covering performance areas wholly within the reporting organization’s own control.
[2] SustainAbility has made this point. The Chiquita annual report was long and useful, but its most useful information was in the form of a few tables showing progress in achieving compliance with certain standards.
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