‘Report or Explain’ sustainability disclosures by 2015 ­— GRI

I (BC) spoke to Ernst Ligteringen (EL), the Chief Executive of Global Reporting Initiative (GRI) on a number of issues regarding sustainability and integrated reporting. GRI is based in Amsterdam. These are excerpts from the last of a two part interview. 

BC: Global Reporting Initiative (GRI) is largely  unknown in Zimbabwe. What is the Global Reporting Initiative and what is its mandate?
EL: Global Reporting Initiative (GRI)’s mission is to enable companies to produce and compare reports on different aspects of their sustainability, such as their carbon footprint, equality and diversity, and energy efficiency.
In order to do this, GRI produces the world’s most widely used sustainability reporting framework, known as the “G3 Guidelines”, which companies can follow to produce a sustainability report. The Guidelines explain what economic, environmental, and social “indicators” companies should report on, and how they could do it. The GRI Guidelines offer a world language for reporting on environmental and social impacts, which enables us to understand each other and to talk about the effect we are having on this planet we share. GRI works closely with its stakeholders to update and develop the Guidelines, ensuring they are effective.
There is growing evidence to suggest that investors may be offered advantages when the indicators highlighted in GRI’s Guidelines, known as “Environmental, Social and Governance (ESG) factors”, are considered alongside investment analysis and used in decision making processes. This kind of information is required to meet the different needs of managers, shareholders and stakeholders, and it provides the foundation for thriving partnerships.
Governments also stand to benefit from improved ESG reporting from all corners of the economy. Companies that produce ESG reports are more transparent, promoting more effective and efficient markets, and helping governments deliver on the goal of a sustainable global economy.
GRI believes that ESG reporting is good for companies, for markets, and for society at large. Therefore, GRI argues that all large and medium-sized companies in OECD countries and fast-growing emerging economies should report publicly on their ESG performance. GRI argues that in order for access to, and analysis of, this type of information to become more commonplace and robust, regulators should adopt a “report or explain” approach to ESG performance disclosure. This means that regulators should ask companies to report their ESG performance or, if they have a good reason not to, explicitly state what that reason is. GRI believes that this could be achieved by 2015 and are calling on companies and market regulators to support this goal.
Secondly, GRI advocates that, by 2020, a standard for integrated reporting, where companies combine their financial and sustainability reports, should be defined, tested and adopted.
BC: What is the governance structure of GRI and how much support does GRI enjoy globally and in Africa particularly?
EL: GRI is structured as a global multi-stakeholder network, overseen by several governance bodies and coordinated by the Secretariat.
The network consists of thousands of experts, in dozens of countries worldwide, who either participate in GRI’s working groups and governance bodies, use the GRI Guidelines to report, access information in GRI-based reports, or contribute to develop the Reporting Framework in other ways.
The governance bodies are comprised of the Board of Directors, the Stakeholder Council and the Technical Advisory Committee. The Stakeholder Council (SC) is GRI’s formal stakeholder policy forum, similar to a parliament, that debates and deliberates key strategic and policy issues. The Technical Advisory Committee (TAC) provides high-level technical advice and expertise to the Board of Directors. The SC meets annually and TAC twice a year and each is comprised of a balance of stakeholders and geographic constituencies.
Several of GRI’s Organizational Stakeholders and several training partners are based in Africa:
lThe Organisational Stakeholder Program is located at the center of the global multi-stakeholder network that makes up GRI. By putting their names to the GRI mission, products and processes, and by broadening participation around sustainability and transparency, the Organisational Stakeholders provide a key basis for legitimacy, and they play an important governance role by electing members to the GRI Stakeholder Council annually.
lGRI’s training partners are certified to offer training to companies that want to produce a sustainability report using GRI’s Guidelines.
BC: I learnt about your activities from a “sustainability report” produced by the South African-based Pretoria Portland Cement (PPC) which is also listed on the Zimbabwe Stock Exchange. What is a “sustainability report’’ and what is the business case for embracing sustainability reporting?
EL: Sustainability reporting is a practice by which an organisation discloses its economic, environmental, and social performance. Many organisations find that financial reporting alone no longer satisfies the needs of shareholders, customers, communities, and other stakeholders for information about the overall performance of the organisation.
GRI’s Guidelines explain what economic, environmental, and social “indicators’’ companies should report on, and how they could do it. The GRI Guidelines offer a world language for reporting on environmental and social impacts, so that we can understand each other and talk about the effect we are having on this planet we share.
Although all companies make economic, environmental and social impacts on the world, different sectors, including mining, automotive, banking, and public agencies, face different sustainability issues. To capture these issues and offer tailored guidelines, GRI also produces several “Sector Supplements’’ that can be used alongside the Guidelines.
Only what gets measured can be managed and improved. Sustainability reporting is an important way for organisations to manage and improve their economic, environmental, and social performance. By being clear about their sustainability performance, companies can benefit from increased employee satisfaction, brand and reputation enhancement, improved relationships with stakeholders and standing out from their competitors.
People who read reports produced using GRI Guidelines can compare the economic, environmental and social performance of different companies, as well as monitoring the change in a company’s performance over time. This kind of assessment can be helpful in planning future improvements to managing sustainability.
BC: The sustainability reports are classified into different levels. The PPC sustainability report I read was classified as a Level C report. What are these levels and what is their significance?
EL: The “Application Levels’’ GRI uses indicate the sort of content to expect in a report, and to what extent the Guidelines have been followed. The Application Levels are also intended to provide GRI reporters with a pathway to follow to improve their reporting.
There are three Application Levels: A, B and C. C is the starting level, appropriate for first-time reporters and smaller companies, and A is the most extensive, for larger and more experienced companies.
The levels can be self-declared or checked, either by GRI or a third party. Reports that have been checked can also be assured by an external assurance service, which would result in published conclusions on the quality of the report and the information contained within it. GRI recommends the use of external assurance for sustainability reports in order to achieve a thorough and comprehensive evaluation.

Share your views at brettchulu@consultant.com

 

Brett Chulu

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