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GRI Guidelines Revisited

With increased publication of corporate sustainability reports, companies are looking for ways to gain more from the reporting process, and for ways to produce better reports. One of the most effective routes to extracting more from reporting is to base a sustainability report on the Global Reporting Initiative’s Sustainability Reporting Guidelines. Reports based on the Guidelines consistently place high in benchmarking studies and awards programs. More importantly, GRI-based reports have enabled companies to squarely focus on stakeholder relations.

However, if the feedback at seminars and in sustainability publications is any indication, the Guidelines are not everyone’s favorite, and are in need of continued improvement. As well, it’s true, sustainability reports that are not based on the Guidelines have won awards too. Still, despite their shortcomings, the Guidelines continue to shape the world of sustainability reporting.

According to the KPMG International Survey of Corporate Sustainability Reporting 2002, approximately 45% of the Global Fortune 250 now produces some type of social, environmental, corporate citizenship, or sustainability report. This figure is up from 35% in 1999. National surveys around the world also point to steadily increasing uptake of sustainability reporting.

In the late 1990s when sustainability reporting was just getting started, companies floundered individually to determine what information to include in their non-financial performance reports. With the introduction of the GRI’s first set of Guidelines in 2000, companies started to look to guidance developed through a multi-stakeholder process to help structure their reports and enhance credibility.

Because sustainability reporting is still nascent, any means through which a company can streamline the process and ensure high quality results that meet stakeholder expectations, is seen as effective. If through sustainability reporting companies hope to communicate clearly with stakeholders -- be they customers, investors, employees -- and to identify how to improve their social, economic and environmental performance, then doing so based on the emerging international standard recommended by leaders in business, financial services, benchmarking groups and advocacy groups is a logical approach.

Is it just a coincidence that GRI-based reports are winning sustainability reporting awards and topping benchmarking lists, or is there good reason?

First, the evidence. Here is how GRI-based reports are faring lately:
  • All five winners of the Australian 2002 Sustainability Reporting Awards announced in June 2003
  • Four of the five winners in the 2002 US Awards for Sustainability Reporting announced in April 2003
  • All four of the awards in the sustainability reporting category in the 2002 U.K. Awards for Sustainability Reporting announced in March 2003
  • The winner of the best 2002 sustainability report in New Zealand by a non-listed entity
  • Seven of the top 10 reports in the June 2003 csr network limited report of Fortune Global 100 companies, “2003 Benchmark Survey of Global Reporting”
  • Twenty of the top 25 reports in SustainAbility Ltd.’s “Trust Us” 2002 benchmarking study of global reporters
Now, comments from the report-producing community:
  • “We will engage our stakeholders on corporate sustainability and the triple bottom line, set targets and measure progress using a framework such as the Global Reporting Initiative.” (Forum for Corporate Conscience, Collective Intentions as Adopted by Delegates (100 top US executives), March 2003)
  • “The GRI Guidelines have encouraged us to take a more comprehensive look at our performance…. Now through our sustainability report we are able to… show the synergies and interrelationships in defining our success and responding to diverse stakeholder interests.” (Harry Kraemer Jr., CEO, Baxter International, April 2002)
  • “The GRI Guidelines have been a great help for us in understanding and translating the changing global agenda into topics and issues that Novo Nordisk should report on to the public.” (Lise Kingo, Senior Vice President, Stakeholder Relations, Novo Nordisk A/S, December 2001)
Finally, comments from report users:
  • “The GRI enables less time gathering data and more time analyzing data.” (Robert Walker, Vice President, SRI Policy and Research, Ethical Funds Inc., June 2003)
  • “Overall, we view the GRI as setting the global benchmark for disclosure and encourage companies to produce reports which are in accordance with the GRI Guidelines.” (Henderson Global Investors, SRI Annual Report, May 2003)
  • “As one of the NGOs supporting the GRI, Greenpeace encourages companies to use these guidelines to report their environmental and social contributions to society.” (Greenpeace Business, Issue 70, December 2002/January 2003)
Companies that undertake sustainability reporting based on the GRI Guidelines send a strong message to readers that they are serious about non-financial disclosure. They also send a clear message internally that they plan to pursue continual improvement of their social and environmental performance.

It’s no coincidence that GRI-based reports are highly regarded. Based on the input of a diverse range of stakeholders worldwide, including representatives of business, civil society, government, the financial community, and labor, the Guidelines represent the state of the art in guidance on sustainability reporting.

All of this is not to say that the Guidelines are perfect. Due to their relatively immature state, sustainability reporting and the guidance that shapes it face many challenges.

There are limits to the “one-size-fits-all” approach to reporting embodied in the Guidelines. To capture the unique set of sustainability issues faced by different industry sectors (e.g., mining, automotive, banking), GRI needs to continually expand its suite of incipient sector supplements for use in conjunction with the Guidelines. Earlier this year, members of the International Petroleum Industry Environmental Conservation Association (IPIECA) took a long hard look at the GRI Guidelines and found the individual elements as being only somewhat useful. IPIECA also made suggestions for improving the Guidelines, including development of indicators that are more specific to the oil and gas industry.

Some critics depict the Guidelines as insensitive to materiality and as requiring an indiscriminate volume of information. Greater clarity is necessary on how adherence to the reporting principles stated in the Guidelines serves the objective of materiality. In their report, Redefining Materiality, AccountAbility and the U.K. Social Investment Forum propose a five-part test of materiality to determine exactly what to disclose. Perhaps the GRI should take a close look at this contribution.

In the borderless world of corporate activity a further challenge for GRI lies in clarifying the boundaries of enterprises for reporting purposes. Significant questions remain as to how far up the supply chain and down via customer activities should be included within the jurisdiction of a reporting entity.

A process of compliance monitoring or independent verification is essential for the integrity of the reporting process. Additional definition on the role and rules for report assurance is needed to further enhance the credibility of reports based on the Guidelines.

The Guidelines’ continual refinement is necessary to elevate non-financial reporting to the same routine practice as financial reporting. The ongoing participation of report producers and users in the Guidelines improvement process is essential to reflect stakeholder information needs ever more closely.

And at some point it will be unnecessary to highlight which award-winning reports were based on the Guidelines.

Mark Brownlie, formerly with the Global Reporting Initiative, is now chief executive of Responsibility Matters, a consulting firm based in Calgary, Canada that assists companies and non-profits on sustainability communications and strategies.

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