The GRI and Corporate Reporting

The GRI and Corporate Reporting

Here’s a look at how companies are using the Global Reporting Initiative Guidelines for corporate sustainability reporting and what some of them have to say on the subject. By Peter Downing



British Airways, General Motors, McDonald’s and Panasonic do it, as does China’s Hong Kong-based MTR Corporations, whose key mission is “to develop and operate a world-class railway and to enhance the quality of life of people in Hong Kong.”

These are just five of the 140 corporations worldwide that issue Global Reporting Initiative Sustainability Reporting Guidelines reports. Seventy-one corporations are from 10 European Union countries, 24 from the United States, 19 from Japan, 8 from Australia, 7 from Canada, 5 from South Africa, 2 from New Zealand, and 1 each from Brazil, China, India, and Poland. Where major firms lead, others must follow.

GRI’s mission is to create a new, generally accepted sustainability reporting framework that will be equivalent to financial reporting practices. This will be an ongoing quest with the bar of financial reporting practices being raised by the U.S. Securities and Exchange Commission and the European Commission in Brussels.

In 2001, 31 of the June 2002 Guidelines reporting companies participated in GRI’s “Structured Feedback Process” Response, a six-part, 50-question feedback exercise on the dynamics of corporate GRI sustainability reporting. No responding company answered all the SFP questions. To enable GRI report readers and first-time GRI reporting companies to understand what is involved in compiling a GRI Guideline sustainability report, TG International Ltd. analyzed the responses to nine SFP questions from 20 GRI reporting companies.

Of the 20 GRI reporting companies listed in Table 1 (below), GRI Performance Indicators Compliance, Germany’s privately owned CWS Powder Coating was the smallest company, with $50 million in sales and 250 employees. Publicly-owned Ford Motor was the largest company with $170 billion in revenues and 346,000 employees worldwide. An unexpected finding was that 6 (30%) companies are privately-owned corporations, the others being publicly owned enterprises.

Q1 Does your company have previous experience in preparing EH&S, social, and sustainability reports?

For 6 (30%) companies, this was their first of its kind report (Agilent Technologies, U.S.; Ito Yokada, Japan; Jebsen and Jessen, Singapore; Natura, Brazil; Nike, U.S.; companies (Baxter, U.S.; ESAB, Sweden; Ford Motor, U.S.; Proctor and Gamble, U.S.; TXU Europe, U.K.) were among the 21 international companies that “pilot-tested” GRI’s 1999 Draft Guidelines.

Q2 Overall, what are the main strengths and weaknesses of the guidelines and the GRI process? (See graph below.)



Q3 What frequency of public reporting do you consider appropriate for your organization (annual, biennial, other)?

Thirteen companies will issue annual GRI reports, four biennial GRI reports. Three other companies replied:
  • Jebsen and Jessen, Singapore: “Once in 3 years.”
  • Nike USA: “Biannual with annual update of key information/ indicators.”
  • TransAlta, Canada: “Externally annually evolving to quarterly. Internally monthly.”
Q4 If possible, please breakdown reporting costs into information collection, report design, writing, verification. legal approval etc.Many companies said they didn’t know, others simply left the question unanswered.
  • Agilent Technologies, USA: Approximately $240,000 for design, writing, printing (external costs). Does not include internal labor for review, editing or data collection. Not verified.
  • BASF, Germany:
    40% data and information collecting
    30% editorial work (including project management, writing, coordination with internal stakeholders)
    30% design (report includes some rather expensive illustrations)
  • ESAB, Sweden:
    25% information gathering
    30% reporting design
    30% writing
    15% printing
  • Ford Motor, USA: Approximately $350,000, excluding the cost of information collection. Not verified.
  • Panasonic, Japan:
    Information collection, 2 million yen
    Planning, 3 million yen
    Design/Writing, 20 million yen
    Printing, 5 million yen
    Verification, 3 million yen
    Total = 33 million yen ($262,000)
  • Rio Tinto, UK: Significant costs. At a corporate level for 2001 alone, the cost will be over $1 million. This is without taking into account the cost of collection at the 30 businesses.
  • TransAlta, Canada: Costs have been and will continue to be significant, mostly in human resources. We estimate that we spend $200,000 on developing improved and broader information for our SD reporting, internal and external.
    15% Information collection
    40% Report design
    30% Writing/Data analysis
    15% Verification and other
Q5 Are there indicators that you find are inappropriate because they require release of information that you consider proprietary or competitive?
  • BASF, Germany: There are other indicators we do not agree with, e.g. reporting on legal non-compliance.
  • Ito Yokado, Japan: We are retailers, also most all products that we sell are imported. We can not check how their labor conditions really are.
  • Jebsen and Jessen, Singapore: Asians will be more secretive. We should allow more time for GRI user to develop key performance indicators that can be shared openly. Avoid “enforcing western values”.
  • Proctor and Gamble, U.S.: Discussion of wages in many countries is seen as a very personal subject.
  • TransAlta, Canada: Yes, some requested indicators are considered competitive information. This will vary from company to company, but some that we have concerns with are: taxes paid, value of goods and services out-sourced and employee retention rate.
Q6 Approximately how much (e.g., percentage) of the indicator list does your report cover?

As shown in Table 1, 17 companies reported their highest GRI performance indicator compliance to be the environmental indicators and the social performance indicators as their lowest reporting compliance. Two companies gave no response and one was incomplete as the social indicators.



Q7 Please indicate which sections/ indicators presented the most significant challenge for your company.

Eleven of the 17 responding GRI companies cited social reporting as the significant GRI reporting challenge. Three GRI companies gave no response.

An effective GRI sustainability report must have relevant social performance indicators. Social performance will be a key ingredient in assuring an organization’s 21st-century global “license to operate.”

Q8 How much of the required information was already collected in your organization?

Another reason for non-compliance with GRI performance indicators is the need for a triple bottom line management information system. Most companies have financial and environmental management information systems. Few have a social management system to capture, measure and report its operational social impacts.
  • Baxter, U.S.: Collection of economic data published in the annual financial report is well established. Data for some of the other economic indicators isn’t readily available. We need to obtain more data for non-US sites and to develop more metrics in this area. Collection of environmental, health and safety data is well established. However, this area is still evolving and requires considerable refinement each year.
  • CWS Powder Coating, Germany: Environmental 80%, Social 20%, Economic 5%.
  • Panasonic, Japan: To assess environmental performance, a system that will cost several tens to several hundreds of million yen will be necessary. We have no estimate for the system to assess social performance.
  • Renault, France: Overall 75%-90%, of which maybe 50% certified in some way.
  • TXU Europe, U.K.: Most of the required information is already collected in established data systems, but wasn’t necessarily reported on and analyzed using the metrics suggested in GRI.
Q9 Do your reporting boundaries go beyond financial reporting definitions to capture major sustainability issues? Are they consistent?

Almost every companies said their GRI report went beyond financial reporting boundaries, both literally and figuratively.
  • Agilent Technologies, U.S.: They were the same for numerical data but narratives went beyond financial boundaries to include suppliers, community etc.
  • BASF, Germany: Yes, we include aspects of our supply chain in our report.
  • ESAB, Sweden: ESAB does not publish an annual financial report. In general, financial reporting does not include a life-cycle perspective for sustainability reporting.
  • Ford, U.S.: In some instances, our citizenship report boundaries go beyond financial boundaries by looking at supplier performance.
  • Nike, U.S.: We have a heavy emphasis on social and environmental information and data that relates to these operations (suppliers). Our financial data, however, is consistent with SEC guidelines.
  • SKF Group, Sweden: Not consistent. Financial report covers entire organization. Sustainability report covers countries with production and distributions facilities (21 countries) but not countries with sales facilities (100+ countries).
As the SFP responses have shown, preparing a GRI sustainability report is an imposing challenge for the reporting organization. Unfortunately, the new August 2002 GRI Guidelines will not make corporate sustainability reporting any easier. Public comments on the April 1, 2002 Draft Guidelines by many of the 80 respondents took strong exception to the largely unchanged final August 2002 GRI Guidelines.

The submission of the Joint Task Force of the American Institute of Certified Public Accountants and the Canadian Institute of Chartered Accountants stated, “We firmly believe that significant improvements need to be made if the goals of effective and economic sustainability reporting and widespread adoption of the Guidelines are to be achieved.”
  • Proctor & Gamble, USA: “The 2002 Draft Guidelines have changed so much that organizations, even those that have previously used them, will be unable to … [and this also] will be a barrier for new companies to start using them.”
The most contentious issue was in order to report “in accordance” with the GRI Guidelines, the reporting organization must meet five conditions:

  1. A GRI content index, a table identifying location in the report of each element of the GRI report content
    • Ricoh Company Ltd. Japan: “I don’t think companies will like to make a GRI content index with so many con-tents left out.”
  2. Prepare 46 qualitative statements pertaining to vision and strategy, profile, governance structure, management systems and stakeholder engagement.
    • Gaz de France: “What about the size of the document? Won’t it be too long and difficult to read?”
  3. Report on 57 core performance indicators (omissions of each core indicator must be explained). There are 44 non-core performance indicators.
    • Ford Motor, USA: “It will be a challenge for Ford to pro-vide data on all the core indicators at this point.”
    • Deloitte Touche, Denmark: “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.
    • World Business Council for Sustainable Development, Switzerland: “The effort required to collect, assemble, analyze and report on the core indicators is huge and will discourage companies from participating.”
  4. Ensure the report is consistent with GRI’s 10 qualitative reporting principles.
    • The Institute of Chartered Accountants of England and Wales: “In the area of reporting principles, we do not think these changes are for the better.”
  5. Include a statement by the board or CEO that: “this report has been prepared “in accordance” with the 2002 GRI Guidelines. We believe that this statement is a true and fair representation of our organization’s sustainability performance.”
    • Yasuda Fire & Marine Insurance Co. Ltd. Japan: “I would like to prepare a report [in accordance] with the guidelines, but complying with all the indicators could be very difficult.”
    • KPMG Netherlands: “We doubt if ANY company will EVER meet the conditions for reporting ‘in accordance’.”
    • The Institute of Chartered Accountants of England and Wales: “We believe it is inappropriate for the guide-lines to employ the term ‘true and fair’ with regards to sustainability reports.”
    • TG International Ltd., Canada: recommended that a GRI reporting organization should be able to state that their report was prepared “in accordance” with the 2002 GRI Guidelines except where otherwise noted.
The caveat except where otherwise noted could be presented in the GRI Content Index by means of a more flexible and simple reporting status such as [1] Reported, [2] Not applicable [3] Restricted for proprietary, competitive and cultural reasons [4] Not measured and [5] DNU, do not understand a specific GRI Guidelines requirement. [Ford Motor: “What does “economic capacity” mean?” Sony Corporation: “What does it mean to match the sustainability foot print?”]

GRI must take quick action and heed the discontent of its most ardent supporters. The five-pronged “in accordance” directive should be suspended, subject to further study. Old and new reporting organizations should be allowed to the use of the June 2000 Guidelines Performance Indicators and to adopt the hopefully revised 2002 Guidelines on a gradual basis. If not, GRI’s five years of work in successfully advancing a worldwide corporate sustainability reporting framework will be derailed. That would be a pity. Half a corporate GRI sustainability report will be always be better than none.

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This article is reproduced from the January 2003 edition of Ethical Corporation magazine, a U.K.-based publication providing news, commentary, analysis, executive training workshops, and conferences on the subject of global corporate citizenship management. For details of how to subscribe to this monthly publication and more information on the services they provide, go to www.ethicalcorp.com.
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