SRI Community Adding Its Two Cents to Comments on GRI G3 Guidelines

SRI Community Adding Its Two Cents to Comments on GRI G3 Guidelines

One-third of the three-month period remains before the March 31 deadline for submission of public comments on the draft of new Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, dubbed "G3" as the third generation of guidelines. The socially responsible investing (SRI) community, many of whom participated in the GRI Stakeholder Council or the three work streams that provided structured feedback on revising the indicators, are gearing up to submit comments aimed at improving the draft.

"The GRI guidelines for sustainability reporting have become the major framework for companies to report on social and environmental issues, so it's critical to take advantage of this opportunity to improve the indicators and the overall process around the GRI," said David Schilling, who served on the G3 Human Rights Advisory Group. Rev. Schilling is also director of the contract supplier and human rights programs at the Interfaith Center for Corporate Responsibility (ICCR), a coalition of 275 faith-based institutional investors with more than $110 billion in assets. "We're encouraging all of our ICCR members, associates, and affiliates to make comments."

"The bar needs to be raised and there is some concern that there are areas where the indicators have been stripped pretty lean to the bone," Rev. Schilling said.

Some SRI advocacy focuses on individual indicators. For example, the ICCR HIV/AIDS Caucus is recommending some very specific changes to flesh out indicator "LA8" concerning HIV/AIDS.

"Mark Regier of MMA Praxis, Lauren Compere of Boston Common Asset Management, and I are suggesting breaking LA8 into three indicators because doing so would underscore the importance of covering behavior change and prevention, testing, and treatment specifically--the indicator as written touches on prevention and does not mention testing or treatment," said Dan Rosan, director of the health care program at ICCR. "We understand GRI is unlikely to do so, but we hope at a minimum they alter the language in the current indicator."

The Caucus also recommends expanding LA8 to encompass tuberculosis and malaria "because global public health authorities agree that tackling all three diseases at once is the best way to address co-infection and make the maximum positive public health and economic impact."

In addition to addressing issues at the micro-level, members of the SRI community are also addressing macro-issues. The Social Investment Research Analyst Network (SIRAN), a working group of the Social Investment Forum (SIF), recently hosted a conference call to coordinate responses.

"We feel the GRI's web-based comment process places a premium on encouraging lots of institutions and individuals to comment, rather than submitting one set of compiled comments," said Steve Lippman, who participated in the G3 Reporting as a Process Working Group (RPWG). Lippman co-chairs SIRAN and is vice president of social research at Trillium Asset Management. "On our call, we agreed to provide some key comment points rather than comment extensively on all the indicators."

"In particular, we want to encourage the GRI to ensure that the new Disclosure on Management Approach includes specific elements on management systems, objectives, monitoring, transparency, and links to compensation to ensure that these discussions provide a robust picture of a company's policies and practices for managing social and environmental issues, and are not just filled with empty platitudes," Lippman said. "There's also concern that the shift towards more quantitative indicators could have unintended consequences."

Rev. Schilling echoed this sentiment, joining Lippman in citing the example of a company with strong vendor compliance systems that identifies code of conduct violations robustly looking worse from a quantitative perspective than a company with weaker monitoring systems.

"There's no question that there's a move to elevate quantifiable indicators within the G3, and there's some good reasons for that--quantitative data is easier to compare and track performance over time in a clearer way," he said. "However, if you look at some of the better CSR reports such as those from the Gap, Reebok, and Nike, they convey not just data--such as code of conduct violations by region and by standard--but also the qualitative information necessary for readers to understand the broader context and assess company policies, implementation, monitoring systems, and remediation, as well as strategic thinking and planning."

The SIRAN conference call also identified "levels of reporting" as an issue left unresolved by the G3 draft, which only offers options of reporting "with reference to" the guidelines and "in accordance," a significantly more robust threshold. The lack of any intermediary levels presents a particular challenge for small- and medium-sized enterprises (SMEs).

"We believe that there could be greater assistance and guidance given to first-time reporters--levels of reporting, as it were, for small and first-time reporters for whom the entire set of protocols can be somewhat daunting," said Julie Gorte, a member of the GRI Stakeholder Council and vice president and chief social investment strategist of Calvert. "Having just done a sustainability report last year, I can say from firsthand experience that it is quite an undertaking for a small company--even for Calvert, which understands the GRI probably better than most companies."

That said, Gorte refocused on the overall positive contributions of GRI to sustainability.

"I know that there have been many who have criticized GRI for many things, and some of that has happened within the Stakeholder Council," Gorte said. "That is to be expected--sought, in fact; that's one of the reasons the Stakeholder Council was created, as part of a very honestly self-critical process of the GRI to bring the best thinking into its process.

"G3 is testament to the fact that the organization has honored its covenant to thoughtful evolution," she added. "GRI is a living organization, and the protocols are a living document."