October 07, 2004
Memo From: SRI Analysts To: Companies--Use GRI Sustainability Reporting Platform!
by William Baue
A coalition of 17 socially responsible investment firms recommends that companies disclose social
and environmental data using the Global Reporting Initiative.
Yesterday, 17 socially responsible investment (SRI) firms representing over $147 billion in assets
issued a joint
statement urging companies to disclose social and environmental information using Global
Reporting Initiative (GRI) Sustainability Reporting
Guidelines. Since its 1997 founding by the Coalition for Environmentally Responsible Economies
(CERES) and the United Nations Environment
Programme (UNEP), GRI has become the
standard-bearer in "triple bottom line" (economic, environmental, and social) reporting.
"We support the GRI guidelines as the most comprehensive reporting framework available,
and one that has gained broad credibility through a rigorous, global multi-stakeholder feedback
process," stated the 17 firms. "We also believe the GRI guidelines provide a valuable tool for
providing comparability and consistency across reports."
The coalition, coordinated under
the Social Investment Forum (SIF),
includes large SRI firms such as the Calvert
Group, religious investors such as the Pension Boards of the United Church of Christ (PBUCC), Canadian SRI firms such as Ethical Funds, and SRI
financial adviser firms such as Progressive Asset Management (PAM). The statement is also endorsed by SRI research
firms such as Innovest Strategic Value
Advisors, Michael Jantzi Research Associates (MJRA), and KLD Research & Analytics, as well as advocacy
organizations such as the Interfaith Center on Corporate Responsibility (ICCR).
Steve Lippman, senior social research analyst at
statement signatory Trillium Asset
Management, characterized sustainability reporting using GRI guidelines as a "win-win"
situation for companies and analysts (as well as other stakeholders). Analysts benefit from
increased accessibility to information affecting investment decisions; companies can benefit by
identifying potential risks that can be mitigated and potential liabilities such as energy
inefficiencies that can save money by conservation.
"Our stakeholders look to us to
disclose key environmental and social data so they can compare and judge our performance--it makes
clear business sense for Intel to meet that need," said Dave Stangis, director of corporate
responsibility at Intel (ticker: INTC). "Our shareholders and
communities expect it, and it helps us improve our performance."
Intel is one of only a
handful of US companies that have achieved "in accordance"
reporting status, GRI's most stringent reporting category requiring the board or CEO to sign off in
certification. Other "in accordance" reporters include Dow Chemical (DOW), Ford (F), General Motors (GM), International
Paper (IP), and
Rio Tinto (RTP).
Some 60 US companies are "declared users" of GRI (as opposed to companies that use GRI but do not
notify GRI), and almost 600 companies worldwide declare their GRI usage. The SRI firms are trying
to spur this number upward even further.
Some countries, to varying degrees, have chosen
to require sustainability reporting. The Johannesburg Securities Exchange (JSE) in South Africa mandates GRI reporting by listed companies,
and governmental regulation in Australia, France, and the UK explicitly require varying degrees of
disclosure on social and environmental information.
Mr. Lippman would add the US to the
list of countries mandating disclosure of environmental and social information, under Item 303 of US
Securities and Exchange Commission (SEC)
Regulation S-K, or Management's Discussion and Analysis of Financial Condition and Results of
"I would argue that, in fact, much of this disclosure is already
mandated under SEC requirements that companies disclose material risks, which has been implemented
very poorly and has been poorly enforced as well," Mr. Lippman said.
Mr. Lippman cited
the example of greenhouse gas emissions, which represent a significant potential risk.
"Those are material issues that the GRI certainly picks up but far too few companies are
disclosing in their 10-K forms," Mr. Lippman said.
Mr. Stangis offered a corporate
perspective on this issue.
"Companies are taking a harder look at what goes into
their 10-K and what might be considered material by their shareholders and investors, expanding
some of that disclosure in the social and environmental space," Mr. Stangis said. "While I support
a lot of this reporting some points in terms of disclosing better content in the 10K, I would
oppose mandatory sustainability reporting, at least right now--I do not think it's mature enough to
put into a mandatory framework."
Ernst Ligteringen, CEO of GRI, agrees.
view as the GRI is that sustainability reporting isn't ready as a practice to be completely
regulated, and if that was done prematurely, an incomplete work would be cast in stone," said Mr.
Ligteringen. "Some companies fear the movement toward mandatory reporting, and our advice to them
is, if you move forward in a voluntary way and actually demonstrate that voluntary reporting meets
the needs of those seeking information and helps to increase transparency, chances are the calls
for mandatory reporting would be less strong."