sri-advisor.com
where checking accounts rebuild communities
Back to homepageInstitutional ReportsSRI Financial Professionals DirectoryToolsNewsSRI Performance and TrendsAbout Us   
News


June 15, 2005
Business for Social Responsibility Suggests Improvements to the Global Reporting Initiative
    by William Baue

A BSR report surveys 19 member companies on their experience and opinions of sustainability reporting according to GRI guidelines, identifying both strengths and weaknesses.


The Global Reporting Initiative (GRI) is currently conducting revisions for the third-generation of its Sustainability Reporting Guidelines (dubbed "G3"), due out in mid-2006. Business for Social Responsibility (BSR), a U.S.-based organization of more than 250 member companies worldwide, published a report last week advancing a series of recommendations intended to assist GRI in developing G3. Entitled Reporting as a Process, the report surveys 19 BSR-member companies that use the GRI framework to produce their sustainability reports, inquiring about their experience with and opinions of GRI.

The report posits that G3 stands to direct GRI down one of two roads: the first leading to preeminence as the single globally accepted sustainability reporting framework (BSR's favored destination), the second leading to a landscape littered with other competing frameworks. Corporate uptake of GRI, which is already quite strong, will help determine the future direction of GRI, enhancing the significance of this report.

"Almost without exception, companies were making the case for the Guidelines to be more user-friendly; but no one appeared to advocate that the purpose or concept of the Guidelines needed re-visiting, or that the fundamental content needed substantial overhauling," said Dunstan Hope, director of BSR's information and communications technology program. "Companies appear to want evolution, not revolution."

"User-friendliness is not a slimmed-down compromise on the original GRI mission; rather, making the principles practical will strengthen the Guidelines and strengthen reporting," states the report, authored by Mr. Hope and Cody Sisco, with input from other BSR staff.

While the surveyed companies value GRI's 11 Reporting Principles (transparency, inclusiveness, auditability, completeness, relevance, sustainability context, accuracy, neutrality, comparability, clarity, and timeliness), they feel the sheer number of principles detracts from their usefulness. The relevance (or materiality) principle is considered key by 12 of the 19 companies surveyed, which includes British American Tobacco (ticker: BATS.L), Chevron (CVX), Cinergy (CIN), GE (GE), GlaxoSmithKline (GSK), McDonald's (MCD), Newmont (NEM), and Nike (NKE). Companies generally want more guidance from GRI on how best to determine materiality.

"One of the key issues going forward to consider is to have something tangible about materiality," stated one company, according to BSR. "For materiality, GRI still needs practical guidelines--it is the key missing piece."

"The materiality principle is not some simple 'black line' where everything above the line is important enough to include in the report and everything below the line too insignificant for inclusion," stated another company, according to BSR. "Rather, materiality suggests granularity--some issues will be much more material than others."

BSR illustrates this concept with a triangle filled with various sustainability issues at different "degrees of importance," with non-material issues at the triangle's base and material issue at its tip, separated by a threshold line. BSR further notes that the United Kingdom's new requirement to describe material social and environmental matters in the Operating and Financial Review (OFR) will drive the need for further clarification of materiality from GRI.

The OFR requirement will likely drive similar requirements for financial reporting elsewhere in the world. GRI stands to play an important role in this, helping define material social and environmental issues not only for sustainability reports, but also for annual financial reports. BSR illustrates this by adding a threshold line higher up the triangle for financial reporting materiality.

GRI could stand to learn how to describe materiality from AccountAbility, a UK-based assurance and auditing standards provider, which defines the term more clearly in its AA1000 Assurance Standard, according to many of the surveyed companies. In fact, many companies use AA1000 to guide assurance statements of their sustainability reports, and argue for greater consistency between sustainability reporting frameworks.

"One company 'would like to see all reporting standards in more alliance,' while another spoke of the need for 'one global reporting process,'" the report states.

Indeed, sustainability reports play a vital role in allaying "survey fatigue," whereby companies suffer from the overwhelming inflow of requests for social and environmental performance data. Surveyed companies acknowledged the conscientiousness with which socially responsible investment (SRI) analysts and research firms utilize sustainability reports to find answers or locate information gaps, making their interactions with companies much more efficient.

The report suggests that SRI analysts would likely agree with the surveyed companies' opinion that GRI could stand to improve by shifting from its more backward-looking orientation, asking for historical information, to a more forward-looking orientation, asking for projections of future progress. Also, surveyed companies complained that "GRI is framed in negatives," whereas they tend to frame their sustainability initiatives in positive terms. However, the surveyed companies also recognized the value of looking at social and environmental issues from outside their own perspective, as GRI forces them to do: one company said that developing their sustainability report "allowed the company to learn that sustainability was about more than just environmental issues," according to the BSR report.

 

 
Home
| Reports | SRI Financial Professionals Directory | Tools | News | SRI Performance and Trends | About Us | Contact
© SRI World Group, Inc. - All rights reserved
Terms of use - Privacy Policy - OneReportTM Network