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September 20, 2006
Canadian Social Investment Organization Recommends Mandating Global Reporting Initiative
    by Bill Baue

In a submission to the National Roundtables on Corporate Social Responsibility, SIO advocates for amending the Canada Business Corporations Act to mandate annual GRI reporting.

The Global Reporting Initiative (GRI) Sustainability Reporting Guidelines, slated for revamping next month with the launch of the third generation iteration (dubbed G3), have become the de facto standard in corporate social responsibility (CSR) reporting. Currently, 893 organizations (most but not all of them companies) have registered with GRI as using the guidelines. The number is likely even higher, as not all GRI reporters register with the Amsterdam-based secretariat., the most comprehensive library of CSR reports, indicates a total of 1994 sustainability reports were released in 2005. With almost half of all sustainability reports using this framework, the question arises: should GRI become the de jure standard?

While this question has been bandied about informally for a long time, the Social Investment Organization (SIO) in Canada recently formalized the notion in its submission to the National Roundtables on Corporate Social Responsibility last week. The Roundtables, established by the Canadian government to improve CSR practice specifically in the Canadian extractive sector operating in developing countries, are convening between June and November 2006 in Vancouver, Toronto, Calgary, and Montreal. SIO used the opportunity to make an unprecedented recommendation that the Canada Business Corporations Act be amended to mandate annual GRI reporting.

"As far as I know, this is the first time that there has been a recommendation to mandate GRI reporting," said Eugene Ellmen, executive director of SIO.

The Johannesburg Securities Exchange (JSE) in South Africa mandates GRI reporting as a listing requirement, but no national governments mandate GRI reporting, which is strictly voluntary (though very widespread.)

"I think this is a novel and exciting way of thinking about voluntary/mandatory initiatives and public policy," Mr. Ellmen told "Traditionally, government has taken the view that all public policy must be drafted within the public realm, and corporations take the view that voluntary initiatives are best."

"Well, here's a comprehensive, well-respected multi-stakeholder initiative that could be brought into the public realm by mandating it as required continuous disclosure," he said.

Mr. Ellmen also notes another problem solved by mandating GRI reporting: the multiplicity of indicators and metrics employed in sustainability reports, which makes comparison difficult for analysts. GRI harmonizes indicators and standardizes metrics.

"The downside is that some companies continue to have difficulty with specific measures in the GRI framework," Mr. Ellmen admits. "But it is very much a work in progress, an evolving document that is continually improving, and the fact that it is a multi-stakeholder initiative makes it subject to negotiation from all parties."

"Mandatory filing would speed this evolution even further by creating incentives for more companies to contribute to the dialogue," Mr. Ellmen suggests.

The CSR Roundtables is taking all recommendations into consideration, and will report to the Canadian Parliament before the end of this year.

"Certainly the feedback I received from members of the Roundtable was that our recommendations are very interesting, so I think that we have a good chance of getting our recommendations accepted by the Roundtable," Mr. Ellmen said. "The next step would be to introduce the idea of mandatory GRI reporting into the next review of the Canada Business Corporations Act, which could happen in the next year or so.

"We have a Conservative government, but I don't believe that they are opposed to CSR initiatives, and I believe the Roundtable recommendations will get support from the other parties," added Mr. Ellmen. "So it won't happen right away but I believe that in two years or so this could very well be public policy in Canada."

Editor's Note:

The contribution to the debate on advancing the practice of sustainability reporting captured in the article "Canadian Social Investment Organization Recommends Mandating Global Reporting Initiative" has certainly caught the attention of GRI's worldwide network. As Mr. Ellmen points out, the GRI Guidelines provide a sound foundation for building regulation upon due to its development through an inclusive consensus-seeking process and its ability to streamline reporting metrics. However, due to the diversity of political, economic, and social forces globally, it is clear that there is no single policy that would be provide the answer for every country and circumstance. Whether via voluntary or mandatory approaches, we strongly feel that the discussion on mainstreaming sustainability reporting is essential and urgent. We are hopeful that your article will inspire this debate in Canada--and cause others globally to take a look at the options that will best suit them.

On its part, the GRI will continue to develop and expand the GRI Sustainability Reporting Framework with an eye to ensuring it can be equally successful in voluntary or mandated environments. The launch of the G3 Guidelines on October 5th, at the Amsterdam conference, will be an important milestone. The G3 Guidelines represent an evolutionary step and--we think--provide a robust framework for reports in the years to come. As one of our board members, Sir Mark Moody Stuart (chair of Anglo American), observed: "We have all had a hand in building these Guidelines--organizations not using them today will now find themselves out of excuses."

Ernst Ligteringen
Cheif Executive
Global Reporting Initiative


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