Core Features of the GRI
Unlike SA 8000, AA 1000, or ISO 14001, the Global Reporting Initiative is not a code of conduct (explaining what a company should or should not do), a performance standard (providing measurements by which a company can judge how well it is performing), or a management system (mandating the necessary management processes and policies that should be in place to ensure compliance). What the GRI framework does do is provide the principles and content guidelines that allow an organization to prepare social and environmental sustainability reports in a competent, consistent way.
The framework addresses three areas of company performance: social,-environmental, and economic. Within these three areas there are 110 indicators of performance (of which 57 are mandatory and 53 are voluntary) covering employment policies, disciplinary practices, bribery and corruption, political contributions, product safety, emissions and waste polices, supplier activities, and various supply chain issues such as the safety and disposal of manufacturing materials, and safe and environmentally sound transportation and logistics policies. [9 ]
Moreover, in response to criticism that a one- size -fits-all model means that many of these indicators are inappropriate for differing industry sectors, the GRI has now developed sector-specific supplements that provide more appropriate indicators for sectors such as mining, car manufacturing, financial services, and tour operators.
The structure of the framework incorporates several important principles:
First, it provides a standard reporting process (ensuring transparency and auditability ).
Second, it helps companies decide what to include in their reports ( completeness, relevance, and context ).
Third, the framework is designed to ensure quality and reliability ( accuracy, neutrality, and comparability ).
Finally, it helps to ensure that the reporting is relevant and readable ( clarity and timeliness of information).
[9 ] Sustainability Reporting Guidelines, the Global Reporting Initiative, 2002, p. 36.
Pros and Cons of the GRI Framework
Adhering to these principles, claims GRI, ensures that reports present a balanced and reasonable account of economic, environmental, and social performance, and the resulting contribution of the organization to sustainable development. The framework also helps readers compare performance between companies, and eliminates the credibility concerns that many NGOs and investors have about accuracy and reliability. [10 ]
Reporting should be the end result of a year s worth of management activity, says Nicholas Eisenberger, CEO of Ecos Technologies. If you are doing a good job of managing your performance on an ongoing basis, creating a report is a simple activity ” it is simply gathering what you already know and distilling it, taking away proprietary information, adding any explanatory information, taking away material that doesn t matter to anybody, and reporting it.
That is not what is actually happening, he warns. Because they have all these disparate systems, most companies don t know until 9, 12, even 16 months later what they actually did. [11 ]
Aside from the obvious benefits that come from consistent and standardized reporting, a single, universally recognized reporting framework also would relieve companies of having to respond to sometimes hundreds of different questionnaires in various reporting formats from various stakeholders.
All sorts of people ” ethical investors, NGOs, and governments ” are asking companies for information and they all want it in their own format, says Mark Moody-Stuart, the former Shell chairman, now on the GRI board of directors. If companies can say: ˜We ll give you the information but in the GRI s standard format, hopefully everyone will accept [that]. [12 ]
The Ford Motor Company agrees, contending that if the GRI became the one-stop source for reporting efforts, a single framework could save companies the huge workload involved in responding to myriad requests for information from other bodies. [13 ]
The GRI gives companies a benchmark, and it gives assurance providers a specific framework against which to assure, says Allen White. The problem until now has been a ˜wild west of assurance ” no standards, no norms, no protocols, in terms of what is being assured. So outside of reliance on the existing financial assurance procedures . . . there has been no development, no institution, no specialized procedures for sustainability reports. This is now changing, thanks to organizations like AccountAbility and its AA 1000S Assurance standard.
As the GRI moves toward a higher level of general acceptance, he concludes, analogous to GAAP for financial reporting, it will provide the ˜concreteness that assurers need in order to provide consistent assurance statements. [14 ]
There are still problems to be resolved, however. For one thing, the GRI framework is principally intended to help companies complete audits on their own operations, and although it assumes some level of extended responsibility throughout the supply chain, where an organization decides to erect the boundary to that responsibility is largely left up to the individual company. Although they recommend that a company work closely with stakeholders to determine appropriate reporting boundaries for their company s broader footprint (i.e., their extended supply chain), there is less focus on noncompany operations. Given so many of the serious social and environmental violations occur in a company s extended global supply chain, it is an issue that needs to be clearly addressed.
Moreover, though the GRI is becoming better recognized and supported, the initiative still remains just short of the economy of scale necessary to gain universal support. Critics point out that to coax investors and analysts away from their favorite, self- composed reporting format, the GRI has to become comprehensive enough (and accepted enough), to satisfy all parties that certification really does mean that a company is truly protecting its reputation as much as possible from unexpected social and environmental violations. Until then, they argue, the GRI will be seen by many companies as just another reporting option.
Moreover, as thorough and balanced as the reporting process is, the level of detail and standardized approach means that the reports that are produced make for extraordinarily dry reading ” nothing like the often colorful and emotional corporate social responsibility reports that companies so often produce through their public relations office. The output from the GRI is said by critics to be of little value except to experts familiar with social and environmental standards. It is not an easy issue to remedy, because it is just that sort of public relations spin that the GRI is hoping to eliminate. After all, the GRI is trying to push companies toward putting social and environmental reporting on par with normal financial reporting ” and financial reports, even when furnished with company-friendly photos and an upbeat style, are still judged on content and make for pretty dry reading themselves .
Moreover, the GRI allows companies to implement the framework incrementally, with the option of omitting many of the core indicators altogether. Several companies have chosen to avoid the phrase in accordance with the GRI, choosing instead to simply contend that the GRI informed development of their report. It is an uncomfortable, but probably necessary concession to the practical issue of attracting companies that are still not, for whatever reasons, prepared to fully disclose their activities.
The potential drawback is that this is a voluntary code, says Alison Maitland, in the Financial Times , allowing companies to continue to use reporting as an opportunity for public relations spin rather than a serious effort at measuring and improving performance. Some companies use the guidelines loosely, while others are more rigorous about telling their story ˜warts and all . [15 ]
[10 ] Ibid., p. 22.
[11 ] Interview, August 25, 2003.
[12 ] Alison Maitland, Businesses Called to Account, FT.com, July 24, 2002.
[13 ] Alison Maitland, Social Reporting: Pressures Mount for Greater Disclosure, FT.com, December 10, 2002.
[14 ] Interview, August 25, 2003.
[15 ] Alison Maitland, Survey of Sustainable Business: Companies Start to Detail What on Earth Is Going On, The Financial Times, August 23, 2002.