Transcript Slide 1

Barriers to strengthening
the Global Reporting Initiative (GRI) Framework:
an exploration of the perceptions of consultants, practitioners, and researchers
CSIN Conference, 02.Mar.10
Alberto Fonseca
THE PRESENTATION
• The GRI G3 framework
• 3 Common Criticisms
• Methodology
• Motivational, Structural, and Specific Barriers
• Implications for Reporters, Standard-setters, and Stakeholders
AN INFLUENTIAL FRAMEWORK
• “Formally” used in 1,296 reports (2009)
• Adopted by more than ¾ of the world’s 250 largest companies
• Mentioned in the 2002 WSSD Plan of Implementation
• Praised by global leaders
• Changed the language and structure of non-financial reporting
GRI EVOLUTION
Brown, H. S., Jong, M. d. and Lessidrenska, T. (2009), "The Rise of the Global Reporting
Initiative: a case of institutional entrepreneurship", Environmental Politics, Vol. 18 No. 2,
pp. 182 - 200.
Source: Brown et al. (2009)
THE GRI AS AN ORGANIZATION
• Multi-stakeholder network (Board of directors, stakeholder
council, technical advisory, organizational stakeholder…)
• Funded by governments, foundations, companies,
individuals, and GRI’s services
• Mission is to create conditions for the transparent and
reliable exchange of sustainability information through
the development and continuous improvement of its
Sustainability Reporting Framework.
• Main product: GRI G3 Framework
GRI G3 FRAMEWORK
Standard Disclosures:
1 - Strategy and profile
2 - Management approach
3 – Performance Indicators
Economic
Environmental
Social
Human rights
Society
Product responsibility
?
Source: GRI (2006)
GRI G3 FRAMEWORK
Principles for defining contents:
Materiality
Stakeholder inclusiveness
Sustainability context
Completeness
Principles for defining quality:
Balance
Clarity
Accuracy
Timeliness
Comparability
Reliability
Principles for defining boundaries
Source: GRI (2006)
GRI G3 FRAMEWORK
Sector Supplements:
• Airports
• Apparel & Footwear
• Automotive
• Construction and Real State
• Electric Utilities
• Financial Services
• Food Processing
• Logistic & Transportation
• Mining & Metals
• NGOs
• Public Agencies
• Telecommunications
• Tour Operators
Source: GRI (2006)
GRI G3 FRAMEWORK
Application Level System
Approaches: (1) Self-declaration; (2) Assurance, and (3) GRI check
?
Source: GRI (2006)
GRI G3 USE
Application level of GRI Reports in 2009 (n=1,296)
• 25% externally assured (A+, B+, C+)
5%
Undeclared
9%
24%
10%
A+
C
B
15%
21%
339
B+
A
16%
392
C+
257
Self-declared
GRI-checked
Thirdy-partychecked
GRI G3 USE
The geography of GRI reports in 2009 (n=1,296)
OECD, 73.84%
Canada, 2.78% (36 reports)
Non-OECD,
26.16%
GRI G3 USE
Reasons to celebrate:
GRI reporting is…
• Driving companies to embrace “sustainability” culture
• Enabling benchmarking and learning
• Enhancing corporate reputation
• Promoting stakeholder engagement
• Informing investors, employees, NGOs, managers, etc. about
something
• Generating data for research
• Creating a consultancy market
GRI G3 USE
Reasons to think about:
GRI reporting is not necessarily...
• Promoting “sustainability” accountability
• Contributing to sustainable development
GRI reporting may be…
• Legitimizing “unsustainable” behaviour
• Misleading sustainability-oriented decisions
?
ACADEMIA’s CONCERN
1. Aras, G. and Crowther, D. (2008), "Corporate Sustainability Reporting: A Study in Disingenuity?", Journal of Business
Ethics, Vol. 87, pp. 279-288.
2. Archel, P., Fernández, M. and Larrinaga, C. (2008), "The Organizational and Operational Boundaries of Triple Bottom Line
Reporting: A Survey", Environmental Management, Vol. 4, pp. 106-117.
3. Baue, B. (2006), "Sustainability reporting improving, but not necessarily contributing to true sustainability.", available at:
http://www.ethicalcorp.com/content.asp?ContentID=4723&ContTypeID= (accessed June 30, 2009).
4. Gray, R. (2006), "Social, environmental and sustainability reporting and organisational value creation? Whose value?
Whose creation?", Accounting, Auditing & Accountability Journal, Vol. 19 No. 6, pp. 793-819.
5. Gray, R. (2010), "Is accounting for sustainability actually accounting for sustainabiltiy... and how would we know? An
exploration of narratives of organisations and the planet", Accounting, Organizations and Society, Vol. 35, pp. 47-62.
6. Gray, R. and Bebbington, J. (2007), "Corporate sustainability: accountability or impossible dream?", in Arkinson, G., Dietz,
S. and Neumayer, E. (Eds.), Handbook of Sustainable Development. Edward Elgar, Cheltenham, Northampton.
7. Gray, R. and Milne, M. J. (2002), "Sustainability Reporting: Who's Kidding Whom?", Chartered Accountants Journal of New
Zealand Vol. 81 No. 6, pp. 66-70.
8. Isaksson, R. and Steimle, U. (2009), "What does GRI-reporting tell us about corporate sustainability?", The TQM Journal,
Vol. 21 No. 2, pp. 168-181.
9. Laine, M. (2005), "Meanings of the term "sustainable development" in Finnish corporate disclosures", Accounting Forum,
Vol. 29, pp. 395-413.
10. Lenzen, M., Dey, C. J. and Murray, S. A. (2004), "Historical accountability and cumulative impacts: the treatment of time in
corporate sustainability reporting", Ecological Economics, Vol. 51 No. 3-4, pp. 237-250.
11. McElroy, M. W., Jorna, R. J. and Engelen, J. v. (2008), "Sustainability Quotients and the Social Footprint", Corporate Social
Responsibility and Environmental Management, Vol. 15, pp. 223-234.
12. Milne, M. J., Ball, A. and Gray, R. (2005), "From soothing palliatives and towards ecological literacy: a critique of the triple
bottom line", in Working Paper. Department of Accountancy and Business Law. University of Otago.
13. Milne, M. J., Ball, A. and Gray, R. (2008), "Wither Ecology? The Triple Bottom Line, the Global Reporting Initiative, and the
Institutionalization of Corporate Sustainability Reporting", in American Accounting Association, Anaheim.
14. Moneva, J. M., Archel, P. and Correa, C. (2006), "GRI and the camouflaging f corporate unsustainability", Accounting
Forum, Vol. 30 No. 2, pp. 121-137.
15. Morhardt, J. E. (2009), "General Disregard for Details of GRI Human Rights Reporting by Large Corporations", Global
Business Review, Vol. 10 No. 2, pp. 141-158.
COMMON CRITICISMS
1. GRI is promoting non-contextualized disclosures
• The “Sustainability Context” principle has been overlooked by
reporters and external verifiers
• Disclosures do not reflect the interactive effects of
organizations with the external environment
Bellagio Principle 2: “The underlying social, economic and
environmental system as a whole and the interactions among
its components”
Reaction:
COMMON CRITICISMS
2. GRI’s focus on “organizational” performance is insufficient
and potentially misleading
• Disclosures tend not to be geographically-based
• Lack of transparency of facility-level performance
• Leads to “controversial” aggregations of data, particularly among
MNCs or TNCs
Bellagio Principle 3: “Appropriate geographical scope ranging
from local to global”
Reaction:
FLR
Facility-level Sustainability Reporting
COMMON CRITICISMS
3. Non-integrated disclosures (silos approach)
• What do those 143 indicators indicate?
• Where and how significant are the trade-offs?
• After all, is the organization contributing or not to
sustainability?
Bellagio Principle 2: “The underlying social, economic and
environmental system as a whole and the interactions among its
components” / Bellagio Principle 3: “Implications for decision
making, including trade-offs and synergies”
Reaction: Alternative frameworks with indices and aggregated
indicators
FILLING THE GAPS
METHODOLOGY
•
•
Qualitative approach: grounded theory (constructivist version).
Data collection and analysis techniques:
- Semi-structured, confidential interviews
- Software-supported (Endnote X3 and NVivo 8)
- Memo-writing, coding, and diagramming
Interviewee Profile
Quantity
Code
GRI-certified Training
Consultancies
Experienced and certified GRI reporting trainers with in depthknowledge of the framework.
5
CC
International
Consultancies
Senior consultants on corporate sustainability tools and
strategies, including sustainability reporting.
5
IC
Research Institutions
PhD holders with extensive knowledge on corporate
sustainability evaluations and reporting.
5
RI
Large Mining
Companies
Practitioners
Managers and directors of Corporate Responsibility or
Sustainability who hire and/or coordinates GRI-based
reporting.
5
MP
Group
Among them are: 1 co-founder of GRI, 2 members of GRI’s Stakeholder Council and
Board of Directors, and 7 representatives of GRI’s Organizational Stakeholder
MOTIVATIONAL BARRIERS
•
Voluntary nature of sustainability reporting
•
Current GRI G3 framework is already perceived as demanding
•
GRI’s imbalanced governance (predominance of business
organizations)
•
Path dependence in GRI mission
STRUCTURAL BARRIERS
•
Consistency among reporting standards (Global Compact,
AA1000AS, Global Compact, IFC, sector standards…)
•
Interdependence among framework elements (Supplements,
protocols, indicators, and principles…)
Example: GRI Application Level
(we got A+. Why do more?)
BARRIERS TO SUSTAINABILTIY CONTEXT PROTOCOL
•
Data difficulties
. Definition of boundaries
. Lack of data
. Definition of indicators
•
Definitions of responsibilities
•
Decreased comparability (conflicts between context and
comparability principles)
•
Conceptual problems (“Isn’t context the same as materiality?”)
BARRIERS TO IMPACTED SYSTEMS DISCLOSURES
•
Data difficulties
. Definition of boundaries
. Lack of data
. Definition of indicators
•
Definitions of responsibilities
BARRIERS TO CUMULATIVE DISCLOSURES
All of the above, plus:
•
Changing materiality
•
Decreased comparability
BARRIERS TO FACILITY-LEVEL SUPPLEMENT
•
Capacity-building at sites
•
Lack of interest from local stakeholders
•
Unclear cost-benefits
•
Increased information management
•
Excessive corporate exposure
BARRIERS TO INTEGRATED DISCLOSURES
•
Conceptual confusion
. Integration means different things to different people
•
Data difficulties
. Criteria for weighting indicators
. Methods of aggregation
. Lack of data
. Definition of thresholds, unit of analysis
•
Definitions of responsibilities
•
Decreased comparability (conflicts with comparability principle)
•
Promotion of “unfair” trade-offs
. Room for promoting “weak” sustainability
KEY IMPLICATIONS
• Many barriers cannot be overcome in the short-term, whereas
some can (e.g. ABC Application Level)
• GRI, reporters, and industry associations need to recognize
current gaps and establish incremental and/or transformational
strategies for change
• Stakeholders should be consulted not only to identify relevant
“issues”, but also facilities, methods of aggregation, boundaries,
etc.
KEY IMPLICATIONS
• Sustainability reporting is, of course, a learning process.
However, it seems to be very demanding and complex to
be standardized by a single institution.
• GRI is becoming the
centrepiece of mutually
enforcing reporting tools.
Enhanced coordination among
these initiatives is needed.
THANK YOU
Alberto Fonseca
Department of Geography & Environmental Management
1-519-804-4046
[email protected]