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Is SIF’s GRI study more searching for keys under the lantern?

In a recent press release, the Social Investment Forum (SIF)  laments that while most S&P 100 companies release some sustainability data, only six firms publish complete sustainability reports that meet GRI’s highest, “A” level reporting standard.  What is wrong with this picture?

Having delivered 10 GRI-certified courses across Canada and the US in 2009, I remain intrigued about the focus on and common misperceptions about the so called Application Levels used by those pursuing reporting which utilize the sustainability reporting framework developed by the Global Reporting Initiative (GRI).  The publication of SIRAN/SIF study provides another opportunity to ponder about our desire and mistake of using GRI application levels as ‘short cut’ to help us separate between ‘good’ and ‘bad’ sustainability reporters (or worse, more or less sustainable companies).  It seems that the GRI’s application level designation used in sustainability reporting is being confused with credit rating scales ranging from 'Investment Grande' (such as AAA to BBB) to 'Non-Investment Grade' (such as BB-D). 

The SIF press release notes – not entirely correctly - that “[a]n “A” level report provides data for all of the core GRI performance indicators; addresses the management approach for each indicator; and includes organizational information such as identification of key risks and a statement from the CEO addressing the relevance of sustainability at the organization.”

According to GRI, reporters targeting an “A” Application Level should report, amongst other things, on all core Performance Indicators. However, the GRI guidelines and GRI's FAQ on Application Levels provide important qualifications to the notion of 'ALL core Performance Indicators.' These relate to materiality, boundary setting, data gaps, and proprietary nature of some information.(and let’s park complications of Sector Supplements and National Annexes for now).

GRI notes that Performance Indicator should be selected – and this also means that some may be omitted - based on GRI’s Materiality Principle. A careful review of reports designated as “A” level reveals that some Performance Indicators have been typically left out. Or that the determination of the reporting boundary and associated scope limitations eliminates the depth and usefulness of data presented. Or that data gaps or proprietary nature of information provides grounds for data exclusion without eliminating ones ability to designate a report as having reached an “A” level application.  And I am ignoring the wonderful topic of lack of the 'GRI police' and the broader assurance and credibility of reports – regardless of Application Levels  (see also my previous blog posting: Sustainability Reporting – Misperceptions & Barriers)

Do you feel that GRI’s Application Levels are being understood and used by both reporter makers and users? Do you think groups like SIF/SIRAN should perhaps focus more on non-reporters and need for mainstreaming instead of pushing the ‘early adopters’ to further improve their sustainability reporting practices?

Mehrdad Nazari (webblog)

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8 Responses to “Is SIF’s GRI study more searching for keys under the lantern?”

  1. January 3rd, 2010 at 3:17 pm

    elaine cohen says:

    hello Mehrdad, thank you for an interesting post.
    I share some of your concerns regarding the GRI reporting levels which are designed to provide a graded level of transparency. This has tended to play out as more transparency = better, though better can of course have many different meanings. It is my understanding, however, that a GRI A Level report does require a response to ALL the performance indicators in the G3 framework. However, a response such as “not material” or “not relevant for our business” often passes the test. In some cases this is abused, for instance, an office services Company who declines to report on co2 emissions because they have no manufacturing facilities. Their emission levels may be low, but they do have emissions, so there is no excuse for not reporting. I share your concern that reporting levels are not strictly observed and also find many instances of data not being reported even though they are listed as fully reported in the GRI index in the published report. This occurs even with reports that have been GRI Checked, because of course, the GRI does not check all the indicators, only a small sample. So whilst the GRI has served a very important purpose in driving the overall level of transparency through reporting, and attention to a broad set of commonly accepted indicators, it is far from perfect either in design or in application. Assurance is another proces which is even more seriously abused, and i have written several times about this on my own blog which is dedicated to CSR and sustainability reporting (www.csr-reporting.blogspot.com).

    This being said, the GRI framework is, on balance, sound and provides a structure to reporting in a way which no other framework or standard has been able to do. Given the voluntary nature of reporting, and the prime objective of developing a culture of transparency, I believe the GRI has performed an impressive role. It is people like ourselves (I am a reporting consultant) who should remain vigilant and raise these issues as we see them. I regularly review reports for CorporateRegister.com and highlight examples of GRI misuse, I often write to companies whose reporting does not show consistency, and I recently wrote to the CEO of the GRI to request they pay attention to the “wild west” of report assurance, which serves more to undermine reorting credibility rather than serve it.
    And finally, in answer to your question, yes, I think the GRI reporting levels are largely understood. What is not understood are the many ways reporters do not comply with the declared levels even after a third party assurance or GRI check. And your second question, i think that the focus ought to continue to be on non-reporters. The first report is always the most difficult, and once a first report has been published, a Company cannot easily back down from future reporting cycles. The matter of quality is a measure of the difficulty of achieving increasing levels of transparency, and I feel that this is something that tends to improve as reporting companies build their skills over time, or receive feedback from stakeholders. I believe there is room for more pressure by the GRI, though I suspect it is in the GRI’s interest to wait until more reporters are on the train.
    thank you for an interesting post and an interesting blog, @apesphere on Twitter alerted me to your post
    warm regards
    @elainecohen
    elaine
    http://www.csr-reporting.blogspot.com

  2. January 3rd, 2010 at 3:51 pm

    Laura Musikanski says:

    Sustainability reporting- and measuring and managing of environmental, social, economic (& other areas) performance is a new field. There will be disruption, murkiness and misunderstandings in the creation and formation of the practice. It is important to view the long term- at some point the notion of conformity to guidelines vs. actual performance and contribution to sustainability will be clear. Today, few confuse a well done financial report with a financially healthy organization. In the past, when publicly traded businesses were first required to produce papers (back then- pro-forma!), the same confusion we see today with sustainability performance vs. reporting occurred.

  3. January 5th, 2010 at 1:11 am

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  4. January 5th, 2010 at 2:25 am

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