GRI Changes Application Level Check Processes: Will it Work?

GRI Checks Important Revenue Stream for GRIThe concept and application of GRI Application Level and related ‘Checks’ does not sit well with many ‘CSR nerds’. This is due to confusion of these concepts with some sort of assurance. Will changes introduced by GRI help? Let’s first take a look at the intent and context, review stats and financial drivers, and raise some questions about likely success or failure.

GRI Application Levels were introduced by GRI to help communicate to what extent a report has followed the G3 Guidelines. The systems was also designed to provide a pathway for incremental improvement of reporting. However, the Application Levels – regardless if Self-declared (by reporting organization), Third Party Checked (typically by an external consultant) or GRI Checked (by GRI of course) – are not designed to provide any verification or assurance of content or quality of processes applied. [Is this red, bold and underlined enough?]

Much like urban legends (“did you hear about the alligator in the sewer system…?”), misperceptions about GRI Application Levels are difficult to eradicate. It seems that too many readers/users take the GRI Application Level, especially if strengthened through a 3rd Party Check or a GRI Check, and relate it – mistakenly – to mean an attestation of quality of a report, the sustainability performance of the reporter, or an indication of compliance with GRI or the G3 Guidelines. Neither of these is the case. 

Review of financial issues around the GRI Application Levels also provides an interesting context. GRI's data base suggests that the GRI conducted 460 GRI Checks in 2010 (up from 371 in 2009). At EUR 1,400 each (increased to EUR 1,750 in 2011), this would amount to a maximum of EUR 644,000 (or about US$ 860,000 – but this number is probably too high as Organizational Stakeholder can request free GRI Check). Given the size of GRI’s annual budget (about EUR 4.1 million in 2008/9), the size of this revenue stream for a cash strapped non-profit organization seems to be significant.

Now let’s look at the statistics and recent changes. The bar chart below highlights that GRI Checks have increased by 24% between 2009 and 2010. This is in line with the 22% increase in global GRI reporting discussed in a previous blogs here and here. However, during the same period 3rd Party Checks have outpaced GRI Checks by a factor of two! And it seems that the concerns about potential for miscommunication and misunderstanding (misuse?) have not decreased. So what is GRI to do?

GRI Checks Important Revenue Stream for GRI

In addition to offering GRI-certified training (to which I contribute), GRI strengthened and formalized some of its tools. In February 2011, GRI introduced a G3 Checklist to assist reporters in correctly applying the GRI Guidelines and making valid assessments of their Application Levels. In mid-January 2011, GRI announced changes to its GRI Reports Services. As part of this, GRI will provide a GRI Application Level Check Statement along with its GRI Checks and all reporters are required to include the GRI Content Index with their report. GRI also eliminated the icons previously available for self-declared and 3rd Party Checks. The only icon now available is that provided by GRI following a GRI Check.

Will these changes introduced by GRI reduce the growth–rate of Third Party Checks? Will that group be pushed to procure GRI Checks instead or will they feel more comfortable to switch to ‘Undeclared’ reports instead? Will the changes eliminate the more fundamental ‘assurance confusions concerns’ and/or potential for misuse highlighted by CSR nerds? And is the size of the revenue stream associated with this system simply too much of an exit barrier to encourage a major overhaul? I would welcome your comments and observations.

About the author: Mehrdad Nazari (MBA, MSc, LEAD Fellow) is a Corporate Responsibility, Sustainability Reporting & ESIA Advisor, and Director of Prizma. He was previously an environmental consultant with Dames & Moore, Principal Environmental Specialist at the EBRD and CSR Research Director at CoreRatings. Mehrdad is a GRI-approved trainer on GRI's sustainability reporting framework and a licensed AA1000 Assurance Provider.

3 Comments to GRI Changes Application Level Check Processes: Will it Work?

  1. Ian Ward says:

    It’s high time for a North American group to develop a recognized qualitative assurance program to address the issues you mention.

    The GRI could do this but has thus far resisted embarking on the consulting path (rightly in my opinion as this would raise some ethical issues). A prominent NGO would be ideally suited to offer this type of assurance – along the consulting model of the African Institute for Corporate Citizenship in South Africa (http://www.aiccafrica.org/). However a prominent, for-profit consulting group could also develop and offer a qualitative report evaluations system, ideally in collaboration with a respected NGO to achieve recognition at scale.

    The system need not be overly technical either, as the reputation and expertise of the consulting group would largely suffice in establishing trust with clients and legitimacy for the service. Recommendations could be geared toward fully reporting according to the G3 and other relevant guidelines (Equator principles, global compact, King III, etc.), increasing transparency, aid with positioning, benchmarking and building trust, things the GRI only partly accomplishes due to an excessive reliance on tick-boxing.

    Such a program could be a significant boon for transparency in general and help companies glean real value from the reporting process (ISO standards would benefit from a similar approach as they have long been criticized for excessive reliance on tick boxes and a failure to ensure mid-to-long-term, qualitative organizational change).

    A qualitative evaluation offered in conjunction with the G3 checklist would be far more comprehensive and useful to clients than the common assurance offered by the big four – effectively addressing the question “How do I get full value from my sustainability report?”

    I would develop this service myself but my young consultancy does not currently enjoy the scale to make it work. With a background in consulting, journalism and social geography, including qualitative research methods, I am open to suggestions of groups that might be interested in collaborating on a high-potential R&D project.

    I don’t suppose you’d be up for a challenge, would you Mehrdad?

  2. Many thanks for your detailed comments, Ian. I note your suggestion to introduce a pragmatic qualitative assurance program. Not sure if this meshes well with the expectation of many for a more robust system (which would not be very pragmatic and much more expensive). A more qualitative and trust-building approach is perhaps already available through external stakeholder panels. This approach done more often in Canada compared to other places. Adding a G3 checklist to that efforts not be too complicated. I am not drawn to develop yet another system but prefer to use and expand adoption of existing tools. We have too many good tools which need some convergence and increased adoption.

  3. […] of my blog will know, I am not a great fan of GRI’s Application Level Declaration (see also here and here). This topic leads to interesting (read challenging) discussions with inaugural […]

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