The Global Reporting Initiative

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The Global Reporting Initiative
Towards G3 of the GRI guidelines underpinning
the value of sustainability reporting Roger
Adams, Executive Director Technical,
Association of Chartered Certified Accountants /
GRI Board Member
ACCA/IAFA Seminar on social environmental
accounting Dublin 4.11.05
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Accounting for and reporting on
sustainability

• Sustainable development development which meets
  the needs of the present generation without
  jeopardising the abilities of future generations
  to meet their own needs
• Organisation level approach the triple bottom
  line economic, environmental and social
  performance and impact
• Accounting for sustainability issues
• Internalities measurable costs and benefits
  exist whether they are captured and disclosed
  depends upon the accounting system chosen
• Externalities usually costs such as
  environmental degradation and social impacts
  which are not born by the originating
  organisation and whose measurement (and
  subsequent disclosure) is open to debate

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Accounting for and reporting on
sustainability

• Reporting on sustainability issues
• reporting on some or all elements of the TBL
  began in the early 1990s
• The 2002 GRI sustainability reporting guidelines
  represent the most comprehensive attempt yet to
  set a generally accepted sustainability reporting
  framework
• G3 of GRI is due in late 2006
• CSR reporting vs. sustainability reporting? CSR
  does not necessarily acknowledge the
  sustainability context within which
  organisational strategy and activity occurs
• Assurability remains a debateable issue

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The Global Reporting Initiative

• What is GRI
• What are the benefits of GRI?
• What do the GRI guidelines look like?
• Who is using GRI?
• How does GRI relate to other initiatives?
• Where next for GRI?

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The 2002 GRI Sustainability Reporting Guidelines
www.globalreporting.org
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problems and a solution
Stakeholders receive incomplete information
Companies receive diverse information requests
A generally-accepted reporting framework
developed through a multi-stakeholder process
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THE GRI MISSION

• Design and continually improve reporting
  guidelines reflecting the three dimensions of
  sustainability economic, environmental, and
  social
• Guidelines published 2000, 2002, 2006
• Elevate corporate sustainability reporting to the
  same level as financial reporting
• Now deemed generally accepted?
• Build a global and independent institution to
  steward the Guidelines
• Foundation and Board created 2002

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The pre-history of GRI

• 1990 no reporting to speak of
• 1991 ACCA UK environmental reporting awards
• 1993 first Canadian reporting awards
• 1995 first European reporting awards
• 1997 GRI Steering Committee formed
• 1999(ED) 2000 (Guidelines G1) 2002 (Guidelines
  G2)
• 2002 GRI separately and legally constituted

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GRI BASICS

• What? sustainability reporting guidelines
  reporting on the economic, environmental and
  social aspects of organisational performance
• Who? multi-stakeholder Board and governance
  structure
• How? multi-stakeholder dialogue
• Where? more than 75 countries
• When? started late 1997, independent in 2002
• How many? 750 companies cite the 2002
  guidelines as influencing report preparation / xx
  reporters claim to report in accordance with
  the 2002 Guidelines

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HOW DOES GRI HELP?

• Business identifies areas for improvement
  bolsters stakeholder communications
• NGOs Labour facilitates dialogue with
  business provides consistent information
• Investors standardised approach similar to
  financial reporting
• Governments complements regulations

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We have calculated ethical and ecological
benefits of sustainability reporting to be in
excess of 20m profit contribution to products
and services. Producing a sustainability report
has enabled us to manage a whole host of
ethically and environmentally motivated risks
much more robustly www.co-operativebank.co.uk
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The trust capital we have earned over the
years is extremely valuable. It helps us develop
a reputation as a responsible company. Our
ethical profile certainly factors in on
stakeholders decisions, whether it is about
investments, business relations or
employment. It makes us an attractive business,
preferred partner, supplier and workplace.
www.novonordisk.com
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SUSTAINABILITY REPORTING WHATS THE FEEDBACK?

• Pleon Global Stakeholder Report 2005
• Satisfaction with main issues covered
• Environmental 75.5 (2003 74.4)
• Economic 61.2 (2003 - ? But increase to 2005)
• Social 55.2 (2003 48.7)
• No. of respondents 495

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SUSTAINABILITY REPORTING WHATS THE FEEDBACK?

• Pleon Global Stakeholder Report 2005
• Factors enhancing credibiity in CSR/SD reporting
• Formal external verification (52.5)
• Transparency re mistakes/bad practice (49.7)
• Using an external reporting standard such as GRI
  (48.5)
• Reporting on dialogue with stakeholders (45.5)

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SUSTAINABILITY REPORTING WHATS THE FEEDBACK?

• Pleon Global Stakeholder Report 2005
• Stakeholder preference for formal external
  verification
• Employees 45.6
• Academics 57.6
• NGOs 59.0
• Financial community 71.0

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GRI REPORTS WHATS THE FEEDBACK?

• Pleon Global Stakeholder Report 2005
• The 2002 GRI Guidelines are
• A step towards standardisation - meaning more
  comparable reporting (65.9)
• A flexible f/work for reporting (57.8)
• An excellent benchmarking tool (48.9)
• A step towards standardisation meaning a loss
  in creativity and flexibility in reporting
  (12.1)
• No. of respondents 496

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THE 2002 GRI GUIDELINESWHATS IN THEM?

• How to use the guidelines
• Reporting principles
• Report content and guidance on report structure
• Strengthened social and economic content
• Core vs. additional indicators
• Clarity on flexibility and recognition of
  leadership
• Guidance on assurance

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BASIC STRUCTURE OF A GRI REPORT

• Vision and strategy
• Organisational profile
• Report scope
• Governance structure, management systems and
  stakeholder engagement
• GRI content index (in accordance with only)
• Performance indicators
• Assurance statement (not mandatory)

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SUSTAINABILITY REPORTING PRINCIPLES

• Transparency
• Inclusiveness
• Sustainability context
• Completeness
• Relevance

• Neutrality
• Comparability
• Accuracy
• Clarity
• Timeliness
• Auditability

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PERFORMANCE INDICATORS

• Economic monetary flows - bought in goods and
  services, payroll costs and benefits, taxation,
  distributions, donations, indirect (macro
  economic) impacts (13 indicators 10 core)
• Environmental materials, energy, water use,
  waste, emissions, recycling, bio-diversity,
  suppliers, products, etc. (35 indicators 16
  core)
• Social employment practices and policies,
  collective bargaining, health safety, training
  and education, diversity, human rights, bribery
  corruption, etc. (49 indicators 24 core)

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CORE VS. ADDITIONAL INDICATORS

• Core
• A measure of relevance to reporters and users
• Integral to comparability
• General consensus forming
• Additional
• Leading edge but used by few reporters
• Intensive interest to few stakeholders
• In need of further testing

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IN ACCORDANCE REQUIREMENTS

• Report on the contextual and qualitative
  indicators.  
• Include a GRI Content Index.  
• Report on the core performance indicators.
  Omission of each core indicator must be
  explained.  
• Ensure that the report is consistent with the
  listed sustainability reporting principles.
• Include a statement by the Board or CEO as
  follows
• This report has been prepared in accordance with
  the 2002 GRI Guidelines. We believe that this
  report is a balanced and reasonable
  representation of our organisations
  sustainability performance.

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In accordance with GRI reporters a sampling
106 organisations in 24
countries Including
Musgrave Group Natura Novo Nordisk O2 Puma Raboba
nk SabMIller SC Johnson Shell International Suncor
Volvo West LB
ABN Amro Anglo American Axel Springer AG BHP
Billiton BMW BP BT Diageo Dow Chemical Ford Gaz
de France GM Grupo Santander Holcim Hydro
Quebec Iberia Intel
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GRI COMPLEMENTARY INITIATIVES
Management Systems Standards
Codes of Conduct
GRI seeks to harmonize and integrate
Intangibles Accounting
Performance Standards
GRI
Issue/ Sector/Natl Reporting Guidelines
International Conventions
Assurance Standards
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11-Nov-09
www.globalreporting.org
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apparent chaos but
codes of conduct
management systems
assurance standards
performancestandards
governance standards
performancereporting
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a generally-accepted SD/CSR framework?
governance standards (OECD)
codes (GC, OECD)
management systems (ISO)
performancestandards (SA8000)
assurance standards (AA1000AS)
performance reporting (GRI)
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GRI in 2005

• Board and Stakeholder Council well-established
• 100 organisational stakeholders
• 750 reporters 30 countries
• a developing framework of documents
• translations in Chinese, Dutch, French, German,
  Japanese, Russian Spanish

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where are we now?

• guidelines, sector supplements and protocols
• 2002 guidelines due for revision 2006
  structured feedback process undertaken,
  workstream work complete, public comment period
  about to start
• sector supplements issued for testing financial
  services, tour operators, telecommunications,
  mining, logistics, etc
• sector supplements under development automotive,
  financial services, mining and metals, public
  agencies
• protocols ready for testing child labour, water,
  HIV/AIDS, reporting boundaries
• protocols under development health safety

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G3 of the Guidelines what changes and why? 1
of 2

• Improved flow within document
• from SD context gtgt organisational response and
  vision gtgtgt reporting principles gtgtgt performance
  indicators gtgtgt technical protocols
• Improved governance and financial risks sections
• Tests to support reporting principles such as
  relevance and completeness
• Reduction in the number of indicators to improve
  relevance

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G3 of the Guidelines what changes and why? 2
of 2

• Development of a management disclosure
  framework (MDF) to capture relevant systems
  management issues more clearly
• Full set of technical protocols containing
  measurement guidance
• Improved harmonisation of resultant indicators
  with external protocols
• Tiering system to replace current in
  accordance with reporting criteria set
• Development of fully XBRL enabled web-based
  version of G3 to facilitate external use

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www.globalreporting.org

• Conclusions
• Demand for improved user friendliness has driven
  the proposed changes
• At the same time the authors have striven to
  achieve greater rigour
• New set of Technical Protocols supported by
  proposed new XBRL facility will enable greater
  comparability of reports
• Assurance of sustainability reports remains a
  contentious issue

Thank you