The sold-out biennial GRI 2010 conference with 1,200 attendees from 77 countries was certainly a highlight of the 2010 #CSR calendar and the GRI did an impressive job of bringing such a large crowd of people committed to sustainable business and a sustainable world together for discussion, reflection, presentation, exhibition, interview, debate, LOTS of sandwiches, tweets, awards and networking. The conference was an important landmark in the coming of age of sustainability, a sort of barmitzvah party, attended by the parents and grandparents of the GRI movement, infused with a kind of euphoric sense of achievement coupled with a knowledge that what happens next will be even more significant, propelling the GRI teenager into adolescence with several duties, obligations and a vision of how to make a difference in the world. There were several very clear overriding themes dominating the conference which could not possibly have gone unnoticed by any of the participants.
From the opening of this conference, with the announcement that "GRI proposes that ESG reporting and financial reporting need to converge over the coming decade. GRI advocates that a standard for integrated reporting should be defined, tested and adopted by 2020. GRI is working with leading global organizations in financial markets, accounting, corporate responsibility, ESG reporting, and civil society to establish the International Integrated Reporting Committee. The committee’s purpose is to promote integrated reporting, and to facilitate and coordinate collaboration between key institutions to develop an integrated reporting standard" right through to Mervyn King's closing remarks with the announcement that the Johannesburg stock exchange will require integrated reporting as a condition of listing, it was hard to hear the word reporting at this conference without its new prefix- integrated.
Sustainability as Climate Change
From the words of Mathis Wackernagel, President of the Global Footprint Network in the opening plenary "Humanity is running down the planet" to the words of Kumi Naidoo at the closing plenary "We have no planet B", the meaning of sustainability at the GRI conference was overridingly environmental sustainability and the effects of climate change, at the expense, I feel, of many other social, product, marketplace and supply chain impacts, though breakout sessions were diverse.
Technology and data
The new ways of gathering, analysing and disseminating sustainability metrics and data via Bloomberg terminals and other technologically supported metrics analysis from firms such as CRD analytics, which is used as the basis for the Nasdaq OMX Global Sustainability Index, XBRL reporting language and taxonomies (note new sustainability upcoming buzzword) and software for gathering sustainability data in companies such as that delivered by SAP or Credit360, were all prominently featured throughout this conference. Technology is up front as the key to developing transparency and integration of data for use, primarily by analysts and financial data experts, but also as a business decision making tool. Excel, apparently, is passe.
The voluntary nature of CSR and sustainability efforts is giving way to greater pressure for regulation and legal requirements for sustainability disclosures. Apparently, voluntary is not achieving the scale and pace of change towards transparency that our planet needs. Governments, regulators and stock exchanges around the world will be urged to play a much greater role in driving companies to disclose, though little was said about the processes that will be needed to enforce such new regulation.
Partnerships for standardisation
The GRI has established many high level partnerships to ensure the reporting voice in moving towards greater alignment of the global direction of sustainability transparency - the UNCG partnership to strengthen collaboration, work with several other UN agencies, the OECD, NASDAQ and other exchanges, big NGO's such as Greenpeace, the big accounting companies, think tanks and more, the Integrated Reporting Committee etc. Partnerships for greater global alignment is clearly the way forward.
How did Brazil end up with 6 out of a possible 6 awards in the Readers Choice Report Awards , sponsored by last time Award winner Petrobras, also Brazilian, was the question on everyone's lips at the end of the Awards Gala. What is Brazil doing that no one else is ? Clearly, a point of significant interest for all the other 59 countries whose reports were represented in the Awards this year.
The impact of social media as a whole and in particular the use of the #griconference hashtag, encouraged in every session, and the high quality of tweets flowing throughout the 3 days, including reactions and questions from those not attending, signalled the arrival of the GRI, previously only a moderate voice on social media, into the upper league of real-time microblogging and an ackowledgement that social media is where the voices of today are meeting and influencing. Social media cannot be ignored as a place to engage stakeholders.
It seems that this conference heralded move of the GRI into a new era. Beyond the Bar Mitzvah . The establishment of sustainability reporting and GRI leadership in this field has lent a certain power to the GRI which one senses was bolted into place, not without some dramatics, at this conference. The GRI is moving out of its idealist, start-up, optimistic, improve-the world platform towards a bolder positioning, aligned with where the money is, this time, not to simply to create a better world, but assuming a responsibility to save us all from disaster. From the carrot to the stick, to paraphrase the title of a report launched at the conference on Trends in Voluntary and Mandatory Approaches to Sustainability Reporting, the GRI has lost the infectious, youthful, pioneering enthusiasm of the early days and has moved to where the stakes are more serious, money talks and the currency is planet or no planet. This may not be noticeable to the casual observer, but the shift is there. Perhaps this is not a bad thing. Perhaps this is the only way to create the mindset transformation that was so often pronounced "urgent" by the conference speakers. Perhaps, after all, the triple bottom line really is only one bottom line, as Henk de Bruin of Philips said in a session on integrated reporting. But perhaps, in moving forward, the risk is that the GRI loses sight of the cause and inevitably adopts the behaviours of those big businesses it seeks to change. Perhaps the risk is that, by focusing on financial stakeholders, as the key to all stakeholders, the resulting reality will relegate non-financial stakeholders to the level of recipients of the hand-me-downs of big finance, whose voice is heard at low-volume unless they happen to have the charisma of Kumi Naidoo
Alongside the massive and unequivocal success of the GRI Reporting Framework and the warm applause at the end of the conference, the GRI will have to be careful to ensure its roots are solid as it cultivates new directional offshoots. Let's look at reality:
Over 4,000 "sustainability" reports of sorts are issued annually. GRI say that around 1,300 of these are GRI reports - 30% - though many others are "inspired" by the GRI framework. So whilst the GRI framework is the biggest single reporting framework in use today, the reality is that it is still not applied by the vast majority of reporters.
Sustainability reporting, whilst growing year on year and adopted by a majoirity of leading global businesses, the 5,000 or so businesses that report today remain a drop in the ocean compared to the 82,000 transnational corporations operating worldwide (quoted in "Carrots and Sticks" mentioned above) and the significantly larger number of non-transnational corporations. The reality is that reporting, regrettably, is nowhere near mainstream, even thought we might like to think it is.
The quality of GRI reports varies substantially from the outstanding indicator-by-indicator disclosure-by-disclosure reporters to those reporters whose use of the GRI framework is no more than abuse. "We are not policement" says Ernst Ligteringen. "The GRI does not police the quality of the reports." But perhaps it is time for the GRI to make a fundamental assessment of how, and not only how much, the GRI report framework is applied - how companies are reporting on indicators, how many indicators, how Companies report what they claim to report, the consistency of application of the framework in so many ways. A comprehensive study such as this might reveal a pareto picture - that 20% of the reporters are delivering 80% of the quality, and that 80% of reporters are at best inadequately applying and at worst actively misusing the reporting framework. The reality is that overall, the quality of sustainability reporting using the GRI framework is inconsistent and often inadequate.
The level of integrated reporting remains low at 5% of reports issued and here again we see massive variance in approach and quality, ranging from the simple combination of two types of largely unconnected reports within one cover to the more holistic approach attempted by Novo Nordisk and others. The proclamation of integrated reporting as the ultimate goal is the start of a new path, representing, in my view, the evolution of financial reporting and not of sustainability reporting. The reality is that integrated reporting has hardly taken off, despite the strong drive to buzz it up.
The quality of assurance processes, once again, unpoliced and unchecked, remains as I termed it some time ago, a Wild West. The new AccountAbility standards are a mystery in their pedantic complexity and assurance statements beg more questions than they answer. The assurance market is controlled by the accounting companies, and by and large lacks the depth and scope of a process which can truly assure stakeholders on report integrity. Who assures the assurers ? The reality is, that with only 20-25% of all reports currently being assured, and many badly, the assurance process has not taken firm root.
The success of the GRI must be viewed alongside these challenges, and as the new era of the GRI takes shape, the GRI must be alert and remain true to its broader constituency. As integrated reporting takes off, the GRI must take care to establish a solid platform around quality sustainability reporting that attracts more than just the financiers. The GRI must take care to ensure the rhetoric is founded in reality. The GRI must not let the euphoria of the barmitzvah party mask the responsibility the organization has to the extended family, who represent more than cash and climate change. As transparency takes hold, the GRI must ensure that this is more than just carbon emission data on Bloomberg terminals, and as the GRI expands its influence, it must assume responsibility to align itself not only with those who count in Euros and Dollars, but also with those who count in principles and values.
Well done to the GRI for coming thus far, and for delivering an unmistakeably positive impact on sustainable business processes through reporting. Good luck to the GRI as it faces the challenges ahead. We should continue to be participative and supportive. And watchful.
elaine cohen is co-founder and co-CEO of Beyond Business, a leading social and environmental consulting and reporting firm. Visit our website at www.b-yond.biz/en