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One of the most difficult things when it comes to sustainability reports and sustainability in general is to compare between companies. Not only that sustainability metrics are lagging behind, but you also don’t have websites like Yahoo! Finance that provides you an easy and user-friendly access to comparable data. It’s true that there are some services available (provided by CSRHub and ISOS Group for example), as well as sustainability indexes and ranks, but it’s still not as good as it can get.
This week this situation is about to change dramatically with the launch of the Global Reporting Initiative’s (GRI) new database including data on the sustainability and environmental, social and governance (ESG) transparency of over 3,000 companies worldwide.
As you probably know GRI is the most widely used sustainability reporting framework. To date, thousands of companies in the auto, utility, consumer products, pharmaceuticals, financial, transport, energy and chemicals sectors, among others, in addition to public authorities and non-profits, have published reports that adopt part or all of the guidelines.
Even though these reports were usually available on the GRI website, comparing between the sustainability performances of companies based on this data was very difficult and demanded hours of hard work. This might be one of the reasons that most investors for example didn’t take these reports into consideration. The new database enables an easy way to search and compare between reports, providing a better picture of companies’ sustainability strategy and performance, long-term viability and impacts on society and nature.
The search option is very easy using filters such as type of the report, years, size of the organization, sector and region to search data from about 7,660 reports. This way for example, I can search for all the large forest and paper products companies in Europe that submitted a sustainability report using the third generation (G3) of the guidelines. I click ‘apply’ and get an easy access to all 49 available reports that meet this set of criteria.
The search option is nice, but the comparison option or benchmark as GRI calls it is the real jewel in the crown here. Right now, the comparison is mainly based on compliance with the GRI guidelines. It might not be the most ideal ideal way to compare sustainability performance of companies, but it definitely helps to identify differences between companies, not just on their sustainability performance, but also with regards to their level of transparency and disclosure. As José Luis Blasco Vázquez, Partner in charge of Climate Change and Sustainability Services at KPMG for EMA region, said: “we may be witnessing the most important transformation in corporate transparency and disclosure in recent decades.”
In this section you also have filters for region, sector and report time that help you get more specific in your comparison. Right now, the benchmark section includes all reports that have been GRI-checked from January 2011 onwards, so the number of reports is relatively small. If you try to compare North American companies you’ll find that only ten reports are available. In the case of Europe it’s better with 57 reports and if you want companies from Asia, you have 14 reports right now.
Let’s say for example I want to compare financial services companies worldwide. I set up the filters accordingly and find out 23 reports are available on my dataset. What you get once you hit the ‘benchmark’ button is compliance levels to all the indicators included on the guidelines, whether it’s ‘fully reported,’ ‘partially reported’ or ‘not reported.’ Most of the indicators in my example show full compliance of all the companies, but if I look at indicator 2.9, Significant changes during the reporting period regarding size, structure or ownership, I see 91 percent or 21 companies have fully reported, one company partially reported and one not reported at all. One more click on this indicator and I get a list of all the companies with their level of compliance and then I can check those companies that didn’t fully comply and the reason for that.
Ernst Ligteringen, Chief Executive of the Global Reporting Initiative (GRI) was very excited about the potential of the new database, saying: “There is a wealth of sustainability information in thousands of reports from companies around the world that is currently not easy to access. The new database will make this information easily accessible, enabling companies and investors to benchmark and analyze transparency.” Blasco Vázquez of KPMG also believes it has an important value for investors – “this database assists investors in accessing more robust and comparable information, bringing sustainability data into closer alignment to financial reporting data,” he said.
Hopefully they’re right. In many forums you hear about the need in improved sustainability metrics and tools that will enable investors and other stakeholders to evaluate sustainability. This new database is certainly a step in the right direction, making sustainability data more accessible, understandable and eventually valuable.
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is also an adjunct professor in the University of Delaware’s Alfred Lerner College of Business and Economics.