Next month, the Global Reporting Initiative (GRI) will host its global conference in Amsterdam, a three-day event that will round up the top sustainability professionals and corporate social responsibility thinkers across the globe.
Among the key topics under discussion is the upcoming rollout of the G4 guidelines. Many changes from the current G3 framework are welcome, such as the elimination of the A, B and C reporting levels that often caused confusion about the quality of a report. The G4 guidelines also promise a more rigorous assessment of a company’s impact not only on the environment and society, but across a firm’s value chain.
The result is a more intensive process that goes far beyond checking boxes and the current focus on only what a firm’s stakeholders deem material. In this era when stakeholders, consumers and activists are demanding–and therefore receiving–more transparency and accountability, one way to look at this brave new world of G4 is to prepare companies for the increased scrutiny they will face from all angles.
At the same time, there is a risk many businesses will find the disclosure requirements too onerous and take a step back from sustainability reporting. And considering the momentum GRI and sustainability reporting have ridden in recent years, the results would be disappointing, especially here in the U.S. where we have lagged behind other regions of the world.
There is probably no greater advocate of sustainability reporting, and intensive reviewer of these reports, than Elaine Cohen. She goes so far as to suggest G4 in its current exposure draft form would be “reporting suicide.” Why? The exercise involving mapping a company’s entire value chain, the process of identifying materiality issues within that value chain and the email and paper trail resulting from the process is one reason why Cohen raises some concerns. In addition:
“The new G4 guidelines are not sharp enough to prevent confusion about what is required to report and what is recommended (guidance), and the presentation is difficult, taking some time to understand and then, even only after several readings.”
Another objection Cohen and other CSR practitioners have expressed is over the “in accordance” or “not in accordance” standard, which would replace the aforementioned confusing A-B-C tiered system. But whether the intention is to level a “pass or fail” assessment or not, that is the message GRI imparts. Hence, for companies large and small that are new to CSR reporting, the risk over a perceived black mark could discourage them from adhering to the GRI standard–or even from disclosing sustainability disclosures at all. GRI and the rest of us within this space need to encourage more transparency and reporting, even if it is, at first, slow and at a graduated pace.
Ben Tuxworth, of the advisory firm SalterBaxter, also voiced an ominous warning in The Guardian. The proposed 20-plus percent spike in reporting indicators to over 100; the weighty prospect of a company evaluating multiple value chains; and the overall growing complexity could give CSR reporters pause–and at the same time keep CSR reports relegated as a niche subject for a few experts when in fact, these reports should be mainstream.
GRI has insisted it is listening to these concerns, so whether its professionals listen to this chorus will be apparent next month in Amsterdam. New reporting frameworks will always cause some heartburn, but the reality is that complex business models and supply chains will create complications in reporting. And as far as reporting goes, many companies are moving beyond the bland sustainability report anyway. I rarely read the official GRI report if I do not need to: smart reporters engaging effectively with stakeholders build a web portal through which it is easy to navigate to find the relevant data a researcher covets. The GRI Index ends up as my fact-checking tool to see if the prose on a sustainability website passes the sniff test.
Finally, as is the case with any new reporting framework, voluntary or mandatory, smart companies will use G4 as a business analysis tool. Last fall in a column on GreenBiz, Mindy Gomes Casseres acknowledged the concern companies have over the value chain assessment, especially the long survey, audit and paper trail. But a deep dive into a value chain can also reveal unknown weaknesses and considerable risks to a firm’s business, says Casseres, and can open new conversations with stakeholders and help make more thoughtful decisions about new strategies.
I will bet that GRI will listen to its stakeholders and the release of G4 will assuage the fears Cohen, Tuxworth and other CSR experts have shared in recent months. The fine professionals in GRI’s Amsterdam headquarters really do not have a choice: in order to scale sustainability reporting, we need more privately-held and small and medium sized enterprises to believe sustainability reporting is an exercise that will boost strategic decision-making, and not just be another tedious report to fill out and risk an outcome in which no one is satisfied.
Based in Fresno, California, Leon Kaye is the editor of GreenGoPost.com and frequently writes about business sustainability strategy. Leon also contributes to Guardian Sustainable Business; his work has also appeared on Sustainable Brands, Inhabitat and Earth911. At Better4Business in Anaheim on May 2, he will join a panel discussing how companies can present their CSR initiatives to the media. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).
[Image credit: Leon Kaye]