Sustainability reporting should be comprehensive, transparent, non-biased and standardized, and the best way to improve the quality of reporting, according to the Global Reporting Initiative (GRI), is to get those sustainability reports externally assured, i.e. reviewed by a third party.
GRI pioneered the use of a comprehensive “Sustainability Reporting Framework,” comprising reporting guidelines and sector disclosures, to help enable organizations to identify and better manage risks and opportunities.
In a new report, Trends in External Assurance of Sustainability Report, GRI reports that over the past 12 years it has witnessed “a tremendous and rapid uptake of sustainability reporting, and an increasingly growing trend towards external assurance by organizations worldwide.” The report, released last month, notes that 45 percent of GRI-based sustainability reports published by organizations worldwide last year were externally assured, compared to 38 percent in 2011.
In the U.S., the number of companies publishing externally assured, GRI-based sustainability reports rose from 10 percent in 2011 to 16 percent in 2013. “This growth is both expected and welcome,” the reports says.
Beyond the growth in the number of U.S. companies obtaining external assurance on their GRI reports, the research revealed:
- The number of companies seeking external assurance on their GRI reports is consistently rising.
- Publicly-listed companies are the majority: In 2011 (92 percent) and in 2013 (89 percent), the majority of the U.S. companies publishing a GRI report with a “+” Application Level were publicly-listed companies.
- Some companies obtain multiple assurance engagements on different aspects of their reports. In 2011, 26 U.S. companies published externally assured GRI reports, resulting in 30 external assurance statements. Bristol Myers Squibb and 3M undertook two different assurance engagements; and UPS undertook three different assurance engagements. In 2013, 41 U.S. companies published externally assured GRI reports, resulting in 44 external assurance statements.
- An increasing number of companies are seeking external assurance on their entire sustainability report. In 2011, 17 percent (5 of 30) of the external assurance engagements covered the entire sustainability report. This number rose to 30 percent (13 of 44) of the external assurance engagements in 2013.
“This growth in reporting reflects the increasing demand for extra-financial/sustainability information by investors, regulators, and the public alike—and as this demand rises, so does the demand for more reliable data,” the GRI report says.
Steve Leffin, director of global sustainability at UPS, notes: “What drives transparency is information that is comprehensive, credible, and comparable. We achieve these qualities in our sustainability reporting with a combination of hard work, rigorous assurance by a respected third party, and full application of global reporting frameworks such as GRI.”
As with financial reporting, GRI says external assurance can provide report readers and internal managers with increased confidence in sustainability reporting, “making it more likely that the data disclosed will be used for decision-making by internal and external stakeholders alike.”
Image credit: Report cover from GRI’s website