We are witnessing a leadership battle for ownership of sustainability transparency and it’s not a good thing. Instead of playing to each organization’s strengths, we are risking moving the needle back to only one strength: financial returns. The battle is being played out on the respective turfs of the IIRC, SASB and the GRI, where IIRC and SASB are focused on what investors want to know in order to make more money and GRI is focused on what companies are doing to the world that makes it more or less sustainable. If I were a publicly listed corporation, I would probably find myself rather confused, amused or bemused.
Creating a harmonized corporate transparency pathway which enables consistent and non-overlapping disclosure frameworks does not need to be a lost cause, although it looks that way at present. Even the definition of a core concept such as materiality is not consistent across these three leading organizations, as explained eloquently by Dunstan Alliston-Hope and Guy Morgan of BSR in a great article to which I have referred in the past.As I was considering this fascinating state of affairs, I noticed that a few other accomplished experts have also discussed what Dwayne Baraka calls the disconnect in ESG reporting.
In an article which outlines the strengths and weaknesses of the IIRC, SASB and GRI frameworks, Baraka concludes that, “each of the approaches will add something to various types of investors, and dialogue might increase, but companies and investors need to be involved if CEOs and responsible investors are to have a meeting of minds on the state of ESG reporting.”
Another article, by Cornis van der Lugt, an independent consultant and researcher with a sharp mind, was published back in May 2013, just after GRI’s G4 guidelines were revealed, entitled “Time to align forces.” This was his first message of caution: “Used in combination, IR1 [Integrated Reporting Framework version 1] and G4 can have significant impact on measurement and disclosure by companies world-wide. Yet used non-aligned, and perceived to be competing, years of work on non-financial reporting and corporate sustainability may be lost.” van der Lugt goes on to present a fabulous evaluation of the IIRC and G4 frameworks and even offers his updated comparative analysis of both freely to all those who are interested.
However, even before the pronouncements on the state of affairs post-G4, the chronology of this leadership battle for corporate sustainability transparency was already apparent. These are my observations from afar and some, possibly irreverent and highly subjective assumptions about what’s been going on. Click to continue reading »
CONTINUES » Discuss This »