On Wednesday, the GRI announced the launch of the world’s first Global Reporting Standards for sustainability reporting. These new standards give businesses large and small a common language for reporting non-financial information.
They dovetail with recent global initiatives, including the Sustainable Development Goals (SDGs) and the Paris Agreement, in advancing integrated, un-siloed cooperation and transparency to address common challenges for a world in transition.
Why it matters
The role of business within 21st-century society evolves with the shifting global economy. What a couple of decades ago was the domain of niche “green” businesses is now an expected norm. A recent study published in the MIT Sloan Management Review shows 75 percent of senior executives in investment firms consider a company’s sustainability performance when evaluating the strength of the organization.
An MIT Sloan blog post entitled Investing for a Sustainable Future emphasizes this research, cautioning executives of the risks of ignoring this new investment landscape, writing:
“Investors see a strong link between corporate sustainability performance and financial performance — so they’re using sustainability-related data as a rationale for investment decisions like never before … It is time for corporate leaders to recognize that an increasing number of shareholders are (literally) invested in whether a company’s ESG activities connect with its financial success. customers, investors, and stakeholders shift.”
In a 2005 paper discussing the history and conceptual framework of sustainability accounting published by the School of Accounting of Southern Cross, Australia, author Geoff Lamberton argues: “The process of working with an organization and attempting to estimate sustainable cost may prove more valuable than the financial data produced”
Business reflects the society within which it operates. Without a common framework to assess these important non-financial values, businesses risk losing their social license to operate. GRI provides that framework.
GRI sets the standard
The global reporting standards build on more than 15 years of experience developing multi-stakeholder reporting disclosures. The GRI G4 guidelines are the most widely used sustainability disclosures. The GRI Global Standards bring a modular structure and new format that streamline the process of communicating and understanding the economic, environmental and social impacts of any company.
“The GRI Standards make it much easier for companies to report non-financial information, using a well-understood shared language,” GRI interim chief executive, Eric Hespenheide, said in a press release.
“The Standards are more straightforward, making them accessible to potentially millions of businesses worldwide. Sustainability reporting, using the GRI Standards, is the best way for a company to disclose its economic, environmental and social impacts, thus providing insights into its contributions – positive or negative – toward sustainable development.”
Starting with three Core Standards applicable to any reporting organization, an additional 33 Standards each relate to a specific economic, environmental or social topic. Specific topics are chosen through a rigorous stakeholder engagement process. The information reported is relevant, focused, timely and actionable. Topics can be added or updated without affecting other Standards. As global best practices evolve, so do associated Standards. This is sustainability reporting for the real world, not a static report.
The GRI Standards were set by the Global Sustainability Standards Board (GSSB), an independent standard-setting organization. A cross-section of global society, including business, labor, government, investors, civil society and sustainability practitioners, informed its development.
“Collaborating across the public and private sector, we designed these standards to guide sustainability reporting for any company, in any industry, for decades to come.” said Michael Nugent, vice chair of the GSSB.
Now more than ever
“Meeting the needs of the present without compromising the ability of future generations to meet their own needs.” That is the essence of sustainability, so eloquently defined nearly 30 years ago by the Brundtland Commission in “Our Common Future.”
Never have the broad themes of the Brundtland report been more relevant than today. Despite the growing urgency for action, never has there been a greater opportunity to realize those aspirations. Evidence to the contrary notwithstanding, the past 18 months could arguably be among the most transformative periods of progress in human history, at least in terms of global cooperation for common cause.
Consider the following:
- The United Nation adopted the Sustainable Development Goals
- COP21 lead to the Paris Agreement
- The Paris Agreement quickly passed the threshold to enter into force
- Delegates of the International Civil Aviation Organization reached an agreement to mitigate international aviation emissions
- The Montreal Protocol was amended at a meeting in Kigali, phasing out the use of HFCs, a potent greenhouse gas. The Montreal Protocol remains the paramount example of an effective binding, multilateral agreement.
- The launch of the GRI Global Standards
Each one significant in its own right: The integration of multi-stakeholder interests, cross-sectorial cooperation and improved processes for implementation combine to help make real the original idea expressed in 1987.
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