Ed Note: Check out a 3p sponsored GRI certification in Sustainability Reporting to get trained by the author of this post
By: Nancy Mancilla, ISOS Group
It will not come as news to 3p readers that social and environmental issues can have a short and long term impact on the financial performance of a company. But, objectively measuring a company's sustainability performance is easier said than done.
Sustainability reports are as different as each of us. They vary in format, material issues selected, boundary and scope, and cultural orientation which makes it very difficult to judge performance based on a common set of indicators.
Investment institutions like Bloomberg, the Dow Jones Sustainability Index or FTSE4Good have some of the more widely recognized methods of reviewing corporate sustainability. But they aren't the only companies in the game.
Groups like CSRHub and Sustainability HQ have a deep knowledge of sustainability principals. They have successfully developed systems that make it possible to query a full range of sustainability data and share it with a broad audience. CSRHub Cofounder Cynthia Figge says, “We aggregate data from more than 100 sources to provide our users with a comprehensive source of CSR information on nearly 5,000 publicly traded companies in 65 countries.”
ISOS Group has capitalized on the standardization of the GRI reporting framework to create another measurement system.
Since the GRI framework is standardized, a true apples to apples comparison is possible. ISOS Group has developed a framework to quantitatively measure the strength of a GRI report, and we have collected dozens of reviews of reports using the framework. These all add up to a strong body of data that allows us to compare companies between sectors on the basis of the quality of their reporting.
In 2010, we assessed Walmart, Southwest Airlines, Qualcomm Incorporated, Bucyrus, Johnson & Johnson, Holland America, NextEra, Medtronic, Mattel, Citigroup, UPS, Sempra Energy, State Street or HP on all tests associated with the Quality and Content Principles in the GRI reporting framework. Although not all of the selected reports were GRI-based, all had referred to the framework to some degree as a guide for developing their reports and therefore, could undergo a common set of tests.
According to the final results, HP rated highest, while Walmart lagged in all areas. On average, most reporters failed to effectively apply Materiality and Stakeholder Inclusiveness, (which are key components of a GRI report). This shows that we are still in the elementary stages of sustainability reporting and that the best we can do is to educate ourselves on the importance of applying the right principles to the reporting process.
In order to improve in these areas, reporters should consider:
We have already started another round of assessments by looking at 2010 reports from 14 companies with others planned as they come online. In order to build greater value from this education experience, results are then offered to the reporting organizations as critical feedback and to registries, such as CSRHub.
There is no customary form required by law for this type of reporting, yet there are guidelines we can follow that have been developed and used by thousands of groups globally. Someday, a tool for comparing apples to apples may enter the market. However, until that day comes, we will have to rely on our educated judgment of the GRI to determine the quality of reports and supporting systems. Essentially, mastering the use of GRI’s Quality and Content Principles provides an un-matched authenticity for reporting.
Ed Note: Want more? consider attending this GRI certification in Sustainability Reporting Oct 17-18 in Berkeley, CA and learn directly from Nancy Mancilla
(image credit kightp on flickr)