XBRL: it’s up to GRI to show progress or explain failure

More than four years have passed since the Global Reporting Initiative began working on the adoption of XBRL – eXtensible Business Reporting Language – to manage corporate non-financial information. But evidently the idea has had only minimal acceptance in the business world (see page one) despite the potential benefits to companies, investors and analysts the GRI has claimed for it (EP10, issue 2, p9). While this state of affairs is a concern to the GRI, it should also give pause for reflection to everybody interested in the state of sustainability reporting.

Commentators adduce a whole string of reasons for the meagre take-up of a system that was to allow users, with just a few keyboard strokes, to extract snippets from company reports for the compilation of industry-wide comparisons, indexes and benchmarks. Non-financial bodies are unfamiliar with XBRL, it is said, in contrast to the financial sector where the language originated. The GRI is blamed for providing insufficient support, particularly by not developing beyond its initial form a ‘taxonomy’ to tag individual items of information for automated processing. Companies see no benefit in employing the language in their CSR reports. Investors and analysts, for their part, don’t read CSR reports and likewise have to be convinced first that XBRL is useful to them.

But additional issues come to mind. Much of CSR reporting is narrative in character and less amenable than quantitative information to electronic tagging, despite assertions to the contrary by the  GRI. We also have to take into account that one of the strongest impulses to seek systematization of CSR reports years ago – questionnaire fatigue – has diminished as companies have become better at producing data, and investors and analysts less scatter-gun in their information requests. Mergers of SRI analyst firms have also reduced the number of specialized outfits seeking information, and therefore, have potentially reduced the desire for XBRL.

Yet to the extent that hard facts and figures have replaced waffle in CSR reports, XBRL should become easier to apply and the potential benefits of computerized data handling more realizable. And simply to conclude from the poor take-up of the system that there is no demand for it altogether is to ignore Say’s law that supply creates its own demand – provided, of course, that the supply is properly presented.

Seen in this light, the failure of XBRL to resonate touches some core aspects of sustainability reporting. More than a review behind closed doors is required; the GRI needs to give a public explanation of why take-up has been so poor.