Sustainability reporting has changed beyond recognition in the last decade. The limited accounts of performance produced by a small number of pioneering companies have been replaced by far more substantial reports with much clearer business relevance, and there's been a huge growth in the number of organisations reporting.
As anyone involved in reporting knows, this progress has been driven in no small part by the work of the Global Reporting Initiative (GRI). Founded in 1997, GRI's mission was to provide the guidance and support that would make sustainability reporting standard practice. It issued its first reporting framework in 2000, and via a series of evolutions the GRI framework has become the benchmark for best practice in sustainability reporting. Over 11,000 companies now use the GRI framework as the basis of their reporting.
So far, so good. But the last few months have seen the framework undergo a significant overhaul, as GRI consults stakeholders on a new 'G4' version, and though G4's final content won't be known until its launch in May, it's already causing some consternation in business. If the reporters I've spoken to about G4 are anything to go by, this concern could amount to a serious wobble for GRI, and have significant implications for the future of reporting. Rumours abound as to what exactly will be in G4, but the concerns centre on four potential changes:
• G4 will abandon the reporting 'levels' (A, B, C etc) that companies can achieve. There's a paradox here: these levels are often misunderstood as indicators of sustainability performance, rather than what they are, which is simply the extent of disclosure. But justifying the huge effort of getting a report you can press-release as "A+" is a lot easier than committing even more resource to achieve a report which just meets the same standard as everyone else. Try selling that to your CEO.
• G4 shifts the focus to value chain materiality. It's hard to argue with the value chain being where the greatest impacts are for many companies, but for those with complex, and in many cases, multiple value chains (probably the majority), it's an utterly daunting prospect for any systematic approach.
• G4 increases the number of indicators – from 79 to over a hundred. The sheer volume of data collection looks set to tie up limited resources in chasing numbers and filling in spreadsheets, to the detriment of practical action on performance.
• G4 does nothing to improve the experience for readers. There's a worry that G4 will make reports less engaging as it pushes reporters
to satisfy a tiny band of expert stakeholders – and a lurking sense that nobody is reading anyway.
As Lucinda Hensman of The Coca-Cola Enterprises puts it: "Our company's need to engage more people in our sustainability work is seemingly at odds with the direction in which sustainability reporting guidelines are moving. Indeed, increasingly prescriptive requirements of expert audiences – the GRI G4 guidelines are a case in point – may in fact make the audience for our reporting more limited."
Though nobody doubts the good intention behind the changes, the overall sense I have from a seminar we held with a dozen leading reporting businesses in December is that G4 could make GRI simply too complex and burdensome. As one reporter we spoke to put it: "if the expectations of G4 cannot be simplified, existing reporters may begin to step away from GRI, and new reporters may not be in a position to report against the guidelines at all".
It seems very unlikely this kind of reaction is what GRI is hoping for, and certainly the last thing anyone needs is a reporting standard that fails to drive sustainability performance. Of course it's right that reports should focus on what really matters.
But it's also true that if sustainability reporting is to spread around the world, especially to emerging markets where many companies have not even begun to report, then there's a balance to be struck between offering the right challenge and providing support and value to users. If some of the best-resourced and most committed corporate-reporting teams in the world are having serious doubts about the process, then what are the chances their fledgling counterparts in China, India and Latin America will want to join in?
We're in the process of trying to put some data behind these anecdotal concerns – with a survey of reporting companies and their views of G4. We're also launching an online discussion of the issues and hoping to bring reporting businesses and GRI itself into a wider debate to clarify and resolve some of these issues.
What everyone seems to want is a solution that is rigorous and credible and yet flexible enough that businesses at all stages of the journey can use to improve their performance. If you're involved in reporting and have a view on G4, we'd love to hear from you.
Ben Tuxworth is head of sustainability at Salterbaxter
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