GRI Targets US Corporate Sustainability Reporting

The Global Reporting Initiative (GRI) is opening a new office in the United States to assist US companies in corporate sustainability reporting. The new “Focal Point USA” was launched in New York on Oct. 13, 2010, to increase the number of US companies that produce sustainability reports. GRI provides a framework for producing sustainability reports, also known as Environmental, Social and Governance (ESG) reports. The framework enables large and small companies, nonprofit organizations, and government bodies to assess their sustainability and disclose the results in a way similar to financial reporting. GRI’s new ‘Focal Point USA’ aims to increase the number of US companies reporting on sustainability in a consistent manner, to improve the quality of those reports, and to increase US organizations’ input into developing new guidelines for sustainability reporting.

The Big Four accounting and professional-services firms in the United States (Deloitte, Ernst & Young, KPMG, and PriceWaterhouseCoopers) agreed to provide donations to sponsor GRI’s new Focal Point USA for the first two years. Additionally, The Conference Board, a business and research assocation, agreed to host the GRI Focal Point USA on a pro bono basis during that same period of time. The Conference Board has a Center for Corporate Citizenship & Sustainability and sees its relationship with GRI as a way the center can help make sustainability integral to core business strategies.

In general, sustainability reports provide stakeholders with insight into key performance indicators for energy and water use, greenhouse-gas emissions and waste, and for social-performance indicators related to human-rights issues. This information helps investors, customers, employees, nongovernmental organizations, and other stakeholders understand a company’s ability to manage sustainability risk and related competition issues.

According to data cited by GRI, approximately 80% of the global Fortune 250 companies and the 100 largest firms in the US produced ESG reports in 2008–2009. However, the prevalence of reporting among the Forbes Global 2000, or the top 2000 companies on a worldwide revenue basis, is much lower, at just over 30%.

GRI aims to help organizations and companies learn about reporting on their sustainability performance and to make ESG reporting a mainstream practice by 2015, according to a Oct. 15, 2010 GRI press release. This goal is supported by several policies and policy documents worldwide. For example, a guidance issued by the Securities and Exchange Commission (SEC) in February of 2010 clarifies existing regulations stating that US companies should disclose certain specific climate-related impacts. The guidance also cites GRI Guidelines as a framework for ESG reports (1). GRI is emphasizing disclosure of information relating to the “triple bottom line” of people, planet, and profit, a commonly cited sustainability concept. In 2009, there was a 25% increase in the number of organizations worldwide using the GRI Guidelines for their ESG reporting, according to GRI.

During the past 12 months, GRI has been engaging more closely with US companies, financial institutions, business associations, investors, and government agencies to examine ways to better integrate ESG data into financial reporting. Over the next 10 years, GRI will work with other organizations to develop a framework for integrated reporting to better unify financial and ESG reporting.

In May 2010, GRI and the members of the United Nations Global Compact, a corporate social-responsibility initiative launched by the UN in 2000, agreed to align their work in advancing corporate responsibility and transparency. The UN Global Compact is a leadership platform endorsed by chief executive officers as a strategic platform for advancing sustainability and corporate citizenship. The compact has more than 7700 corporate participants in more than 130 countries and is structured as a joint public and private initiative. It serves as a policy framework for the development, implementation, and disclosure of sustainability principles and practices by offering participants specialized work streams, management tools, resources, and topical programs and projects to help advance sustainable business models and markets as part of a broader goal to build a more sustainable and inclusive global economy, according to the UN. The UN Global Compact has two objectives: to mainstream 10 UN principles involving human rights, labor, the environment, and anticorruption in business activities around the world and catalyze actions in support of broader UN goals, including the Millennium Development Goals, which are eight major objectives for poverty alleviation and related healthcare goals for the developing world.

Under the terms of the agreement, GRI will develop a guidance regarding the UN Global Compact’s 10 principles and issue areas to integrate centrally in a next iteration of its Sustainability Reporting Guidelines, a comprehensive framework developed to facilitate transparency and accountability for businesses and other organizations seeking to disclose their environmental and social performance. At the same time, the UN Global Compact will adopt the GRI Guidelines as the recommended reporting framework for businesses that have joined the compact.

Reference

• SEC, “Commission Guidance Regarding Disclosure Related to Climate Change,” Federal Register 75 (25), 6290–6297 (2010).

See related story, “A Management Model for Sustainability” (PTSM, August 2010)