In search of the perfect GRI Report

The perfect GRI Report hasn’t been written yet. Don't waste your time seeking perfection.

Over the years, reports have become more and more impressive. The level of transparency has increased, and the substantive quality of reporting has matured. New formats have made data more accessible and interactive, and the colours, shapes and concepts are more appropriate. The adherence to GRI guidelines has created a structure to reporting which offers report readership easier access to what counts, even if many reporters are still not entirely clear how to apply the framework in the most effective way, and some choose to bypass the framework and report in their own way.  We are seeing more about sustainability and strategy and less about philanthropy and giving back. We are seeing more focused summaries and less Encyclopedia Britannica. More materiality and less shopping list. More Companies, from more sectors, from more countries are reporting. The range of reporter profiles is expanding and includes global companies, private companies, SME's, non-profits, government agencies and even small consulting companies.  All in all, over the past 10 years, reporting has come of age, one might say , has mainstreamed, and is evolving with trends which include integrated reporting, quarterly reporting, online reporting, local reporting by global companies, personalized reporting using videos and interactive elements to support what reports were always meant to do i.e. providing a platform for feedback and dialogue. But still, in an estimated 5,000 reports published in 2009, there is no perfect report.

Why hasn't reporting reached perfection? Some Companies have been reporting annually now for over 15 years. Why haven't they got it right? Why are all the hundreds of first-time reports that we see every year not learning from the experience of the several-time reporters and producing first-time reports which are, well, perfect?

The answer, I believe, is clear. There cannot be a perfect report because there is not a perfect Company, at least as far as sustainability is concerned. Just as sustainability is a journey, so is reporting part of that journey. Just as no Company has reached their ultimate goal in sustainability, so has no Sustainability Report reached the level of perfection in the way it expresses sustainability performance, and serves as a platform for improving that performance.

The evolution of sustainability reporting

Novo Nordisk's website shows the evolution of their sustainability reporting. The first report listed on the Company website is an Environment Report for 1995, which is their third annual report (previous reports not available online).  The 1998 report looks remarkably like the environmental section of any current report, with calculation of carbon emissions, all resource consumption and resource efficiency, and details of dialogue with environmental stakeholders.  By 1998, Novo Nordisk progressed to the issue of two separate reports, an Environmental Report and a Social Report, with the social report covering human rights, responsible workplace and engaging society themes. Little data is presented in this early social report, though we can read a good contextual presentation of material issues related to diabetes, a disease Novo Nordisk has come to own, as the apparent world leader in addressing solutions for this commonplace disease which has the potential to severely reduce quality of life for millions of people worldwide. In 1999, Novo made its first integration leap with an Environmental and Social Report (not online) and this was  followed by  some experimenting with a Triple Bottom Line Report (2001), a Sustainability Report (2002) and again in 2003, until Novo Nordisk took the second leap of integration, producing an Annual Report with both financial and non-financial disclosures in 2004.  This has remained the preferred format for Novo Nordisk with the release of their latest Annual Report 2008.  This report is at GRI Level A+. By this time, Novo Nordisk reporting has been branded "Changing Diabetes" and "access to health" with reference to the Millennium Development Goals is a core element of the report structure, and the concept of materiality is discussed and material issues listed. Novo Nordisk provides us with one example of the evolution of the internal sustainability journey as reflected in sustainability reporting, though there are many others: Barclays plc (from 1997), BASF (from 1998), Ben and Jerry's (from 1995), Cisco Systems (from 1998), Henkel (from 1992), Intel (from 1994) and many many more. Almost all reporters started out with an environmental report or a social report, and ultimately integrated these into one Sustainability report. Because, actually, this is how internal processes have evolved. (Few Companies have integrated Sustainability Reporting with Financial Reporting. Does this also tell us something about internal processes?)

Seek progress, not perfection

This reporting journey seems quite incredible, as most of use seem to think of reporting as a phenomenon of the last 5 or 6 years. It was only in 2004 that annual reporting output reached the level of over 2,000 reports per year level (according to CorporateRegister), and way back when Novo Nordisk started to report, total global output was less than about 100 reports.  The point here is that reporting continues to evolve just as the concept of sustainability continues to evolve, and neither has reached perfection in application or presentation. Instead of looking for perfection, we should be seeking progress.

Reporting is not effective

A key tenet of progress in sustainability performance is stakeholder feedback and dialogue. Sustainability reporting progress relies on similar feedback and dialogue. This is why the opportunity to provide feedback at the GRI 2010 Reader's Choice Awards and engage in dialogue at the GRI 2010 Conference in May 2010, or on this blog, or elsewhere, is a way of contributing to such progress. There are many people whose first reaction at the mention of reporting is "Reporting is not effective. No-one reads reports". I disagree. I believe that Sustainability Reporting adds significant value beyond the number of people who read them, but I also believe people read reports, maybe not cover-to-cover in every instance, but my experience is that reports add value useful internally and externally and are used by many stakeholders. Take the current demand from Apple stakeholders for a Sustainability Report.

Influencing for progress

Rather than bemoan the ineffectiveness of reporting, a more productive approach would be to change the face of reporting by contributing to the dialogue in a positive way. Reporting, as the expression of transparency, is here to stay, however we see it continuing to evolve. Contributing to the dialogue is influencing the evolution of reporting so that reporting (transparency) can reach and engage more stakeholders, just like us, more effectively. I want to be an influencer not a critic. I want to see a big improvement in the scope and quality of reporting. I want to see more stakeholders engaged in the sustainability debate. That's why I voted in the Readers Choice Awards. Not because I seek perfection, but because I seek progress.

Elaine Cohen

Elaine Cohen is the Joint CEO of BeyondBusiness, a leading social and environmental consulting and sustainability reporting firm, and GRI Organizational Stakeholder.  Elaine also writes regular Sustainability Report reviews on CorporateRegister.com, and a popular reporting blog at www.csr-reporting.blogspot.com.

Companies in developing countries among leaders in climate change reporting

As world leaders and their team of negotiators in Copenhagen worked towards a last-minute deal to agree the best way to reduce carbon emissions, it became clear that at least one influential group is understanding the impact of business activity and climate change.

A joint news release by GRI and ACCA, issued on December 10 - the day that we launched our report “High Impact Sectors: the Challenge of Reporting on Climate Change” at Copenhagen - has received significant media coverage around the world.

That may be not least because our four-part report shows how companies in developing countries are among leaders in climate change reporting. While less than half of companies studied at a global level, disclosed specific climate change-related information using GRI indicators in their company’s sustainability reports, the report does reveal that companies from Brazil, China, India and South Africa are shown to be particularly strong in reporting on climate change policies, strategies, governance and risks. They also lead the way in having in place emissions targets, measurement procedures, and mitigation and adaptation plans.

If the media and the developing economies understand the importance of reporting emissions in an effective way, it surely cannot be too much of a leap for leaders of the developed world to ‘get it’.

The report can be downloaded from this link:
http://www.accaglobal.com/pubs/general/activities/library/sustainability/reporting_pubs/challenge_reporting.pdf

Steve Priddy, Director of Technical Policy and Research, ACCA.

A love-hate relationship

I have a love-hate relationship with sustainability reports.

I am a process guy, and I appreciate the rigor behind reporting:

1. Identify critical issues by engaging external people;
2. Set up a vision of your industry in a just and sustainable world;
3. Build processes that help you deliver your strategy;
4. Set ambitious, credible targets;
5. Monitor progress;

… et voilà, overtime your sustainability performance should improve, to the benefit of your bottom line.

Yet there are times when reporting drives me up the wall:
• A sustainability strategy that exists only in the head of sustainability specialists,
• Robust articulation of incremental innovation strategy, when the whole industry needs a re-think,
• Trivial metrics that reflect data availability rather than critical information.

I am all too aware that my theoretical approach does not always pan out.

I also have a hard time with the abundance of rankings and popularity votes, serving a small community of reporting experts. That’s why I am involved in the second edition of the Reader’s Choice Award. We start with basic reporting questions (perception of reporting, use of report, credibility) and ask readers for examples that best illustrate what they value (the infamous popularity vote).

Not only do we check these results with reporters’ initial goals, three of us also spend a lot of time dissecting the results. This extra layer of analysis provided by Futerra, KPMG and SustainAbility will result in robust commentaries on the state of reporting, for better or for worse.

So spread the word! The more participants the better.

JP Renaut,
Program Manager,
SustainAbility

Readers versus Reporters

This year will see the return of the Global Reporting Initiative’s Readers' Choice Awards and Readers' survey, but with a twist. This time, it’s not just the readers’ opinions we want. For the first time, companies that produce sustainability reports will also be able to take part in the survey. This will provide a unique insight, showing both sides of the story.

Data from the GRI’s reports list showed that 1,061 GRI reports were published in 2008, a record-breaking 50% growth compared to 2007. Last year’s results from the GRI’s reader’s survey also showed that 90% of readers’ views towards a company had been influenced by reading its sustainability report. Both these statistics are significant. The first shows that even in the current economic climate, companies are still dedicating time and money to their reporting. The second indicates that they have an impact on their readers. So, has the business case for sustainability reporting finally emerged? If the answer is yes, this is extremely positive, but also reiterates the importance for companies to get their reporting right. Last year’s reader’s survey provided a unique insight into what readers want to see in sustainability reporting. Yet, without also hearing from the companies that produce these reports, it is difficult for us to measure the effectiveness of their reporting. What we still don’t know is whether companies are actually meeting their own objectives and reaching their target audiences.

This is what Futerra is really interested in. Being able to see both sides of the story will help us understand how well companies reporting and their readers’ expectations are aligned. If the results show they are not aligned, then companies will need to change the way they report. It will be a unique experience in demonstrating how effective sustainability reporting really is.

If so, this will be a key moment in redefining sustainability reporting for the future.
The journey will begin on Thursday 19th November, when the survey opens to reporters at http://awards.globalreporting.org/

We look forward to seeing the results.

Helen Spoor, Consultant, Futerra Sustainability Communications Ltd.