The Global Reporting Initiative: Dust in our eyes or important impact measure?

By Kitty Kerner

AMSTERDAM – “If the only tool you have is a hammer, every problem begins to look like a nail.” Apply this well-known aphorism by psychologist Abraham Maslow to the business world, and you end up with a reality where everything is measured against its dollar value. If the only tool we use to measure what’s valuable and important is the price-tag, then those things without a price-tag begin to seem unimportant and irrelevant. Like air and water. Or the conditions for our workers.

Ergo – we need different tools.

This, in a nutshell, is the idea behind the of the Global Reporting Initiative (GRI), an international movement that aims to make reporting on economic, environmental, and social performance by all organizations as routine and comparable as financial reporting. The outcome is called a sustainability report. Imagine picking up such a sustainability report by, say, Nike, and being able to read all about the impacts of their production on the environment, the social and economic fabric of their plants’ communities and even their suppliers. Sound like a futuristic dream?

Well, it’s already here. Nike is one of over 3,000 organizations worldwide that are publishing a sustainability seport, many of them using GRI guidelines. From their first incarnation in 2000, these guidelines have steadily become the global de facto standard for corporate sustainability reporting worldwide. They evolved in an ongoing global multi-stakeholder dialogue, involving all who are interested in getting a measure of sustainability – from businesses and academia to governments and NGOs. The newest version, the G3, was just released last month at an international conference in Amsterdam, where GRI is based.

I had the opportunity to attend the conference and used it to see what the buzz was all about. The list of nearly 1,000 attendees read like a “who’s who” of the corporate world, and at times I felt like I was in the middle of a great big infomercial. When you hear statements such as “Sustainability is not an option, but a necessity” and “Sustainability is the innovation opportunity of the century” then – given the audience – one can’t help but be suspicious.

It all sounds good, but what can we expect from such a report, issued by the companies themselves? As Karien van Gennip, the Dutch minister of foreign trade, aptly said: “Progress in reporting about Corporate Social Responsibility will not necessarily lead to companies actually acting more responsible.” Corporate Social Responsibility (CSR) is about awareness of the impact a company has on people, planet, and society, van Gennip continued, and thus “CSR must become part of the company DNA.”

Incidentally, Amsterdam is the first city in the Netherlands to publish a sustainability report. And the Netherlands itself tries to lead by example: it plans that by 2010 all goods and services purchased by the state must come from companies doing sustainable practices. “We can provide encouragement and apply gentle pressure” van Gennip pointed out. “But ultimately it’s the companies’ responsibility.”

The Global Reporting Initiative states that “the best reports should provide a balanced and reasonable representation of the sustainability performance of an organization – including both positive and negative results.” For the reports to be truly useful in that respect, users – whether they’re customers, employees, investors, researchers, active community members or just interested individuals – need to be able to trust the content. Otherwise it’s just more company advertisement.

Trust was one of the more highly debated issues during this conference. It seems crucial that external, licensed auditors are involved in the process if a company wants to gain trust from its stakeholders. In addition, credibility can also be achieved with trusted labels such as the widely known Fair Trade label. Only when sustainability reporting is seen as an independently verifiable process, can the public be sure it’s looking at the footprint of each company on the society, economy and environment. And that, indeed, would be a valuable tool.

Former Vice President Al Gore, who delivered the wrap-up speech at the end of the conference, commented on the world’s need for a new approach:

“This movement toward more transparency and disclosure is absolutely essential, not only in order to include these other values but also important to assist in a fundamental shift away from short-term analysis to long-term analysis,” he said. “How our modern world has become so fixated on the short-term consequences of our actions and the short-term performance of corporations is in some ways a mystery, because it is manifestly self-destructive and self-defeating if what you are really interested in is investing.”

Gore pulled off a captivating speech, using the European release of his movie, “An Inconvenient Truth,” to focus on his “favorite” topic, global warming – but he also reminded organizations to go beyond CSR reports and spend more time focusing on key issues.

“If a developing country with a million acres of rain forest decides to clear-cut that rain forest this year, the consequences, according to the financial reports, are terrific – what a windfall!” he said. “The fact that its future has been destroyed is not reflected in the ledger.”

Gore went on to declare that the days of sustainability reporting being labeled a “niche” are gone. “It is not a niche. The old way of measuring value is becoming irrelevant to the more complete approach to what we really need to understand and track,” he said.

It’s a worthy goal, and the GRI guidelines – as limited as they may be – could be the new tool to help us find our path to more sustainable practices.

Hey, at least we’re talking about it: Sustainability, with all its inherent flaws of being such a hard-to-define-concept, has finally joined the corporate table. If we can get to the point where environmental protection, efficient resource management, product responsibility, and social accountability become a company’s integrated strategy and an inevitable consequence of doing good (i.e. responsible) business, then there’s hope. Let’s just hope it’s not too late.


For more information, visit www.globalreporting.org.