By Nancy Bartlett, Senior Executive Education Research Analyst, Boston College Center

Should your company invest in producing a corporate sustainability report in today’s world of increasing demand for transparency?

Let’s look at the numbers.

The Global Reporting Initiative: Scope

In a workshop session, Marjella Alma, manager of external relations for the Global Reporting Initiative offered that 95 percent of the world’s 250 largest companies today disclose sustainability performance information. The GRI is a robust reporting framework for non-financial reporting, also called CSR or sustainability reports. While investors and financial reporting entities utilize these reports to obtain critical information for investment decisions, Alma emphasized that these reports have important applicability for companies well beyond their designated intent.

The GRI contains a set of principles and reporting elements that are applicable to all types of organizations to report on indicators that are often perceived as too intangible to be measurable. It provides guidance and support to organizations to help drive sustainability reporting as a standard practice. GRI principles include materiality, boundary-setting, inclusiveness (such as breath of supply chains), and stakeholder engagement.

Reporting elements include six different indicators such as information points around profile disclosure, disclosure management approach, and performance indicators.

Referring to the recent shift by some companies to combine CSR with the company’s financial reporting, Alma continued to discuss the essentiality of third-party assurance for the integrity of data: 50 percent of companies internationally use external assurance for their reports. That percentage for U.S.-based companies stands at less than 20 percent. Stock exchanges and other financial entities, in Singapore and Johannesburg for example, are also beginning to require companies to produce a sustainability report or combine their social and environmental metrics with those in their annual financial reports.

Dell’s journey with CSR reporting

Following Alma’s overview, Dell’s Director of Sustainability Operations Bruno Sarda offered the organizational perspective on GRI reporting. Dell has been producing a corporate responsibility report since 1998 with continuous improvements over the years helping it finally achieve an A level in 2011, he said. For Dell, he continued, GRI means:

1)      Assess, prioritize and engage with broad stakeholders;

2)      Use business materiality and metrics to define key areas of opportunity and risk management;

3)      Leverage or collaborate with resources “embedded” across Dell business function to own;

4)      Drive and measure Dell goals;

5)      Maintain executive alignment and accountability strategy and goals;

6)      Integrate a core set of sustainability values into every employee’s role.

The sustainability reporting process “is the vehicle to engage with stakeholders,” he summarized. The company’s own research found that its stakeholders have different needs. To address the diversity of these needs, Dell posts its report in an accessible format and makes the full GRI index and full reports publicly accessible in formats that enable individual stakeholders access by indicators or factors that are important to them.  Additionally, the content in its sustainability report provides a helpful index to other Dell information such as its annual report.

The GRI framework, in fact, gives companies the flexibility to reference existing content, such as an annual report, or 10-K filing, in the sustainability report. While companies can use the framework to define the indicators that matter to them, there are specific requirements to qualify for the label of “GRI Report.” There are also levels of transparency based on an objective classification system. More importantly, the framework can serve as a pathway to improve a company’s reporting over time.

However, Sarda acknowledged that a company can address an indicator in its sustainability report that may not equate to divulging specific data due to proprietary concerns or the inability to generate meaningful data. One participant noted: “I remain a skeptic … as so much [of the report content] is discretionary.” However “even if you do not publicly disclose the data, it can provide useful information for your firm,” remarked another participant.

One participant described the result of going through the process of writing report as “shining the light [on ourselves].”

Even companies (think defense contractors and mining) that are not historically inclined toward transparency have found value in drafting a report, noted the speakers. Participants shared varying philosophical views about writing a report, however, with views ranging from its “not whether [to report] but how much,” to the fact that it serves “as a means to provide the company a set of uniform coherent responses for use throughout the organization and a filter for procurement.”

Despite the overwhelming skepticism, Alma ended by predicting a 35 percent worldwide growth in GRI reporting this year. She also noted that the Boston College Center for Corporate Citizenship will be a GRI-certified Training Partner in the United States.

Tags: 2012 International Corporate Citizenship Conference, CSR reporting, Global Reporting Initiative, GRI, social reporting
This entry was posted by Nancy Bartlett, Senior Executive Education Research Analyst, Boston College Center on Wednesday, April 18th, 2012 at 11:05 AM, and is filed under Center News & Features. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.