Global Reporting Initiative (GRI), Risk Management, Sustainability, Sustainability Reporting, Sustainable Development Goals

SDG Goal 1 End Poverty – Businesses can get involved!

 

United Nations Sustainable Development Goal 01
SWR supports the UN Sustainable Development Goals.

As promised in my last post, this post discusses how businesses can apply Goal 1 of the Sustainable Development Goals (SDG).

Goal 1. End poverty in all its forms everywhere

Here are the targets to achieve the goal.

Targets

1.1 By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day

1.2 By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions

1.3 Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the
vulnerable

1.4 By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance

1.5 By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters

1.a Ensure significant mobilization of resources from a variety of sources, including through enhanced development cooperation, in order to provide adequate and predictable means for developing countries, in particular least developed countries, to implement programmes and policies to end poverty in all its dimensions

1.b Create sound policy frameworks at the national, regional and international levels, based on pro-poor and gender-sensitive development strategies, to support
accelerated investment in poverty eradication actions

These targets are ambitious, and businesses have an important role to play in achieving them! Many businesses are already doing so, and there are many examples.

So your next questions are why and how would my business get involved?

A quote from Ban Ki-Moon, United Nations Secretary General (2008-2016), provides a big picture perspective.

…we must invest in people – in education, skills development, health care. This will help equip people for decent jobs and incomes. It will boost purchasing power. The virtuous cycle between human capital, jobs and income is central to building healthy local markets and a healthy world economy. It is good for people and good for business.

Evaluating your entire value chain (i.e., the full lifecycle of your products and services) can help identify areas that can reduce your negative impacts and improve your business simultaneously. Your business decisions about things such as employee wages, working conditions, product pricing, or raw material sources have impacts on people in poverty.

You can measure your direct impacts on the local economy. What proportion of your spending is on local suppliers at significant locations of operations? To illustrate how UPS affects the local economy, here is an excerpt from its 2015 sustainability report.

In 2015, UPS spent approximately US$943 million in procurement with small and diverse businesses in the United States.

A third-party study on the economic impact of our spending with small businesses, as well as minority-, women-, veteran-owned, and other diverse suppliers in 2015, found that UPS contributed more than US$2.3 billion to the U.S. economy (U.S. GDP) and sustained more than 14,200 jobs in the supply chain and local communities. A breakdown of that US$2.3 billion includes US$941 million in direct economic benefit from suppliers’ operations and activities; US$639 million in indirect impact from the economic benefit and employment supported in the suppliers’ respective supply chains from procuring goods and services; and US$743 million in community impact from the wider economic benefits that arise when the suppliers’ employees and those in their supply chains spend their earnings. Overall, for every million dollars that UPS spends with small and diverse suppliers, 15 jobs are created with those companies in their local communities.

If supply chains are a significant part of your business, evaluating them not only on economic criteria but also on social criteria can be an effective risk management tool. Do you have policies to screen for suppliers that adhere to international and your company-specific human rights and labor standards? You can have a positive influence by demanding adherence to these standards. This is a proactive approach that is much less costly than a reactive one.

How you are investing in the economic well being of your employees has a direct economic impact on poverty alleviation. Lower incomes reduce access to adequate housing, quality education, social networks, and social status among others. Evaluating the wages paid along with how they compare to the minimum wages in the local area puts a focus on a company’s economic impact on workers. For example, Abengoa, a Spanish company that applies technological solutions in the energy and environment sectors, disclosed in its 2015 sustainability report the percentage paid to its workers above the local minimum wage.

abengoa-ec5-2015

 

Another example where companies can assess their impacts on poverty is examining their significant positive and negative indirect economic impacts. In the Global Reporting Initiative (GRI) Sustainability Reporting Standards, there are several examples of indirect economic impacts that illustrate this idea.

  • How does your company change the productivity of organizations, sectors, or the whole economy?
  • Is your company involved in economic development in areas of high poverty?
  • Does your company’s economic impact in a particular location improve or deteriorate social or environmental conditions?
  • What is the availability of your products and services for those on low incomes?

What should you do with your answers to these questions and your evaluation of your business? You can incorporate these issues into your business strategy. You can set targets for improvement. You can publish a sustainability report to measure your progress.

Baxter International is an example of a company that has set targets and reported them its sustainability reports. In its 2015 report, Baxter pledged to increase it spending with diverse suppliers by 50%, from 4% of relevant spending in 2015 to 6% in 2020. These published targets are public commitments that reveal the company’s sustainability strategy and implementation plans.

To be a part of the solution to end poverty, your business can be involved; it can measure its impacts, set targets, and report its progress in a sustainability report.

The next blog will examine how your business can help achieve SDG Goal 2 Zero Hunger.

Accountants, Accounting Education, AICPA, Global Reporting Initiative (GRI), GRI Certified Training, Integrated Reporting, ISOS Group, Sustainability, Sustainability education, Sustainability Reporting

Will Accountants Save the World?

 

earth_and_limb_m1199291564l_color_2stretch_mask_0

NASA/Goddard/Arizona State University

As an accountant, I was thrilled to read that Peter Bakker, President of World Business Council for Sustainable Development , said, “Accountants would save the world.” This should make any accountant smile. The realist in me knows that it will take a big “village” to save the world, but accountants can play an important role.

At an experts panel discussion in Amsterdam, Marjolein Baghuis stated, “… the conclusion was that accountants can certainly play a role in making companies more sustainable, but the profession is not quite ready to deliver on this promise without further education.” I agree!

Accountants have a long history of providing information to decision makers. They have been in the business of providing information since the 15th century. Really! If you want to read a great book, I recommend The Reckoning: Financial Accountability and the Rise and Fall of Nations by Jacob Soll.  Accountants are big players in the fortunes of companies and nations. With their experience in providing information for decision-making, accountants can provide important sustainability information to companies, governments, and the public.

Sustainability reporting is unfortunately not currently recognized as an important topic in accounting education in the United States. In a curriculum crowded with courses in tax, auditing, financial accounting, and management accounting, training in sustainability reporting is viewed as nice but not necessary.

Why is this?

There are several reasons.

  1. It is not covered on the major certification exams such as the Certified Public Accountants (CPA) exam and the Certified Management Accountant exam.
  2. There is no demand for sustainability reporting skills in accounting public practice because there is no legal requirement to do it in the United States.
  3. Inside companies, accountants are not usually tasked with sustainability accounting and reporting.
  4. Accountants in small to medium sized public practices do not traditionally offer sustainability services.
  5. Most small to medium sized accounting firms do not know how to make the business case for sustainability reporting for their own firm or for their clients.

Over the years there have been attempts to include sustainability reporting as part of accountants’ education but with little progress. Other traditional accounting topics take precedence. Without the demand, change will be slow.

Once in practice, however, accountants who desire to learn about sustainability reporting can look to several professional organizations. The American Institute of Certified Public Accountants promotes the benefits of sustainability services and provides information to its members. The International Federation of Accountants (IFAC) offers information and resources. IFAC is actively engaged with  the Prince of Wales’ Accounting for Sustainability Project, the International Integrated Reporting Council, the Climate Disclosure Standards Board, and the Global Reporting Initiative (GRI). Accountants can attend GRI certified sustainability reporting training courses offered by GRI Training Partners such as the ISOS Group.

How will demand for sustainability reporting be created? Here are some possibilities.

Mandatory reporting – Nothings creates a demand for services like a legal requirement. Examples abound – auditing, tax, Sarbanes-Oxley Act compliance.

Demand by financial institutions – As part of the evaluation of companies, lending institutions could require a sustainability report. This report would enable banks to do an expanded risk assessment. This would include a company’s environmental and social risks, which are directly tied to their economic risks.

Demand by local governments – Local governments might consider requiring sustainability reports from companies within the city limits. This would be beneficial to cities in assessing a company’s economic, environmental, and social risks. By complying, organizations would be demonstrating their good citizenship and assessing their own risks.

What do you think?

 

 

 

 

 

Sustainability Reporting: Getting Started, 2015 (2nd edition). Gwendolen B. White
Assurance Readiness Review, Global Reporting Initiative (GRI), Risk Management, Sustainability Reporting

New Book Available Now!

Sustainability Reporting: Getting Started, 2015 (2nd edition). Gwendolen B. White
Sustainability Reporting: Getting Started, 2015 (2nd edition). Gwendolen B. White

My new book is now available at Business Expert Press! This latest edition presents the rationale for reporting along with a discussion of the major sustainability reporting frameworks such as the Global Reporting Initiative (GRI) G4 Sustainability Reporting Guidelines, the Integrated Reporting Framework, and the Sustainability Accounting Standards Board Standards. You will find detailed examples of the GRI G4 Guidelines from actual company reports such as UPS, Nestle, and Weyerhaeuser, to name a few. These examples show how major companies have applied the GRI guidelines. This book can help get your organization started on its reporting journey.

 

Global Reporting Initiative (GRI), Sustainability Reporting

Assurance and the Global Reporting Initiative (GRI)

Late afternoon light on Lake Michigan, Evanston, IL
Late afternoon light on Lake Michigan, Evanston, IL

Having just finished revising my book, Sustainability Reporting: Getting Started, assurance and the Global Reporting Initiative (GRI) are on my mind.  In my previous post I wrote about why we need to have sustainability reports assured. We hope that we can believe what we read in sustainability reports; third party assurance may give us some level comfort about the accuracy of the information reported in them.  Accuracy is never guaranteed, but at least it is a step in the right direction.

Because the GRI Sustainability Reporting Guidelines is the most widely used framework for sustainability reporting, they figure prominently in the landscape of reporting.  GRI pronouncements about assurance have significant consequences for how assurance is provided  and reported in sustainability reports. Although the GRI 
recommends the use of external assurance, it is not a requirement to be ‘in accordance’ with the Guidelines
.

The Guidelines do have something to say about how assurance reports are disclosed. Organizations that want to be “in accordance with” the GRI guidelines are required to indicate whether they have an external assurance report. In addition, for each disclosure in the sustainability report, the organization has to say whether or not it has been assured. In essence, it is a checklist of what has and has not been assured by an external third party.

The GRI has issued a clarification and a change to the guidelines!

On August 5, 2015, the GRI Global Sustainability Standards Board (GSSB) issued an interpretation on how an organization should reference its external assurance reports. This interpretation acknowledges there is confusion about assurance reports because readers do not always understand the language in them. Assurance reports come in many different permutations so this statement rings true. The recently issued interpretation recommends that organizations explain the assurance standards used, the level of assurance obtained, and any limitations of the assurance process.

The GSSB decided that organizations are no longer required to indicate assurance for each disclosure.  Basically, the checklist is gone. Instead, reporters will provide readers with a summary of the assurance process and what the report means. This helps the reporters and the readers to understand more about what is being assured and how.

I think this change in how an organization reports its third party assurance is a positive step for reporters and readers. GRI’s stakeholders are seeking improvement to the guidelines and the GRI GSSB is responding in ways that are making the assurance of sustainability reports easier to understand.

 

 

Global Reporting Initiative (GRI), Sustainability Reporting

Global Reporting Initiative (GRI) + Integrated Reporting Training

Indiana University Memorial Union
Indiana University Memorial Union

GRI Sustainability Reporting + Integrated Training

I will be one of the trainers at this event on the beautiful campus of Indiana University in Bloomington, Indiana. Please take a look at this exciting training opportunity in September.

Global Reporting Initiative (GRI)/Integrated Reporting (IR) Training  is being offered by ISOS Center for Corporate Social Responsibility in collaboration with the School of Public and Environmental Affairs (SPEA). The training session will cover the Global Reporting Initiative (GRI) sustainability reporting framework and Integrated Reporting (IR) at the Indiana Memorial Union (900 East Seventh Street) from Thursday, 24 September to Saturday, 26 September. The training sessions will cover a wide variety of issues related to sustainability reporting.

Public Panel on “Who’s Responsible for Sustainability?” – Free Event!!

24 September 2015, 5:00 pm to 7:30 pm, University Club, Indiana Memorial Union
In conjunction with the Global Reporting Initiative (GRI)/Integrated Reporting (IR) Training, a panel discussion entitled “Who’s Responsible for Sustainability?” will be held at the Indiana Memorial Union’s University Club.  Indiana University has invited sustainability leaders from the public, private, and nonprofit sectors to highlight their efforts to address complex social, environmental, and economic challenges. Panelists will include:
· Bill Brown, Director of the IU Office of Sustainability;
· Jesse Kharbanda, Executive Director of the Hoosier Environmental Council;
· Karen Cecil, Director, Global Environmental Sustainability Environmental Strategy &    Compliance, Cummins Inc;
· Maria Koetter, Director of Sustainability, Louisville, KY, Metro Government

I hope to see you in Bloomington!