Global Reporting Initiative (GRI), Sustainability Reporting

Research on Assurance

One of SpaceX's "assurance" modes. Credit: SpaceX/Roger Gilbertson
One of SpaceX’s “assurance” modes. Credit: SpaceX/Roger Gilbertson

Assurance on sustainability reports – How is it perceived?

As companies start to invest in assurance for their sustainability reports, they have to wonder “is it worth it?” Academic studies can shed some light on this.

In a 2105 study, researchers at the University of New South Wales in Australia looked at whether assurance of environmental, social, and governance (ESG) indicators affected investors’ willingness to invest in a company.

Researchers presented a sustainability report with ESG indicators to graduate students in a master’s of financial analysis program. These were students who were “sophisticated” users of financial information. They were told that they had inherited some money (lucky for them) and were to indicate their willingness to invest the money in a company. The researchers varied which students were given sustainability reports with assurance vs. no assurance and whether the company’s strategy and ESG indicators were aligned. For example, assume a retail grocery’s strategy is aimed at supporting products that are based on environmental stewardship. A strategically aligned ESG indicator would be the percentage of animal products sold that are sourced from sustainable agricultural practices.

What did they do with their inheritance?  Study participants, aka, investors, were more willing to invest if the company had its ESG indicators assured. Assurance made a statistically significant difference! It also mattered to these investors if the ESG indicators had a high relevance to the companies’ strategy. This is an important result, especially as companies decide on what sustainability metrics to report. Just reporting for the sake of reporting does not mean as much as reporting what matters. This sounds very much like the essence of the GRI G4 Sustainability Reporting Guidelines.

This is just one study, but an interesting one that supports the role of assurance in giving credibility to sustainability reports. There are other assurance studies that I will talk about in future blogs.

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!

Assurance Readiness Review, Global Reporting Initiative (GRI), Sustainability Reporting

Can you trust the content of sustainability reports?

I have been away for a few weeks finishing the second edition of my book, Sustainability Reporting: Getting Started, to be published soon by Business Expert Press. The second edition is up-to-date with discussions about the GRI G4 guidelines, Integrated Reporting <IR> framework, and Sustainability Accounting Standards Board (SASB) guidelines. When the new edition is available, I will let you know.

In the past few weeks, I have read a lot of published GRI G4 sustainability reports. A whole lot! It was exciting to see so many organizations reporting. The people who wrote them ranged from novice to experienced reporters. Some were great reports with seemingly transparent details about their environmental and social impacts. Some were not as forthcoming.

For example, one of the GRI human rights indicators, (G4-HR12), requires reporting the “number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms.” While a few of the companies disclosed that there were mechanisms to deal with human rights violations, they then reported that the number discovered was confidential. Why is the number confidential? Why did they bother to report this indicator at all? It does their stakeholders no good to say there were problems, but that they have chosen not to disclose them. Let’s hope their stakeholders demand answers to such questions.

I felt much better about the transparency of companies that did report how many grievances were filed and how many were resolved. But should I feel better just because they published the numbers? Are these numbers accurate and how would a reader know? As external stakeholders, how would we know if anything in the report is trustworthy? Getting companies to publish sustainability reports is progress, but the next push in sustainability reporting is assurance of report content by independent, third parties.

Stay tuned for my next blog posts when I talk more about assurance.

Sustainability Reporting

Welcome to my new blog about sustainability reporting!

Sustainability reporting is a powerful tool to help organizations prosper while doing good things for their stakeholders and for the world. It may not be as important as the invention of the wheel, but in my opinion it sometimes comes close.

There are new things happening in the sustainability reporting world all the time. Trends on reporting and reporting standards are published frequently along with environmental, social, and political events that affect reporting. I keep current on what is going on. If you follow my blog, I will keep you posted on what I think about it.

This week (July 9 & 10), I will be teaching at a GRI (Global Reporting Initiative) Certified Training with the ISOSGroup in Minneapolis at Best Buy’s corporate headquarters. After my return, I will be posting on a regular basis.

I look forward to discussions with you!

(PS We’re still working on some bugs in our installation.  Right now we’re having trouble with comments and the menu. Comments work on Firefox, Chrome, Opera, and Safari iOS but inexplicably do not work on Safari on the Mac. Also, The main menu works when accessed from Blog Home, but not from an individual post. Thanks for your patience!  We think we have these bugs, at least, squashed.)