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Sustainability Reporting Is Here to Stay

April 05, 2002

by Mark Thomsen

The Global Reporting Initiative, an organization working to make corporate performance more transparent, was formally inaugurated as an independent institution yesterday.

SocialFunds.com -- The Global Reporting Initiative (GRI) was officially launched as a permanent institution yesterday at an event held at the United Nations in New York. Since 1997, GRI has been leading a worldwide, multi-stakeholder effort to establish standards for how corporations report their economic, environmental, and social performance. It was announced at the inauguration that the newly independent organization will be headquartered in Amsterdam, The Netherlands.

"By offering guidelines that enable companies to report on their work to improve environmental and social conditions, the GRI has a unique contribution to make in fostering corporate transparency and accountability far beyond financial matters," said U.N. Deputy Secretary-General Louise Frechette in her opening remarks.

GRI was convened originally by Boston-based Coalition for Environmentally Responsible Economies (CERES) and the United Nations Environmental Programme (UNEP). GRI's framework for corporate reporting, known as the Sustainability Reporting Guidelines, is still a work in progress. Thousands of representatives from the business, accountancy, and investment sectors as well as from environmental, human rights, and labor organizations have been developing the guidelines through a step-by-step process.

The first draft of the guidelines was reviewed by twenty-one pilot test companies, other firms, and a diverse group of non-corporate stakeholders between 1999-2000. The second version of the guidelines was released in June of 2000 and was pilot tested by thirty-one companies. The third version of the guidelines is expected to be released this coming July.

According to GRI, more than 110 companies from around the world have used the Sustainability Reporting Guidelines in reporting aspects of their economic, environmental, and social performance. Companies include Bristol-Myers Squibb (ticker: BMY), Danone (DA), Electrolux (ELUX), Ford (F), General Motors (GM), NEC (NIPNY), Nike (NKE), Novo Group (NVO), and Nokia (NOK).

More and more large companies are viewing sustainability reporting as a necessity. A survey conducted by CSR Network Limited, a UK-based international consultancy, shows that environmental reporting increased for the 100 largest firms (G100) listed in Fortune magazine's August 2000 Global 500. In 2001 more than half of the G100 produced global environmental reports, which is a first. In 1999 only 44 out of the largest 100 companies issued reports on environmental performance.

Many companies view increasing transparency through sustainability reporting as a chance to gain competitive advantage. Increased transparency can strengthen a company's relationships with stakeholders such as investors and local communities. But some companies also view sustainability reporting as an opportunity measure their own results and identify places where they can improve.

"The GRI Guidelines have encouraged us to take a more comprehensive look at our performance according to the triple bottom line of economic, environmental, and social responsibility," said Harry Kraemer Jr., CEO of Baxter International (BAX), who spoke at the event. "Now through our sustainability report we are able to bring these together to show the synergies and interrelationships in defining our success and responding to diverse stakeholder interests."