I had the honor to be at the New York Stock Exchange this week for the GRI Focal Point USA launch which puts “resources on the ground” for current and future sustainability reporters in the form of sustainability veteran and reporting expert Mike Wallace, GRI Director.
Webcast live, the event was attended by more than 200 representatives of US corporate GRI reporters, Wall Street investment firms, major accounting firms and organizational stakeholders such as Two Tomorrows. While some participants expressed disappointment at not getting to ring the opening bell, for many of us just being in the hallowed “cathedral of capital” was excitement enough.
For the GRI to establish a US presence brings the Amsterdam-based organization full circle. Originally launched as an initiative of Boston-based Ceres in 1999, the GRI was the brainchild of Alan White (present at Monday’s event) and co-founder Robert Massey.
In his opening remarks, GRI Chief Executive Ernst Ligteringen was direct in his rationale for setting up shop stateside: Despite the overall growth in sustainability reporting worldwide and year-over-year uptake of the GRI reporting framework, the US continues to lag Europe when it comes to GRI reporting.
This is perhaps ironic when you consider the number of global organizations based in the US who are influential in sustainability reporting realm, including the International Finance Corporation (IFC), the Principles for Responsible Investment (PRI) and the United Nations Global Compact (UNGC).
Today more than 30,000 organizations around the world disclose some kind of sustainability information. According to GRI, however, only 1,400 organizations officially follow their reporting guidelines. Europe accounts for 45% of this number while the US accounts for less than 10%. Further, while third-party assurance is largely absent from all but the leading US sustainability reports, two out of three European reports are assured. And less than 1% of all reports are assured against the AA1000 AS 2008, a principles-based assurance standard that provides an independent view on the credibility of public disclosure.
While the US was the second-largest GRI reporting country in 2009, the hope is that with a presence here, the GRI can more actively help to close the gap with other reporting regions and even encourage the US to take the lead in sustainability reporting.
It’s difficult to understand why the US is not already the champion of sustainability reporting or what the potential obstacles might be to greater uptake of the GRI G3 guidelines. As far back as 2006, the Investor Network on Climate Risk (INCR), a coalition of 50-plus institutional investors managing over $3 trillion, asked S&P 500 companies to use the GRI to report on their environmental, social, and governance (ESG) issues. To paraphrase something Mr Ligteringen said: “Do companies that don’t report really believe ESG issues are unrelated to their businesses?”
The benefits of sustainability reporting have so far proven themselves to outweigh the potential imagined drawbacks. Providing stakeholders with a transparent and thorough account of your company’s performance on environmental, social and governance (ESG) issues enables them to make informed decisions (Do I want to invest in this company? Do I want to work here? Do I want this company to locate in my community?). Using the GRI guidelines to do so enables stakeholders to more fairly make ‘apples to apples’ comparisons and to arrive at more accurate conclusions.
And now, the GRI has just published the results of a survey that reiterate something we have told clients for years: that sustainability reporting is not simply a communications exercise; it is a tool for improving sustainability performance. According to the survey, 65 percent of respondents said the top reason for reporting on their sustainability performance was ‘improving internal processes’. As the saying goes, what gets measured gets managed, and what gets managed gets measured. Making a set of public commitments related to sustainability certainly provides the impetus for achieving them.
For any company that may still have reservations about sustainability reporting and especially is reluctant to use the GRI guidelines, I thought Bloomberg’s Curtis Ravenal had a very compelling reason indeed: During the panel discussion at Monday’s event moderated by David Vidal of The Conference Board, Mr Ravenal said simply that, without a GRI report, your company’s sustainability information could be absent from the ESG data service distributed through its terminals to analysts and others in more than 150 countries around the world (though Bloomberg will send a survey if your company doesn’t publish a report).
The Focal Point USA follows similar offices GRI has established in Brazil, China and elsewhere where sustainability reporting is now booming – particularly GRI-based reports. If GRI’s presence in the US can somehow be a similar catalyst, then we are happy to welcome Mike home and look forward to our continued engagement with and support of GRI.