This article lays out how companies can accelerate positive change with the use of the GRI Standards which are overwhelmingly, the chosen framework for CSR/ ESG/ SDG/ Sustainability reporting. Today, 80% of the world’s 250 largest companies report according to the GRI Standards.
Two major issues in today’s world – the bigger picture is material
1) Whilst there is a huge take-up of sustainability reporting by the largest companies globally, they only represent approximately 10% of the global economy. SMEs, which represent about 90%(1) of the global economy, are taking little or no action to address huge issues like climate change or their impacts on the economy and society.
2) We need to shift gears and accelerate change, dealing now with issues that are screaming ‘urgent’ – like taking action on climate change (2a) (2b) (2c). This has to be done now by the vast majority of companies, large and small, on a global scale. Companies must first identify their impacts and, then, must take focused action by measuring, managing and changing.
Evolving your GRI Standards report to one that matters
In view of the pressing sustainability issues we are facing, I firmly believe that companies must make every effort accelerate positive change Tweet This!. They must take a step back and see the forest, address environmental issues but also take positive action to develop the economies and societies on which they rely for growth and profit. US$12 trillion is the cherry on the cake (see below).
I propose that in addition to their material topics, companies report on:
1) four very important standards (descriptions below):
- GRI Disclosure 201-1 Direct economic value generated and distributed(3)
- GRI Standard 203 Indirect Economic Impacts(4)
- GRI Standard 308 Supplier Environmental Assessment(5)
- GRI Standard 414 Supplier Social Assessment(6)
2) at least one positive impact on society, using any of the GRI Standards but, more specifically, GRI 201 and 203
3) how they implemented GRI’s Reporting Principles, which help them demonstrate that they are not greenwashing
How is a company treating the society on which it relies for growth and profit?
GRI Disclosure 201-1 Direct economic value generated and distributed
With this disclosure companies must report and provide information on:
- Direct economic value generated: revenues;
- Economic value distributed: operating costs, employee wages and benefits, payments to providers of capital, payments to government by country, and community investments;
- Economic value retained: ‘direct economic value generated’ less ‘economic value distributed’.
GRI Standard 203 Indirect Economic Impacts
- Disclosure 203-1 Infrastructure investments and services supported
- Disclosure 203-2 Significant indirect economic impacts
What does this mean for the person in the street?
These are both marvellous GRI Standards that companies can use to report on their positive impacts. However, many companies see sustainability reporting as a tick box exercise and fail to realise the importance of using their strengths to tackle, head-on, the problems that seem to be always in the headlines. Imagine a world where most companies are finding solutions for the important issues in the societies they operate and rely on for profit/growth. Issues related to infrastructure, unemployment (most importantly, youth unemployment), support for local suppliers and economic development in areas of high poverty, or the availability of their products and services for those with low incomes.
License to operate – millennials
Millennials, who hold our future in their hands, are overwhelmingly pro-sustainability and are showing this with their every action. Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.(7)
Increasing supply chain pressure to get the smaller companies (that represent 90% of the global economy) to measure-manage-change
GRI Standards 308 and 414 supplier assessment (environment and social), used in combination with any of the other environmental or social standards, will accelerate positive change. Smaller companies wishing to be part of the supply chain of larger companies will, as a matter of fact, have to provide the information required by these standards. Most importantly, they will not be burdened with a full-scale report, as they will only be reporting on what matters (materiality).
What does this mean for the person in the street?
Experts on climate change are screaming ’emergency’, but politicians and other decision-makers around the world are either indifferent or dragging their feet, or not moving fast enough. Imagine a world where, despite these difficulties, the overwhelming majority of large companies, take action ASAP. A world where these companies take it upon themselves to clean their supply chains of emissions using GRI 308 Supplier Environmental Assessment in combination with GRI 305 Emissions. In essence, these companies will be using their buying power to implement the positive change that is so desperately needed and get the companies (SMEs) that are responsible for 90% of global economic activity to toe the line. At the same time, they will be able to tackle other key environmental issues (e.g. water, waste, biodiversity, and others).
Similarly, companies can leverage their strengths to implement positive outcomes for society. GRI 414 Supplier Social Assessment will help diminish bad practices in their supply chain. Companies will be able to address issues such as occupational health and safety, diversity and equal opportunity, child labour, forced or compulsory labour.
How the GRI Principles can help companies avoid being accused of greenwashing
I believe that companies might hold back from implementing positive change, in fear of being accused of greenwashing. In the digital age we live in, information is instantly and freely accessible throughout the globe and this applies to companies, too: people are able to instantly access information about a company’s policies, the impact of its activity, its reputation, with or without the company’s consent(8). The GRI Reporting Principles go a long way in helping companies demonstrate that they are not greenwashing(9). By requiring companies to report according to these principles, GRI helps them create a first-class report regarding both content and quality, and demonstrate that they are taking solid, focused action (materiality) on their most important impacts. In essence, companies are building their armour and, if a question appears on social or other media, they are able to simply say ‘we are dealing with this impact in a responsible way, you can find information on how we are constantly improving in our GRI Standards Sustainability Report’.
Strategy – Strategy – Strategy
Seeing 90% of the ‘forest’ (SMEs taking action) is material
In my opinion, we need to step back and see the forest. Small and medium-sized enterprises (SMEs), responsible for around 90% of global economic activity, must begin to measure, manage and change. By using the proposed standards we:
1) put in place the foundation for a solid strategy to address the urgent sustainability issues outlined above
2) help companies demonstrate in no uncertain terms that they are spearheading positive change ASAP and promoting social and environmental responsibility throughout their supply chains(10)
3) get more of the SMEs, which represent 90% of global economic activity, to engage in focused reporting (material topics)
4) streamline reporting for SMEs that will not be burdened to provide a full report.
Action has to be taken yesterday – US$12 trillion is the cherry on the cake
In view of the pressing issues we are facing regarding the environment, economy and society, we need to take urgent action. I invite companies to take positive action now, using the above-mentioned GRI Standards and report their progress in their next reporting cycle. The cherry on the cake is not just creating a better, more sustainable world for all of us. According to the ‘Better Business, Better World’ report by the Business and Sustainable Development Commission (BSDC), sustainable business practices will, by 2030, create, for corporations, tremendous market opportunities worth US$12 trillion Tweet This! (11).
• Case Studies: How companies are cleaning their supply chains of bad environmental and social practices
• Case studies: How companies are affecting positive change on the economies and societies they operate in and rely on for profit/growth
Sustainability Reporting and Marketing Communication Strategy Expert. Simon is a Fellow of the Chartered Institute of Marketing and a Chartered Marketer, and holds an MBA in Marketing. He is a GRI and IEMA Trainer, the publisher of www.sustaincase.com and owner of www.fbrh.co.uk(12). Simon teaches the FBRH GRI Standards Certified and IEMA(13) Approved Course (venue: London LSE)(14).
80% of the world’s 250 largest companies report in accordance with the GRI Standards
SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.
Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.
FBRH GRI Standards Certified and IEMA approved Sustainability Course | Venue: London LSE
By registering for the next 2-day FBRH GRI-Standards Certified and IEMA approved Course you will be taking the first step in gaining the many benefits of sustainability reporting.
(1) An exclusive interview with Tim Mohin, GRI’s new Chief Executive. https://sustaincase.com/an-exclusive-interview-with-tim-mohin-gris-new-chief-executive/
(2) A. Climate report: Scientists urge deep rapid change to limit warming. https://sustaincase.com/climate-report-scientists-urge-deep-rapid-change-to-limit-warming/
B. UN Secretary General: Climate change is moving faster than we are. https://sustaincase.com/un-secretary-general-climate-change-is-moving-faster-than-we-are
C. Four former UN climate talks presidents urge action on climate change. The next two years are crucial https://sustaincase.com/urgent-climate-change-action-needed-the-next-two-years-are-crucial/
(3) GRI Disclosure 201-1 Direct economic value generated and distributed. https://www.globalreporting.org/standards/gri-standards-download-center/gri-201-economic-performance-2016/
(4) GRI Standard 203 Indirect Economic Impacts. https://www.globalreporting.org/standards/gri-standards-download-center/gri-203-indirect-economic-impacts/
(5) GRI Standard 308 Supplier Environmental Assessment. https://www.globalreporting.org/standards/gri-standards-download-center/gri-308-supplier-environmental-assessment-2016/
(6) GRI Standard 414 Supplier Social Assessment. https://www.globalreporting.org/standards/gri-standards-download-center/gri-414-supplier-social-assessment-2016/
(7) Why Sustainability is important. https://sustaincase.com/articles-research/
(8) Laying the foundation for good communication with responsible CSR/ sustainability reporting. https://sustaincase.com/good-communication-with-responsible-csr-reporting/
(9) How not to be accused of Greenwashing. https://sustaincase.com/how-not-to-be-accused-of-greenwashing/
(10) Over 100 case studies on www.sustaincase.com demonstrate how companies are taking positive, focused action. https://sustaincase.com/category/case-studies/
(11) BSDC: Achieving the UN Sustainable Development Goals will create, for businesses, opportunities worth US$12 trillion. https://sustaincase.com/bsdc-achieving-the-un-sustainable-development-goals-will-create-for-businesses-opportunities-worth-us12-trillion/
(12) FBRH Consultants Ltd is a GRI Standards Certified Training Partner (UK) and an Institute of Environmental Management and Assessment (IEMA) Training Partner.
(13) Institute of Environmental Management and Assessment (IEMA). https://fbrh.co.uk/en/IEMA
(14) 2-day FBRH GRI Standards Certified and IEMA Approved Training Course • London LSE. https://fbrh.co.uk/en/gri-certified-training/2-day-fbrh-gri-standards-certified-training-course-about