Pitsillides: How will GRI progress under your leadership in getting more SMEs to report in accordance with the GRI Standards?

The Global Reporting Initiative’s Headquarters in Amsterdam

Mohin: It is difficult to overstate the importance of SME-reporting. Around 90% of global economic activity is the result of small and medium enterprises, so we know we cannot achieve our goal of sustainable development without them. Many SMEs lack the resources to produce a full-blown annual sustainability report like large corporations. As a result, most SMEs have refrained from reporting and currently about 10% of the sustainability reports in the GRI Sustainability Disclosure Database are from SMEs. One of the main reasons for this low uptake is that management at most SMEs fails to see the business case for sustainability reporting. Instead, they see reporting as a compliance requirement, rather than a strategic business practice that can directly benefit their companies.

This is why in 2016, together with the Swiss State Secretariat for Economic Affairs, GRI launched the second phase of the program “Corporate Sustainability and Reporting for Competitive Business”. The program aims to help SMEs, based in six developing countries, across three continents (Colombia, Ghana, Indonesia, Peru, South Africa and Vietnam), use sustainability reporting to gain better access to global value chains. Through this program, GRI will develop and pilot a new adaptation of the GRI Standards tailored for SMEs. The goal is to assist them in efficiently using GRI Standards and disclosing their sector specific impacts. After the pilot phase of the program has been successfully conducted in the six aforementioned countries, the SME adaptation of GRI Standards can be made available for wider adoption.

Additionally, the new GRI Standards already give organizations the flexibility to choose to disclose information that is most relevant to them without producing an entire sustainability report. This innovation in reporting lowers the barrier for new reporters but still produces meaningful results. I hope this will spur on much more reporting amongst SMEs.

More and more providers of capital are asking tough questions of companies these days. Lending institutions and investors increasingly consider sustainability performance when evaluating companies.

Pitsillides: Can you provide information on how the EU Directive 2014/95/EU has impacted sustainability reporting and, more specifically, reporting in accordance to the GRI Standards?

Mohin: It is a bit premature to speak about the impact of the EU Directive on Non-financial reporting, as the transposition of the directive into national legislation is still happening. We do know that a large number of companies will start to report as a result of the directive. This will significantly increase transparency across Europe. This is a welcome change since it will give these companies and their stakeholders the information they need to inform decisions that can contribute to sustainable development.

Companies that are subject to the directive can use the GRI Standards to fulfill their reporting requirement. GRI’s Global Sustainability Standards Board developed GRI Standards based on input from a truly diverse set of stakeholders including labor groups, business associations, civil society organizations, and investors. As a result, any organization, in any sector of the economy, anywhere in the world, can use GRI Standards to increase transparency and communicate with all of their stakeholders.

Pitsillides: Why the transition from G4 Guidelines to GRI Standards? What does this transition mean, in terms of changes, for businesses and organizations?

Mohin: For organizations that have already adopted G4, the changes are minor. The GRI Standards are built on the G4 Guidelines, which have been restructured into a set of modular, interrelated reporting standards. The GRI Standards include all the concepts and disclosures from G4, in an improved structure and with clearer requirements. The content is organized in a more straightforward way, with less repetition. No new topics have been added to GRI Standards. Throughout the transition from G4 to GRI Standards, care has been taken to preserve the focus on materiality, and to minimize changes to the G4 disclosures and their methodologies.

For organizations that are just beginning their reporting journey, adopting GRI Standards should be simpler because of the clarifications the Global Sustainability Standards Board has made to the content. These changes make it easier for an organization to know what they need to report and how they need to report it.

Pitsillides: Why should a company or any organization issue a sustainability report? What are the benefits of sustainability reporting in accordance to the GRI Standards?

Mohin: Organizations that use the GRI reporting framework have reported many benefits as a result of sustainability reporting. Here are a handful of the benefits our reporters have told us about:

1. Improved management systems – A key benefit of the reporting process is that it allows a company to track progress and highlight areas needing improvement, so that it can manage what it measures and make changes where necessary. Once a company tracks and assesses its performance, it can identify areas where it could be doing better, e.g. potential productivity improvements and cost reductions.

2. Attracting, motivating and retaining employees – A company’s high performance standards and reputation are intangibles that help to attract and motivate employees. The reporting process shows that a company is not just talking about sustainability issues, but is also prepared to publicly discuss, measure and act on them.  In today’s competitive talent market, increased recruitment and employee engagement are significant benefits.

3. Enhanced stakeholder relations – The sustainability reporting process is an important tool companies can use to disclose non-financial performance to stakeholders. Through the relationships which the reporting process can create between a company and its stakeholders, the business gets vital feedback on the effects of operations. Based on this feedback, companies can take action to address stakeholder concerns as well as improve its business processes.

4. Attracting funding – More and more providers of capital are asking tough questions of companies these days. Lending institutions and investors increasingly consider sustainability performance when evaluating companies, e.g. good governance, ethical values, social priorities and environmental actions. Sustainability reporting also demonstrates that a company is working to manage risks over the medium and long-term.

Pitsillides: With over 20 years of experience in corporate social responsibility, and with your new appointment with GRI, how do you see today’s global business landscape? What are the key environmental, economic and social challenges facing corporations?

Mohin: Collectively we are facing tremendous sustainability challenges including climate change, corruption, poverty, and gender inequality to name only a few. In my 20 years working in corporate responsibility, I witnessed how sustainability reporting can really make a difference. But I also know that business-as-usual will not get the job done. We have to dig deeper and do more if we want to find solutions to these challenges. The Sustainable Development Goals (SDGs) are a good example. The private sector will play the pivotal role in whether or not we achieve those 17, ambitious Global Goals. It won’t be enough for businesses to merely match their current sustainability efforts to the goals. Each business will need to look for new ways to contribute to sustainable development. GRI has partnered with the UN Global Compact to help the private sector make the SDGs a reality. We recently launched the Reporting on the SDGs Action Platform, which consists of representatives from leading businesses, civil society organizations, statistics bureaus, international organizations, governments, investor groups and data users. The Action Platform members will work with GRI and UN Global Compact to establish best practice for businesses to report their contributions to the SDGs.

It won’t be enough for businesses to merely match their current sustainability efforts to the SDG goals. Each business will need to look for new ways to contribute to sustainable development.