Simon Pitsillides, SustainCase Editor, discusses with Tim Mohin, CEO of the Global Reporting Initiative (GRI), the ways in which the vast majority of companies which are the backbone of the world economy, can be mobilized to take real action. How they can be encouraged to #takePositiveAction and #bePositiveChange to effectively address this and many other important sustainability issues our world is facing today. By specifically identifying their most important impacts (materiality) and then proceeding to measuring, managing and changing, companies can become, with their positive contribution, part of a positive chain reaction that is changing our world.

Simon Pitsillides: The SustainCase Clean Air campaign in the UK is aimed at the companies who are responsible for approximately 90% of global economic activity (small and medium-sized enterprises). Our main target is that they use GRI 305: Emissions to drive pollution out of business supply chains, either through compulsory reporting (we have started a petition to the UK Government and Parliament) or through self-regulation. In essence, our goal is that the majority of companies take ownership and not only reduce their emissions, but also put pressure on their supply chains in a positive way, by choosing suppliers who produce little or no emissions. What are your thoughts regarding this target and the Clean Air campaign?

Tim Mohin: I am always happy when I see these types of grass roots efforts to encourage businesses to be more accountable for the impacts they are having on the economy, the environment and society. Clean air is such an important issue. It affects everyone. We know from experience that when we create transparency around impacts, businesses start making improvements. And you are right to note how important it is that companies work with their suppliers, since impacts are not limited to the four walls of the business.

GRI Standard 305 Emissions is an excellent tool for businesses of all sizes to measure, manage and communicate their Scope 1, Scope 2 and Scope 3 emissions of greenhouse gases, ozone-depleting substances, nitrogen oxides, sulfur oxides and other significant air emissions. The GRI Sustainability Reporting Standards give organizations the flexibility to report just on their emissions (or any of the other topics) without producing an entire sustainability report.

Pitsillides: On a global scale, a key target of the SustainCase Clean Air campaign is to begin a conversation to make the measuring & public reporting of emissions by small and medium-sized enterprises compulsory, worldwide. This conversation, could help “accelerate change” (I am borrowing a phrase from the interview you kindly gave us in 2017). What are your thoughts on this?

Mohin: In principle I would like to see all businesses taking responsibility for their sustainability impacts, but I also know that many SMEs don’t have the resources to do sustainability reporting in the same way that Fortune 500 companies report. Again, this is why, under the GRI Standards, we created the option for a company to report on specific information without creating an entire report. At GRI, we know that getting more SMEs to begin disclosing information on their sustainability performance is the next big step we need to take in the transparency movement. We are also currently conducting research to assess what kind of policy and regulatory environment would be best, in terms of stimulating more reporting by SMEs.

Pitsillides: Does GRI provide additional support for companies who want to report their emissions using GRI 305: Emissions?

Mohin: Yes we do. With generous support from the Swiss State Secretariat for Economic Affairs SECO, we are currently working in select developing countries (Colombia, Ghana, Indonesia, Peru, South Africa and Vietnam) to stimulate more reporting by small and medium-sized enterprises (SMEs). Through the “Competitive Business Program,” we are helping SMEs begin reaping the many benefits of sustainability reporting, which will allow them to improve their business prospects and make positive contributions to their local society and economy. This effort includes GRI 305 disclosures as well as other key sustainability information.

Because many SMEs do not have the resources to put a sustainability management team in place, we have developed the GRI Digital Reporting Platform, a tool that makes reporting easier for SMEs. Using the Digital Reporting Platform, suppliers can digitally share the specific sustainability information that their customers want. The digital report that’s produced is in a format that allows companies in an SME’s value chain can aggregate and use for their own reporting. After we have completed the pilot phase in these six countries, we plan to make the GRI Digital Reporting platform available worldwide.      

Pitsillides: Which is, in your view, the business case for reporting emissions? How will a small and medium-sized enterprise benefit from reporting this information and not see it as just a compliance requirement?

Mohin: I strongly believe that most business owners want to make positive contributions to their local communities and environment. Still, most SMEs do not report on their sustainability impacts because they either lack knowledge of the benefits they can gain from the practice or they believe that the process of reporting is too costly. So a large part of the work we do here at GRI is demonstrating to SMEs that they can benefit from sustainability reporting. When we look at companies reducing emissions, the business case is actually quite clear. Most of the emissions within a business’ control are associated with costs such as heating or cooling office buildings or fuel for vehicles or electricity used for running equipment. As such, a reduction in emissions is usually coupled with a reduction in those costs. That’s a tangible benefit to a company’s bottom-line.

Pitsillides: Do you believe that emissions should be considered a de facto material issue for all companies, given the urgency of the problem with air pollution as stated by the UN? Should, for example, financial institutions re-examine the boundary of this important material issue? In simple terms, should financial institutions not just report the emissions they are responsible for, but also carry out environmental assessments of clients and clients projects? In addition, should they find ways to support companies that are taking responsible action with clean energy and possibly reduce support for companies that are not doing so?

Mohin: I believe that looking at longer term risk, like climate change, is part of the fiduciary duty of financial institutions. That is why the information disclosed in GRI-reports is important for investors. Savvy investors, including financial institutions, should understand how the companies in which they are invested are performing in terms of environmental, social and governance (ESG) issues. I would like to see all investors using ESG data to inform decision making, so that we can move financial capital towards companies and projects that are making positive contributions to the world. This is particularly important if we want to achieve the Sustainable Development Goals (SDGs).

Trillions of dollars in investment capital are necessary in order to make the achievement of the SDGs a reality, but currently there is a disconnect, between the sustainability data that companies publish and the information that investors need for decision making. To help close this gap, GRI is working together with the UN Global Compact and the Principles for Responsible Investment on “Investor-relevant Business reporting on the Sustainable Development Goals.” This document will provide a brief overview of why investors are increasingly demanding SDG-related performance data, help corporate practitioners better understand who the relevant actors are within the investor community and include recommendations on how to present SDG-related information so that it resonates with an investor audience.

Pitsillides: Are there other issues that could be considered as material for a majority of companies, so as to meet global sustainability goals much sooner and accelerate change?

Mohin: Materiality assessments are very much determined by the context within which a specific business operates. This context is definitely informed by the particular industry or sector of the economy within which a company operates, but each business is unique. That said, the SDGs are the global framework for understanding how the world needs to change in order to create the conditions for sustainable development. All companies and their stakeholders should use the SDGs as a framework to guide their activities.

Pitsillides: Are small and medium-sized enterprises taking advantage of the flexibility the GRI Standards offer to disclose the most relevant information (materiality)? Are they taking action on what matters, where it matters for their business? Have they begun to report?

Mohin: We know that SMEs account for a significant portion of global economic activity and also create a large amount of sustainability impacts. But when we look into the GRI Sustainability Disclosure Database, a repository of over 46,000 sustainability reports, we see that a mere ten percent of them are from SMEs. With the GRI Standards, we are providing SMEs (and other businesses) the option to report on specific sustainability information by using as little as one GRI Standard, or a part thereof, without producing an entire sustainability report. So we hope to see the number of SMEs that disclose information on their sustainability impacts increase in the years to come.

Pitsillides: Thank you very much Mr Mohin.

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Tim Mohin, GRI’s new Chief Executive

In December 2016 Tim Mohin, a well-known sustainability practitioner, advocate and author, was appointed as GRI’s new Chief Executive. Mr. Mohin has tremendous experience with global sustainability, from his years with leading companies and governments. The SustainCase Editor, Simon Pitsillides, interviewed Mr. Mohin on the key challenges facing sustainability today and the opportunities presented by his new role.

Simon Pitsillides: What are the challenges and opportunities presented by your new role as GRI’s Chief Executive?

Tim Mohin: I’ve seen, firsthand, how sustainability reporting can change the way a company does business and create positive impacts  Tweet This! for a company’s employees, customers and other stakeholders. I became GRI’s Chief Executive because I truly believe in the transformational power of transparency. I’m focused on figuring out ways to help organizations and their stakeholders get even more out of their investments in sustainability reporting. Thousands of companies all around the world produce sustainability reports, which is a positive development over the past 20 years. But we have not seen change at the scale we need, in order to achieve our end goal: sustainable development. We need companies to dig deeper and discover the additional actions needed to accelerate change. Helping with this process is our biggest challenge at GRI, but also a tremendous opportunity to play a role in creating a better world.

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.

 

A company’s high performance standards and reputation are intangibles that help to attract and motivate employees.

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Also read:

Laying the foundation for good communication with responsible CSR/ sustainability reporting

The Value of CSR Reporting

Corporate Social Responsibility (CSR) and the European Union: Directive 2014/95/EU

Research by well-recognized institutions is clearly proving that responsible companies can look to the future with optimism

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