‘Now, more than ever, firms need to report’February 2009
EP talks to Global Reporting Initiative chief executive Ernst Ligteringen about sustainability reporting in an economic downturn – and other pressing matters.
EP: How might the recession affect sustainability reporting?
EL: Given that the flames of the financial crisis were fanned by a lack of transparency from our financial institutions, scaling back on public disclosure would be like pouring petrol on the fire. However, I guess there’s a danger that some companies might risk self-immolation by scaling back their reporting. This would be myopic and unfortunate, to say the least. Now more than ever companies need the element of trust. It’s also important to remember that the reporting process can help management better understand metrics on energy and resource efficiency, human resource management and stakeholder relations. In a recession, this is exactly the sort of data investors and creditors are increasingly looking for.
EP: What about the potential effect on the GRI’s funding?
EL: In the early days our funding came from a mix of sources, including foundations and the World Bank, then companies began to provide a larger share, along with the Dutch government and the European Commission. We continue to seek a balanced approach to funding encompassing governments, foundations and companies. But we can’t assume that GRI will be immune from the effects of a global economic downturn, therefore we’ll exercise caution along with everyone else.
EP: There have been complaints that GRI is too dominant in its field. How do you respond?
EL: Too dominant? Really? Well, it’s important to state that the GRI guidelines are adopted voluntarily by companies around the world. But I don’t think of GRI as being ‘competitive’ in the way you suggest. GRI doesn’t own the guidelines – it just convenes the process through which the guidelines are developed and are made freely available.
EP: How have the GRI’s G3 guidelines been received?
EL: I’d say they have been our greatest success. The fact that they’re now used by the vast majority of companies issuing a sustainability report is testament to that. Looking back, the main challenge was communicating to the hundreds of organizations using previous guidance that there was now a new and improved framework – one on which they had to select the most material issues to report on, rather than reporting on everything. Many companies have said they are uncertain how to use this materiality framework in practice, which is why we’re convening a multi-stakeholder working group to provide more practical guidance on defining material issues and indicators.
EP: How are you extending your reach to the developing world, and do you feel you need to?
EL: Absolutely. The ‘Global’ in Global Reporting Initiative isn’t there for show. As the economic centre of gravity shifts to the south and to the east, so too do some of the greatest sustainability impacts. It’s essential that organizations in countries such as China, India, and Brazil are on board. We now have several alliances that allow us to reach new audiences, including with the Global Compact, the International Finance Corporation and the United Nations Conference on Trade and Development.
EP: Were the GRI Readers’ Choice awards – which allowed report readers, rather than experts, to vote on the best sustainability reports – really a good way to judge quality?
EL: It’s important to give the actual readers of reports a voice, rather than just hearing from often self-appointed ‘experts’. More than 1700 people scored at least two reports, and at the same time they completed a survey about how and why they read sustainability reports – which proved to be an invaluable piece of research on reader preferences. We’ll repeat the whole exercise at the next GRI Global Conference in May 2010.
EP: The Swedish government has decreed that all state-owned companies should file sustainability reports in accordance with GRI guidelines. Should other governments follow?
EL: What Sweden did was to set a great example to other companies. And similar moves are afoot in other countries too. Whether or not reporting is made mandatory, governments around the world – and other organizations including the G8 – are sending strong signals to companies that they should take their sustainability performance seriously and report on it.
EP: Which sectors need to most improve their game when it comes to reporting?
EL: I think there’s ample room for improvement everywhere! And this must be in both the quantitative and qualitative disclosures companies make.
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