Is integrated reporting the logical progression for sustainability reporting?
The fourth genus of the ever evolving GRI reporting framework is now in the first public comment stage of its conception. This stage is crucial for the framework to maintain its credo of multi-stakeholder consensus based actualisation.
It seems the world of sustainability is on a crash course for hybridisation with annual reporting. The integrated report for many is seen to be as inevitable as globalisation, but would it be the best possible solution for sustainability reporters and their audience? Would a GRI framework for integrated reporting be the best option for most reporters?
Perhaps one of the biggest challenges for the GRI is: how to cater for the myriad demands of a hugely diverse clientele, attempting to cover all industries in all nations.
The GRI’s popularity and biggest criticism is its ‘one size fits all’ nature. There are perhaps two issues to deal with here. Firstly, is it possible to have a reporting framework that satisfactorily meets the requirements of all industries and organisation sizes? Secondly, even within an organisation, is it possible to produce a report that meets the informational
requirements of a diverse range of stakeholders?
In my experience of attempting to benchmark companies by their sustainability reports, it quickly becomes apparent that despite the ‘GRI’s core goals of mainstreaming… disclosure on environmental, social and governance performance,’ there remains a lack of uniformity in both the metrics used for measurement and reporting of information, and the assessment of material issues.
It seems one of the biggest issues that the GRI must address in the development is the conflicting demands of easily benchmarkable disclosure of data and a focus on highly customisable materiality. It is arguable the integration of sustainability reporting with financial reporting would reduce the level of materiality based customisation that is currently available with the G3 and G3.1 frameworks.
One of the most commonly asked questions about sustainability reports is:
‘for who are they produced, who is the audience?’ In my view, integrated reporting
is a good way to answer this question because the audience for financial reports is more easily definable.
As the GRI’s latest sustainability report states: ‘GRI’s mission is to create conditions for the transparent and reliable exchange of sustainability information through the development and continuous improvement of the GRI Sustainability Reporting Framework. The Global Reporting Initiative’s vision is that disclosure on economic, environmental and social performance becomes as commonplace and comparable as financial reporting, and as important to organizational success.’
If sustainability is to be reported in the much more assurance focused world of the annual report, my fear would be that this would reduce the tendency of sustainability reports to be highly customised materiality focused documents. I find it unlikely that a hybridised report would reduce the statistical and benchmark-able nature of financial reporting. It would be more likely that sustainability reporting would diminish as a standalone entity and become a footnote to the heavily regulated world of financial reporting.
I think it is important to point out that my preference for the reincarnation of the GRI framework would include integrated reporting. For me, the optimal format for sustainability reporting would involve both the increased standardisation of data reporting that would be offered by integrated reporting for use by those with an analytical bent, and a separate but linked materiality and disclosure focused report for those interested in context and transparency.
In short, there need not be a stand-off between standardisation of metrics and key data for the analysts and benchmarkers, and increased customisation and stakeholder engagement through materiality. I believe the polarity of standardisation and customisation should be
recognised. Rather than trying to force a compromise, I would separate the two. Standardisation could be achieved through integrated reporting, with a heavy focus on hard data with increased uniformity of metrics and disclosure on methods of data capture. This standardised reporting of key data that could be either uniform across all industries or tailored in the vein of the sector supplements would satisfy those stakeholders whose focus is on the numbers and quantifiable measurable comparable data.
As we have seen from reporters, it is not necessary to produce a printable glossy report. It is more important that the GRI framework can be applied to almost any source of information be it printed, onscreen pdf, video or tweet. This is highlighted by some of my preferred sustainability reporting manifestations, Patagonia’s Footprint Chronicles Newmont’s Behind the Mine or Novo Nordisk’s use of Tweeted sustainability
information, who use Tweets to supplement their award winning integrated reports. Novo Nordisk exemplify the way in which the GRI framework can be a flexible tool to be used in the way that best discloses, engages, quantifies and reports information to an organisation’s stakeholders.
The separation, in my opinion, would reduce the competition between data and disclosure that is often apparent in current reports. It would allow each to be more focused and less compromising. It would also enable greater stakeholder engagement, allowing each to cater more specifically for their intended audiences.