One of the most common questions we encounter at Zumer is:
How can you compare something as complicated as corporate social performance?
True, corporations are incredibly complex entities with multiple subsidiaries, operations spanning the globe, varying ownership structures, and intricate supply chains. One only needs to think of the fact that the tobacco company Phillip Morris used to own Kraft Foods, or that Small Planet Foods is owned by General Mills and you want to throw up your hands in frustration as to what seems an impossible task.
In all reality, it is not quite as hard as one may think, and while difficult, it is a task that can be achieved thanks to the work of the Global Reporting Initiative (GRI). The GRI has made excellent progress in standardizing how and what companies should report on, in terms of environmental and social performance. This allows us to compare apples to apples instead of apples to oranges, rating companies on their performance in comparison to their peers.
What is the GRI?
The Global Reporting Initiative (GRI) is the global de-facto standard for non-financial reporting. Based out of Amsterdam, the GRI is an NGO that brings together an international network of thousands of stakeholders from business, civil society, labor, and professional institutions. This network creates the content of the sustainability reporting framework in a consensus-seeking process. Founded in 1997 by sponsors such as Boston based non-profit, CERES, the GRI has grown to encompass a network of over 30,000 individuals and is a collaborative center of the United Nations Environment Programme.
The GRI provides the framework for companies to report on over 70 indicators relating to the Environment, Society, Economic, Labour Practices, Human Rights, and Product Responsibility.
In its short history the GRI has made exceptional progress and has been a major catalyst in promoting the growth of non-financial business reporting. After ten years in existence it has become the international standard with over 1000 multinational corporations reporting by its metrics. These are not simply companies that sell health-food and green cleaning products, but some of the largest and most well-know companies around.
Business Week recently reported that 80 % of the top 15 global brands issued reports using metrics developed by the GRI. And of those, the top five brands: Coca-Cola, Microsoft, IBM, General Electric and Nokia, all issued GRI reports. Likewise over 50% of the S&P 100, and 20% of the Fortune 500 are reporting by GRI standards. Needless to say, the GRI has been quite successful in getting buy-in from the biggest companies out there.
The importance of the GRI
While standardized sustainability reporting may not be the sexiest innovation to take the “environmental world” by storm, it is probably one of the single most important steps to making an impact on how corporations can reduce their environmental and social impact.
To make a parallel, there once was a time when corporations did not have GAAP accounting rules and financial information was reported in whatever means would make the company look the most favorable. Over time however, accounting became a regulated profession, GAAP rules emerged and public financial reporting was required if a company wished to be publicly traded. This innovation not only exposes corruption, polices taxes, and protects shareholders, but it also allows managers to monitor corporate performance and identify strategy within their organization.
Does the fact that a company reports by GRI standards make them a good corporate citizen?
No, reporting in itself does not guarantee that a corporation is acting responsibly. It is however, the first step towards identifying areas of improvement, strategic objectives, and monitoring past performance. To use the accounting adage: “You can’t manage what you don’t measure.”
Furthermore, reporting by GRI standards and making this information publicly available allows companies to be held accountable for their impacts and is a way for consumers to cut through the PR and marketing spin and make informed decisions.
This is where Zumer comes into the equation — ultimately our mission is to make this corporate responsibility performance accessible to the conzumers. Instead of glossy reports sitting in boxes gathering dust, we want these reports to be read, we want them to be debated, and we want them to play a role in purchasing decisions.
If conzumers begin to use this data when they buy, corporations will change, and it will be a race to the top instead of a race to the bottom. After all, corporations are only as strong as their customers.
What kind of customer do you want to be, and what kind of corporations do you want to see?
http://www.globalreporting.org