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The Global Reporting Initiative (GRI) Transition to Standards: The Good, the Bad and the Ugly

GBU-first-art-buzzword-site-colorAs many companies are publishing or reaching the final stretch in developing their 2016 sustainability reports, it’s time to start planning for the next reporting cycle. A key part of that planning process for many reporters will be thinking through the GRI Standards, released in October 2016, which will be required for all GRI reporters starting July 1, 2018. In other words, any report published after that date must use the Standards rather than G4 to claim any reference to GRI.

 

GRI has been a major force in encouraging and guiding sustainability reporting for nearly two decades, and the four generations of GRI Guidelines have been widely used. More than 3,400 reports were published in 2016 using GRI, and some 26,400 GRI-based reports are listed in GRI’s database. The GRI Standards are intended to update its sustainability reporting framework from guidelines to a full-fledged, standards-based system. The Standards follow the 2013 overhaul of GRI’s reporting guidance from G3 to G4, which was a substantial undertaking for most organizations.

 

We’re sure many reporting companies, report content developers and report users are wondering how big a transition the shift to the Standards will be, and whether and when to make the jump. We think there is much to like about the Standards, and the lift won’t be as heavy as the move from G3 to G4. To help reporters think through this transition, we’ve developed a white paper reviewing some of the good, the bad and the ugly of the new Standards based on how well they help to advance GRI’s stated goals, their value to reporters and report readers and the effort required to make the shift.

 

Download our white paper The Global Reporting Initiative (GRI) transition to Standards: The Good, The Bad and the Ugly

Science-based goals: The key to “doing enough”

Sustainability reports have always aspired to place a company’s activities and impacts into context. The Global Reporting Initiative (GRI), for example, has included “sustainability context” as a reporting principle since 2002. But in practice, this aspiration hasn’t always been met: Companies often report performance indicators but omit information that would help stakeholders understand the significance of the data.

 

For example, if Company A reports it used 10 million gallons of water and Company B used 200 million gallons, Company A has better environmental performance, right? Not so fast! If Company A withdraws 90 percent of the available water from a river, degrades its water quality and discharges it upstream of a community, it may have much worse performance than a bigger water user. It all depends on the source of the water, the sustainable level of withdrawals from that source, what share of withdrawals the company claims, and whether water is returned to the source – and in what condition. These considerations quickly move context into the realm of science, particularly in determining sustainable levels of use or “ecological limits.”

 

Sustainability context is even more important when setting goals. Yet according to the World Resources Institute (WRI), “Despite…looming ecological threats, most companies set sustainability targets based on what is considered feasible or competitive rather than what is necessary to preserve Earth’s resources for future generations. Out of 40,000 corporate sustainability reports published between 2000 and 2014, only about 5 percent mention ecological limits.” As Andrew Steer of WRI sums it up: “Stop just doing better and do enough.”

 

There’s no doubt that providing sustainability context and setting science-based goals can be daunting. When Ford launched a pioneering science-based climate goal in 2008, its scientists had to develop a complex model of emissions and atmospheric greenhouse gas (GHG) levels in order to set a target reflecting their share of necessary reductions. The good news is that science-based goals are becoming better understood and established, with guidance, tools and inspiration more readily available than ever before. For example:

 

  • – The Science Based Targets initiative provides guidance and tools to companies to make it easier to adopt GHG emissions reduction targets that limit global warming to less than 2 degrees Celsius. A collaboration among CDP, the UN Global Compact, WRI and World Wildlife Fund, Science Based Targets provides different models for emissions reduction. As of December 2016, more than 200 businesses had pledged to work with the initiative to set goals related to climate. Next up – helping companies ensure their water neutrality goals are meaningful and scientifically sound.

 

  • – The Future Fit Business Benchmark is an open-source tool that allows companies to benchmark their sustainability performance with an eye toward being “fit” for the constraints of the future. As they put it, “a future-fit® business is one that in no way undermines – and ideally increases – the possibility that humans and other life will flourish on Earth forever.”

 

  • – World Resources Institute worked with Mars to set goals that take into account science regarding the global carbon budget, water stress and other ecological constraints. The goals also take into account the local context of impacts throughout the company’s supply chain and operations.

 

  •  – Kellogg committed to deliver a 65 percent reduction in Scope 1 and 2 emissions by 2050. What’s also significant is that the company is engaging direct suppliers to reduce absolute Scope 3 emissions by 50 percent by 2050. Kellogg even specifies the percentage of suppliers to be engaged – 75 percent of Tier 1 suppliers – and how they’ll be engaged: by reporting to CDP Supply Chain by 2020.

 

The concept of living within one’s limits is straightforward. But for companies setting sustainability goals, figuring out those limits and how they relate to a company’s activities and impacts – positive and negative – has been challenging. That picture is changing rapidly. We hope we’ve provided some insight on the how to set these goals, to secure a better future for all of us.

 

Communicating the Value Chain

What could be more important to stakeholders than understanding the nature of a company’s business? Yet many reporters miss the opportunity to provide this basic information. That’s changing, though, as sustainability and CR reports are used more often to provide greater clarity on a company’s business model (how it makes money) and on its value chain (key direct and indirect activities that support the business model).

 

This is happening in tandem with increased integrated reporting and additional focus on corporate purpose. In fact, the International Integrated Reporting Council’s guidance (IIRC) requires that companies illustrate the business model. Whether they use the IIRC framework or not, more and more companies are creating visual representations of their business, which can also help to make their reporting more visually engaging.

 

Showing the value chain can be straightforward, as our client Novelis did:

 

novelis

 

Campbell Soup Company’s simple wheel graphic is also straightforward, but includes examples of material issues, activities and initiatives related to each step of the value chain.

 

campbells

 

At the other end of the spectrum, Fibria, a Brazilian pulp company, uses the IIRC’s approach to reporting on value creation by clarifying the business model and showing how the business increases or decreases stocks of financial and non-financial capital. Fibria offers multiple business model infographics for a range of audiences, putting the visual of how the company creates value front and center for key audiences.

 

fibria

 

To determine which approach makes the most sense for your company, consider the following questions:

 

+ Who is the primary audience? Is it investors, suppliers, customers or some combination?

+ Which framework are we following (IIRC, GRI, etc.)? This is a great place to start, since frameworks offer advice on what to include in visual depictions of value chains.

+ Are there stakeholder misconceptions about our value chain that we have an opportunity to clarify or correct through a value chain graphic?

+ What are the highest priority areas to share? Be sure to include the most important steps of the value chain—if your chosen audiences would be overwhelmed by seeing detail like Fibria’s, consider a mostly visual representation.

 

No matter how you approach sharing your value chain, it’s an important step at a time when reporting about activities outside a company’s core operations is all but expected.

Four New Tools for Sustainability Professionals

Here’s a brief roundup of new sustainability and general business tools on our radar. From visualizing company financial performance in context to understanding the interconnected benefits of green infrastructure, there’s something helpful for sustainability professionals working in all kinds of disciplines.

 

Finviz.com

 

This financial visualization tool allows you to view the color-coded financial performance of sectors, categories and companies at a glance. For example, the consumer goods sector varies from red to green, representing the performance of each company’s stock, while the size of the block corresponds to the company’s relative market cap. Hovering over the sector or category allows you to see the performance of top companies. You can also filter the tool by S&P 500 companies.

 

finix

 

Transformative Transparency

 

Supply chains are notoriously complex and often opaque, but also vitally important to understanding a company’s impacts and opportunities to shrink its footprint. Created by the Stockholm Environment Institute, the supply chain transparency platform, now in beta testing, aims to help researchers and others understand the flow of agricultural goods from their origin through traders and importers to a destination country.  The current version focuses on the commodities of coffee and soy due to their ties to deforestation. The tool sources shipping data to provide supply chain mapping, which is then overlaid with social and environmental data to help identify sustainability risks and opportunities.

 

Partnership for Resilience and Preparation (PREP)

 

As a part of its late-September announcement on climate partnerships through the Partnership for Resilience and Preparation (PREP), the Obama Administration announced a new data platform created by the World Resources Institute and the U.S. Department of the Interior. The PREP platform aims to provide unprecedented access to robust, actionable, climate data for companies and communities. Though the platform is in beta, a quick look through it reveals historical and projected data related to precipitation, temperature and emissions as well as human-centered research around topics like climate justice.

 

City Performance Tool

 

Directed at urban planning and municipal sustainability professionals, Siemens’ City Performance Tool (CyPT) analyzes how improving infrastructure could support economic development and reduce environmental impact in cities like San Francisco. Specifically, CyPT uses modeling to show how (and which) green energy, building and transportation technologies reduce impact and create jobs. The city of San Francisco plans to use this data to meet its 2050 environmental goals.

 

Engaging with the Sustainable Development Goals – not Business as Usual

Launched with great fanfare a year ago, the United Nations Sustainable Development Goals (SDGs) build on the success of Millennium Development Goals and go well beyond them. Like the MDGs, the SDGs have three interconnected objectives: ending poverty, protecting the planet and ensuring prosperity by 2030, all while tackling climate change. However, the SDGs were developed in a true public/private/NGO collaboration, taking multiple perspectives into account and addressing issues critical to developed and developing countries alike. There’s a call to action here, too: the goals specifically ask the business community to engage in solving global challenges. They also give companies a new way to evaluate their business models in a sustainability context.

 

A year out, companies are engaging with the goals in a variety of ways from pro forma to strategic – as well they should: according to research from PwC UK, 90% of people think it’s important for businesses to work with the SDGs, and 78% of people are more likely to buy from a company using them.

 

How companies are using the SDGs: a few examples

 

Unilever: Leading consumer packaged goods company Unilever celebrated the launch of the goals with short animated videos explaining how the company supports individual goals like clean water and gender equality. Later, it engaged employees in the process, asking them to make videos about what the goals meant to them on a personal level. By bringing employees into the conversation, Unilever creates a connection that makes the goals that much more embedded in the organization.

 

Coca-Cola Enterprises: Many companies, including Coca-Cola Enterprises (CCE), are mapping their existing CSR initiatives to the SDGs; CCE even shared its mapping in a sustainable development infographic. While this is valuable, it would be even more meaningful if CCE used the goals and underlying targets to inspire strategy, including future goals and targets. Not many companies are there yet, but it’s where leaders are headed.

 

Novozymes: For example, Novozymes, a Danish biotechnology company, describes its approach to connecting the SDGs and its business in its sustainability report. The company elaborated at last June’s Sustainable Brands conference in San Diego on how it mapped its company purpose, strategy and long-term goals to the SDGs. The rationale is that thinking about these goals now means it will be better-positioned to deal with a tougher regulatory environment and scarcity of natural resources like water. The company even developed a tool to evaluate its innovation pipeline against the goals.

 

Engaging with the SDGs

 

Initial Steps

 

1. Spot opportunities to leverage the goals through mapping, engagement and communications, like CCE did.

 

2. Figure out what steps you’ve already taken throughout your value chain, in internal and external CSR initiatives and through strategic philanthropy. Are there opportunities to have the goals inform existing initiatives?

 

Deeper Engagement

 

3. While the 17 goals are inspiring – and it’s hard to imagine anyone questioning them – the real substance of the SDGs lies in the 169 targets that set out how the goals will be met. So it’s important to dig into the details of each target and figure out what’s best aligned with your business and where the threats and opportunities lie. The PwC UK survey reports that more than 30% of businesses surveyed only plan to assess impact on some of the SDGs relevant to their businesses, while just 10% plan to assess impact on all relevant SDGs.

 

4. In your next materiality assessment process, leverage the goals as another lens by which to assess your material issues. The SDG Compass guide, created by the UN especially for businesses looking to integrate SDGs into strategy, offers step-by-step advice.

 

Looking to the future

 

Despite the high profile and flurry of activity around the SDGs, a recent, sober assessment by DNV-GL  of the likelihood the goals will be reached concluded that eight of the goals are unlikely to be achieved in any global region by 2030. But the same report, which was presented to the UN Global Compact (UNGC), offers examples of how UNGC signatories are having an impact on each of the goals and sets out a challenge to business to raise their level of ambition and improve the odds of success.

 

Implementing the SDGs is not business as usual. It’s business for a sustainable future.

Is the mobile phone killing the sustainability report?

We’ve all been there. You navigate to a company’s corporate responsibility website or sustainability report and come upon an engaging landing page. Something moves, drawing you in. You scroll through key messages and stats, maybe sample some video. Then you start to click around looking for a specific piece of information. But to mix some carnivorous metaphors – where’s the beef? You find the site is all sizzle and no steak. If you’re able to find substance at all, it’s brief, breezy and not especially candid or strategic.

 

What happened? A May-December romance between a new technology trend of fluid design (or the ability of a website to be viewed on phone, tablet or laptop) coupled with the age-old tendency of organizations toward opacity and obfuscation. Mate the two and you can end up with fluffy little communications that multiply like Tribbles.

 

It doesn’t have to be that way. A number of organizations have cracked the code and provided corporate responsibility and sustainability communications that work well on any device without sacrificing transparency and comprehensive disclosure.

 

The Ford sustainability report, which aside from an eight-page PDF summary is all online and all responsive, provides engaging top-level messages on material issues while also allowing users to drill down to details and data . Nike’s sustainable business website, designed to appeal to consumers as well as sustainability specialists, offers multiple ways to engage with key messages and data and points power users to a PDF report that offers a comprehensive look at progress against their targets.

 

It is possible to have your beef and eat it too.

Trending Now: Megatrends

Everywhere you look in the sustainability world, megatrends are being identified, analyzed and prioritized. PwC, for example, has spotlighted a set of megatrends that it is using to inform all of its work. Many of their peers and consultancies have done similar trend analysis.

 

Why this surge of interest? Perhaps the most obvious reason is that as the pace of change accelerates in technology, society, geopolitics — and even the natural world — it’s ever more important to understand the direction and drivers of that change. The current focus on disruptive innovation is also a natural fit with megatrend analysis. As organizations of all sizes embrace the idea of disruption (if not always the reality), it’s essential to understand what the disruptive forces are and how they will influence winners and losers in the marketplace.

 

Megatrends are also making their way into sustainability communications and reporting. Companies ranging from DSM to Bosch are articulating how megatrends are shaping their business.

 

At Ford Motor Company, chief futurist and megatrend guru Sheryl Connelly has been identifying consumer-related trends for years and sharing her insights publicly through a trend report book. For the Ford 2014/15 Sustainability Report, BuzzWord developed an innovative method for using megatrends to inform and “amplify” the materiality analysis used to shape the company’s sustainability strategy and reporting. The same report identifies the mobility megatrends that are guiding Ford’s thinking as it develops sustainable solutions for future global mobility.

 

Are megatrends a trend that will last? Most trends wax and wane, but unless the pace of change slows, identifying important changes in the world will continue to offer important insights to inform sustainability strategies and initiatives.

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