The Global Reporting Initiative

What with the reported lack of transparency of KDEB and PNSB in its CSR allocations, perhaps Malaysian companies (and businesses within the region) might want to show their genuineness in  transparency for their stakeholders.  If so,  the Global Reporting Initiative (GRI) offers businesses a sustainability reporting framework. Businesses can use the GRI framework to measure and report their economic, environmental, and social performance.

The cornerstone of the framework is the Sustainability Reporting Guidelines. Now in its third version (known as the G3 Guidelines) is free to the public. Other components of the framework include Sector Supplements (unique indicators for industry sectors) and Protocols (detailed reporting guidance) and National Annexes (unique country-level information).

Some might view the GRI and the Guidelines with suspicion, perhaps considering the Guidelines as a barrier to trade for small businesses in developing countries.   The GRI, however, provides the world’s most widely-used and understood framework for sustainability reporting — providing investors, buyers and creditors with additional information that they are increasingly seeking in order to make sound  investment decisions.  According to GRI’s representative, Scott McAusland, a sustainability report helps to provide the market with information on how a well company is placed to meet the challenges relevant to the business.  McAusland states that the GRI is seeing a massive increase in usage in many developing countries, from Brazil to South Africa to the Philippines and many countries in between.

Therefore, sustainability reports based on the GRI framework are being used to benchmark organizational performance with respect to laws, norms, codes, performance standards and voluntary initiatives.  The reports demonstrate organizational commitment to sustainable development, and compare organizational performance over time.

Why is is it worth looking into sustainability reporting? Simply put, to reveal how well you manage your business and the environment in which it is set. Sustainability reporting is a process for publicly disclosing your economic, environmental, and social performance. Many organizations find that financial reporting alone no longer satisfies the needs of shareholders, customers, communities, and other stakeholders for information about overall organizational performance.

The term “sustainability reporting” is synonymous with citizenship reporting, social reporting, triple-bottom line reporting and other terms that encompass the economic, environmental, and social aspects of an organization’s performance.

Companies follow a generally accepted reporting framework for financial reporting. Without a similarly accepted framework for sustainability reports, such reports could lack the features that could make them broadly useful: credibility, consistency, and comparability. If the thousands of companies that voluntarily disclose their sustainability impacts did not refer to a generally accepted reporting framework, they would risk producing non-comparable reports, and/or reports which inadequately address the full spectrum of stakeholder interests. A generally accepted sustainability reporting framework also simplifies report preparation and assessment, helping both reporters and report users gain greater value from sustainability reporting.

Because the development costs of the GRI framework is shared among multiple users, the overall transaction cost for reporters is considerably lower than costs might be should a company develop it’s ‘own company’ or ‘own sector’ reporting framework.

GRI firmly believes that multi-stakeholder engagement is the most valuable way to produce reporting guidance that is universally applicable and appropriately responds to stakeholders’ needs. Accordingly, all elements of the GRI reporting framework are created and continuously improved using a consensus-seeking process involving practitioners worldwide with diverse backgrounds. Business, civil society, labor, accounting, investors, academics, governments, and practitioners are all included in developing the reporting standard.

The Global Reporting Intitiative (GRI) refers to the 30,000 strong multi-stakeholder network that collaborates to advance sustainability reporting. To date, more than 1,500 companies, including many of the worlds leading brands, have declared their voluntary adoption of the Guidelines worldwide. Consequently the G3 Guidelines have become the de facto global standard for reporting.

In Malaysia, only a few companies appear to have voluntarily reported based on the G3 Guidelines, namely:

• British American Tobacco
• Kualiti Alam
• UEM Environment
• UMW Holdings

According to research, their reports have not been consistent. Singapore does not appear to have any businesses listed in recent years. Click here to download the GRI Reports List.

OWW Consulting appears to be the only GRI Organizational Stakeholder in Malaysia, while CSR Asia and Singapore Compact for CSR are listed under Singapore. Click here to go to search for GRI Organizational Stakeholders.

Malaysia appears to be ahead of the region, as there is a CSR reporting requirement for listed companies. Furthermore, government-linked companies through the Putrajaya Transformation Programme, which requires them to incorporate Environmental, Social and Governance (ESG) issues into their management processes.

To support widespread uptake of of this standardized global framework for sustainability reporting, GRI develops learning materials and accredits training partners. Special guidance is also available for small and medium sized enterprises.◊