To GRI or not to GRI? Advice for your next sustainability report
Diane Crowe, head of sustainability, Reconomy Group, looks at how the rise in prominence of ESG data and transparency for businesses is shaping reporting.
Pressure is increasing on businesses to be more transparent on their sustainability plans and outcomes. As such, we believe it is vital for companies to clearly demonstrate their purpose, strategy, and actions to build credibility amongst their key audiences.
However, the journey of how to best disclose information relating to a company’s environmental, social and governance (ESG) performance is less than clear. Much of the guidance out there is directed towards public companies of a certain size. A fundamental change to the corporate reporting structure is required for all businesses to effectively, consistently and transparently provide insight into their sustainability efforts to employees and external audiences. In the meantime, many companies are faced with a choice: to demonstrate their progress and objectives in their own way or fit to one of the reporting frameworks that are out there, including the Global Reporting Initiative (GRI).
At Reconomy Group we audit and verify our carbon and social value data and we are now considering verifying and disclosing even more of our sustainability data using the GRI framework. The question foremost in our mind: What are the benefits and, what, if any, are the disadvantages?
Companies using the GRI framework work closely with stakeholders to determine reporting boundaries and improve relations with investors, employees, customers, local communities, amongst others. If used consistently, the GRI enables stakeholders to benchmark ESG performance against historic data of the company and its peers – helping to address concerns relating to accuracy and credibility. This allows companies to make sure they are not falling behind their peers and are delivering on their promises.
However, the GRI can be time consuming and resource intensive. The process can lead to rigid and lengthy reports that fail to keep key audiences engaged. Furthermore, given the demanding and voluntary nature of the reporting process, the GRI does little to incentivise companies to conform to the framework – particularly privately held companies who may not be looking to attract external investment. As a result, critics argue that the systematic approach may actually act as a hindrance to companies who might otherwise pioneer the sector in trialling new standards for sustainability reporting and furthering the overall ESG agenda.
The UK Government has mandated that all large businesses must disclose their annual energy use and greenhouse gas emissions. The EU has followed suit, stating that from 2024 onwards, all large companies are required to report on sustainability policy and performance. The next step is a global sustainability reporting standard.
If companies, legislators, existing reporting frameworks and wider stakeholders can work together, we will accelerate our efforts to reduce our collective environmental footprint and create a more transparent, sustainable future.
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