How the new GRI Standards will benefit your business
Eric Hespenheide, Interim Chief Executive, Global Reporting Initiative
If your company doesn’t understand, manage and communicate its sustainability performance then you’re almost certainly missing out on business opportunities and exposing yourself to risks that threaten the business over the long term.
Thousands of companies around the world, including in Hong Kong, are set to start disclosing their sustainability impacts for the first time. Many are doing so in response to major international developments such as the Paris Climate agreement and the advent of the global 2030 Development Agenda and Sustainable Development Goals. Other businesses are starting their sustainability reporting journeys because of new local regulations, as we see in Hong Kong with HKEx’s ‘comply or explain’ approach to listed companies’ disclosure of ESG information.
Whatever the reasons that drive a business to begin disclosing sustainability information, most worry about the costs involved in terms of time, man-hours and money; some question whether this investment will be worth the effort. Some corporate boards see sustainability as a public relations tactic, aimed solely at enhancing their company’s reputation. And some Chief Finance Officers complain that there’s little benefit in creating a long report, with a laundry list of disclosures – many of which are immaterial for the company’s management and investors.
Though there is merit in these concerns, there are myriad ways in which sustainability reporting has legitimately been shown to benefit business. Only the worst kind of cynic can use those concerns to justify ignoring their business’ contribution to sustainable development.
The benefits of sustainability reporting
It cannot be denied: there are costs associated with reporting. Establishing an internal team – to engage with stakeholders, collect and process data, and create the report – requires a commitment of resources. Yet this is no different than anything else of value that an organisation does. If a business wants to enter into a new market, it cannot do so for free. Management may decide to do so if they believe those costs will be outweighed by the potential benefits. The same is true for sustainability.
Part of our work at GRI is helping businesses understand all of the ways that investing in sustainability can pay dividends. Organisations that use GRI’s framework have told us that it’s helped their businesses in numerous ways: enhanced relations with their stakeholders, better access to sources of capital, improved risk management, and higher employee satisfaction. Our members listed these and other significant benefits on top of savings on things like energy costs, water use, and decreased employee sick leave through improvements in workplace safety.
Embedding sustainability into the heart of operations
Along with our efforts to educate non-reporters about all the good reasons to start, GRI also works with new reporters to help them embed sustainability into the heart of their operations. Some companies decide to begin disclosing sustainability information in order to counter negative perceptions or to boost their public reputations. These are valid reasons to begin reporting, but at GRI we want companies to understand that the real benefits come from embracing sustainability in good faith.
It’s not about a quick uptick in public perception; it’s about meaningful transparency that breaks down internal silos and gives stakeholders a means of communicating concerns with the company. Many companies that use GRI’s reporting framework claim their sustainability efforts have helped them refine their business strategies and spur on innovation that has allowed them to achieve competitive advantages in their marketplace.
The new GRI Standards
We have always viewed sustainability reporting as a means to an end: greater corporate transparency, better business and stakeholder decision making, and ultimately more inclusive and resilient businesses and markets. As we have evolved our reporting framework, our focus has been on helping businesses and stakeholders extract even more value out of the reporting process. This is why we recently released an updated version of our framework: The GRI Sustainability Reporting Standards (GRI Standards).
GRI Standards are the world’s first global standards for sustainability reporting, giving companies a common language for disclosing non-financial information. The Standards are based on the GRI G4 Guidelines, the world’s most widely used sustainability disclosures, and feature an improved format and new modular structure. They also come with a new disclosure option, which will provide businesses with more flexibility and lower the entrance barrier for new reporters. So businesses can now select specific pieces of information to disclose, without producing a stand-alone report.
The GRI Standards represent best practice for sustainability disclosures. They are aligned with other normative sustainability frameworks, including the United Nations Guiding Principles on Business and Human Rights, UN and ILO Conventions, and the OECD Guidelines for Multinational Enterprises. They can also be used to communicate an organisation’s contributions to the SDGs, and how it plays a part in achieving them. Furthermore, GRI and the Global Sustainability Standards Board will continue to create reliable, credible disclosures for the SDGs and work collaboratively with UNGC and PRI, along with many others.
The new GRI Standards definitively replace the G4 Guidelines, which will be phased out by 1 July 2018. For more information, please visit our website:
The views of guest contributors do not necessarily reflect those of HKCSS, the Caring Company Scheme or Sustainable Business HK.