Tuesday, January 3, 2017

GRI's great start to 2017!

With the start of a new year, I decided to clear the decks and make way for all the good things that are going to happen in 2017. In a year when BrexiTrump did nothing to advance a positive vision of a shared, collaborative, inclusive, optimistic path forward, anything that might indicate that the future will get a little brighter is worth supporting. One of those things is the appointment of a promising new Chief Executive at GRI. Tim Mohin, Corporate Responsibility veteran, author, former regulator, ex Intel, Apple and soon AMD CSR exec, former Electronic Industry Citizenship Coalition (EICC) Board Chairman, Tim has a passion that's easy to recognize - it's about making the world a better place. He also has a proven track record in sustainability reporting, a singularly relevant ingredient for anyone planning to take the helm in Amsterdam.

I met Tim in person, after years of mutual retweeting, in Berlin earlier this year at Humboldt University's 7th International Conference on Corporate Sustainability and Responsibility. We shared a stage together in a panel on CSR and Digitization. Tim talked about what being a CSR practitioner means in the age of digitization. Tim explained that, while there is a lot that companies do to be "less bad", especially in the supply chain, there are many ways that companies can create "more good", including through digital technology. One of the most important aspects of all of this is designing these activities right from the outset - good by design to deliver sustainability at scale.

I chatted with Tim just before the holidays. Here's how it went: 

GRI Chief Exec is going to mean a lot of changes for you, right?
Absolutely. New job, new city, new home. new issues - it's a lot to take in. Especially with the holidays just around the corner. I am very excited.

What drew you to this job?  
I have been working in the sustainability arena for more than 20 years with different companies, and 10 years in government before that. My experience with transparency as a tool for sustainability is a good one. There is a great deal of power in transparency - think of the old phrase: sunshine is the best disinfectant! When you look back at my career, I have worked on sustainability reporting for Intel, Apple and now AMD (AMD has 21 consecutive years of sustainability reporting, well before there was a GRI). I can tell you from first-hand experience, transparency works!  But, it has to be done right. That's what I am interested in with this role.

What does "transparency works" mean?
The point of transparency - publishing information - is to advance sustainability and advance performance. That has almost gotten lost in the debate we have been having about this standard or other. We should be able to answer the question: Has it helped? Some of that clarity has gotten lost and I would very much like to see it come back.

What does the new GRI tag-line, Empowering Sustainable Decisions, mean to you?
I do subscribe to the vision of empowering - it goes back to what I was saying before - by putting information out to the world, information found its way into the hands of investors and others. That information matters, and its users create the pressure or leverage on a company to improve. You can track trends and you can do comparisons with other companies in the sector. But ultimately, someone in the company has to take action. That sounds like empowering sustainable decisions to me.

Who reads reports? How are reports are being used to generate action?
I have written on this topic a few times, for example, one piece I published a few years ago was called: "Is your report a window or a mirror?" We often think reports are a window - everyone can look in. More often they are a mirror and often the main readership is employees. The very act of reporting holds up a mirror to what's happening in the company, asking the question: How are you doing? It creates an opportunity for employees to think about their performance and contributions. Corporations are just a bunch of people. My experience of reporting at companies for many years is that it creates opportunities. Suddenly people light up with the realization that their job can actually help people and the planet. Well, yes, it can. It’s true there are issues - I've been around a long enough to know that. These issues were outside the mainstream for a long time. Now they are more inside the mainstream and it is uplifting to see how you can get a very positive response from different people in different functions in organizations.

Role of GRI to date? 
I'll share my perspective as the incoming Chief Executive. To start with, if you are running CSR department, the first thing I would say is go look at GRI. For the past 17 years, GRI has defined what CSR means in a very real and practical sense. GRI has created a sort of road-map for CSR and sustainability. You could call it the "installed base" of sustainability information and standards. That has been incredibly valuable and GRI has established a powerful leadership position. The future, on the other hand, is still full of challenges. When GRI started out, sustainability reporting was new and novel - today, most of the Fortune500 are doing it and most are using GRI.  But there is some confusion, some fatigue, both on the data provider side and on the data consumer side. If you are the installed base of that market, the question is how do you respond to those challenges. That's what I hope to get into in January. As a long-time practitioner and reporter, I can see those problems quite clearly. 


Initial areas of focus? 
It's a bit early to say! But one thing I will say is that expansion into emerging markets is an important priority for the organization. I spent a lot of my career at Apple in China and other parts of Asia. That area of the world is just booming and presents some of the most egregious and challenging CSR issues I have ever seen. Looking at those issues coupled with extreme growth, one of the things I believe is that the role of CSR is very important and much of this stems from globalization. Some corporations are bigger than nation states in terms of annual revenues and their operations can have an effect in every corner of the globe. We need to harness that incredible economic activity towards good - then all of a sudden, you are not waiting for this or that jurisdiction, you have created a broad scope of sustainability action and that's what I want to see GRI do more of.  

Let's get personal......
Born in: The U.S., into a military family, so I moved around often and that includes 3 years in London (British accent now a little faded!)
Married: Happily

Kids: Two children, both married, my daughter, who has a beautiful little baby, is an attorney and my son just gained his PhD in Chemistry. They won't be joining us in Amsterdam but I hope they will come to visit.    

Top hobby: I am a cyclist. I have clocked up a lot of miles this year -  around 3,100, averaging 60 miles per week.
Fave movie: Captain Fantastic
Fave book: I am now re-reading several leadership books and I audio-read about 3- 4 books a month. I just finished Bruce Springsteen's autobiography, Born to Run and that's pretty good. I wouldn't say I have a favorite book but the leadership book I am reading now is one I would recommend to anyone. It's called It's Your Ship written by a former navy captain, and its message is essentially: take care of your people and they will do a great job for you. 
Fave music: I listen to Slacker, which doesn't work in Europe so I am going to switch to Spotify. I stream music constantly. I love the classic rock genre and also Indie style and jazz.

Fave ice cream: Rocky Road, of course.

Favorite GRI Performance indicator:  They are all good ๐Ÿ˜

Last word from Tim: For me, all the positions I have selected in my career have been about making the world better. It's my cause and I want it to be my legacy. We often get mired in a lot of details and debates and argue about things, but ultimately we all want to move the world forward. It doesn't have to be a zero-sum game. I see my new role at GRI as a wonderful way to pursue my cause. 

And the last last word from me: 
I was inspired by my chat with Tim (as I have been from his writings and talks) and believe he will bring a new discipline to GRI. I am sure he is not a Slacker and though he might have a Rocky Road ahead, I expect he will make the GRI his Ship and end up being Captain Fantastic. I am looking forward to hearing more from Tim and supporting his progress in the new year. 

Wishing all the CSR-Reporting Blog readers an equally fantastic year ahead.... where the Rocky Roads are only the kind you eat.  
    

   



elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise Guide to Next Generation Sustainability Reporting  AND  Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via Twitter (@elainecohen)  or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm).  Need help writing your first / next Sustainability Report? Contact elaine: info@b-yond.biz 

Saturday, December 24, 2016

Santa Claus Inc. 2016 Material Topics Report

With zero shopping days left before Christmas, the time is here once again to preview Santa's Sustainability Report. Reporting is a long Santa tradition. Check out Santa's prior reports: 



Santa Claus Inc. 2016 Material Topics Report 
 ๐ŸŽ… Leadership Message  ๐ŸŽ…

Dear Stakeholders 

Oh, what a year 2016 has been. Ups and downs, downs and ups. Fortunately, profits have been up for the 346th successive year although almost everything else has been down. That includes Santa’s mood in the wake of startling turns of events in the political arena, mentioning no names Trump Brexit, corporate fraud mentioning no names Wells Fargo, devastating natural disasters in different corners of the globe, the spread of extremism and violence, the grim fate of populations under siege and civil war, increasing racism, sexism and terrorism and the rapidly deteriorating level of biodiversity on the planet which is destroying my reindeer population and favorite dodo egg breakfasts. 

Nevertheless, Santa is never down for long, as my mission to spread joy, goodwill and gifts throughout the holiday season is powerful enough to spur me on. In fact, my mission has such a motivating effect on me, taking away all the pain that I feel for the world’s gentle people, that I decided to recreate it in tablet form and market it as acetaminophen and hydrocodone which some of you might know as Vicodin. We call it SantaUpper. So far, we have sold several million units of SantaUpper and have noticed an interesting development. As people begin to feel greater joy and goodwill, they have become more generous of spirit and in cash. Donations to the Santa Claus Goodwill Fund have tripled and are on the way to achieving record levels by the New Year. You can help, whether or not you have ingested our SantaUppers. Send loads of money NOW to the Santa Goodwill Fund. 

Aside from this, we have received reports that some people are using far more SantaUppers than the stated dose. We understand that this drug is a little addictive. However, overdosing has given rise to another positive commercial opportunity for people and planet. The SantaUpperDowner. For those who have become critically addicted to SantaUppers, a few swigs of SantaUpperDowner (kale juice flavored with licorice, ginger and reindeer droppings) will soon bring the pain back. Sales are a little sluggish, mainly as we have not been able to maintain a steady supply of reindeer droppings because most them are used in biogas conversion to fuel Santa’s hybrid sleigh – our eco-friendly contribution to Goal 13 - so we are increasing the level of soluble fiber in our reindeer diet and expect to triple production in 2017. Reindeer are now enjoying dried figs and baked yams 3 times a day, in addition to their regular diet of Arctic char. 

Santa’s Materiality Matrix 
This year, we decided to refresh our Materiality Matrix to define the issues that matter most to our business and to our stakeholders. We consulted with many stakeholders including our teams of elves and reindeer, children around the world, parents, toy suppliers, sleigh manufacturers and sustainability experts. We asked all of these groups to suggest the issues that are of greatest importance to them and which affect their decisions about Santa Claus Inc. and rank them in order of priority. The results were not entirely surprising – especially after we massaged them a little to deliver the result we wanted. Here is Santa’s materiality matrix for 2016: 



New Hallmark Movie Series 
For years now, we have been standing idly by as Hallmark dominates the Holiday Season with Santa movies without paying any royalties to yours truly. Although the movies are often well made and star my fave performers such as Lori Loughlin, the fact remains that the holiday season belongs to Santa, not to Hallmark. However, generous as ever, we have now formed an agreement with Hallmark to produce a new Santa series that will replace Hallmark's 2016 Christmas line-up. Watch out on your big and little screens for the following New Movies: 

• Santa and the Science-Based Goals 
• Santa Brings Every Child an Eco-toy for Christmas 
• Love at the Christmas Compost Party 
• Santa Makes an SDG Wish for Christmas 
• The Sustainable Mistletoe Promise 
• My Christmas Citizenship Dream 
• A Perfect Positive Impact Christmas 
• A Heavenly Christmas Engaging Stakeholders 
• Santa and the Sustainability Reporting Mystery 

All of these full-length movies feature Santa in the starring role and they are guaranteed to bring a tear to your eye this holiday season. Lori Loughlin, Hallmark’s most proliferous and talented actress, also features in each of these movies, because she is Santa’s favorite. And she always solves the Garage Sale Mysteries which is an advantage in case there is any foul play on the set. Do let us know if you have enjoyed a Santa Hallmark movie this season. We are already working on sequels to all the above. 

New Santa Reality Series 
Santa never ceases to be amazed at the growth in popularity of reality TV and the interest that viewers have in following the personal lives of so many individuals for no particular reason. But, if the Kardashians can do it, if Mariah Carey can do it and heck, if the Amish can do it, then so can Santa. Apparently, reality TV reflects the thirst that the general population has for transparency. Santa believes that transparency could reinforce the trust and love that people everywhere have for Santa. Starting in 2017, a brand-new series of Santa Reality will air on prime time every day for a full year. In preparation for the show, we have kitted out our entire elf and reindeer population with personal microphones and we installed cameras throughout the North Pole. In order to achieve full transparency, we decided to hold nothing back. For some viewers, this may be a disturbing experience. Especially the parts where Santa is in the bathroom after the regular Wednesday breakfast curry, and one episode where overweight elves get stuck in a narrow chimney as they were preparing to help Santa deliver toys on Christmas Eve. Unfortunately, the only way to resolve this situation was to demolish the chimney or dismember the elves. We chose the latter because the chimney was Trump Tower chimney and therefore very high profile. After a gruesome episode in which we cut up several elves and shipped the parts to cannibals in Fiji, we subcontracted the Trump Tower toy delivery to Alex Baldwin who successfully navigated the chimney and was filmed doing so on Saturday Night Live

Santa on Mars 
A new venture we have undertaken in the past year is the fulfilment of our promise to bring toys to all the children of Mars, even if we still don’t know where they are. We believe that populating Mars is the solution to a sustainable planet Earth as the likelihood of achieving the recommendations of the IPCC sometime before we all reach the age of 243 is seriously close to zero. Therefore, we have accelerated our plans to support this initiative by being inclusive and spreading our joy and goodwill to territories unknown. Getting to Mars has been a bit of a problem, as our reindeer cannot survive in Mars’s atmosphere and we didn’t have enough oxygen tanks to support our team of elves. Therefore, instead of the sleigh, we chartered a Virgin Galactic satellite, specially customized for our elf population, and we kitted out a compact team of elves with Mars survival kits, including several cans of Red Bull in case they suffer a bout of low blood sugar. In our first trial mission, we deposited several toys for children of all sexes and ages in craters around the planet. We also left a few iPhone 7’s just in case they are Mars-proof as well as waterproof, so that the kids could give us a call if they wanted to replace any toys. To our delight, we received several calls from satisfied kids on Mars. We also received several complaints about the iPhone 7’s. Apparently, the battery life on Mars is even poorer than it is on Earth, and it’s impossible to use the earphones that were “in the box” while the iPhone is on constant charge. We addressed this by shipping out a batch of recalled Samsung Galaxy Note 7’s, but they all exploded before they could reach their galactic destination. 

Toy Developments 
As we do every year, we have continued to expand our range of toys and in 2016, we decided to focus on toys that support SDG 5 – gender equality – with a breakthrough innovation: A woman Santa. Yes, this is the first ever gender-balanced Santa doll in the history of Santakind. Santa Woman comes in 5 different editions, empowering women everywhere.

 • Santa Woman Housewife: Special edition of a doll that can cook, clean, shop, raise children, make the beds, run errands, look after elderly parents, perform conjugal duties, and even make home-made ice cream. She needs very little care and attention and never gets worn out. This Santa Woman is most popular with boys. 
• Santa Woman Executive: We only make around 5% of Santa Women Executives, representing the penetration of women in leading roles in business today. This edition is first in the office every day and last to leave, wears suit and a tie, goes for drinks after work and beats all the Santa Men Executives at almost every project. The good news is that Santa Woman Executives come at about 60% of the price of Santa Men Executives and they never need to be promoted. 
Santa Woman Miss World: This edition of Santa Woman is everyone’s favorite. Her mission is to achieve world peace and she loves animals. She looks as good in a bikini as in an evening dress, or even jeans. She has long shiny hair and doesn’t say very much other than how wonderful it would be to achieve world peace. She didn’t even speak out when unwelcome visitors stopped by the dressing room. 
Santa Disabled Woman: We took our cue from Lego on this one. This edition comes in several versions: one in a wheelchair, one with crutches, one with no arms and one who is deaf. Despite their disability, each of these Santa Women are big achievers. The box sets come with Para Olympic gold medals, academic degrees and awards for community service. Unfortunately, there are no business awards, as these Santa Women are typically excluded from the mainstream job market.
Santa Woman President of the United States: We had to cancel this edition due to tragic unforeseen circumstances. 

Elf Healf and Safety
Every year we provide an update on elf healf, one of our most material priorities. Our commitment is to ensure we do not kill any elves in the course of their work, thereby ensuring they retain their health. This year, in an attempt to encourage elves to accept greater accountability for their own wellbeing, we started a new scheme whereby all elves are required to take an Elf Healf survey relating to healthy lifestyles. The Survey quizzed elves about their personal health habits. Unfortunately, as our elves do not have any healthy habits, all surveys were returned blank. As a result, we decided to link elf healf to compensation and benefits. Simply put, the worse the health of the elf, the lower the compensation and benefits. Elves that are sick more than one day a year receive a 10% pay cut, more than 3 days per year, a 35% pay cut and elves that are sick more than 7 days a year actually have to pay Santa. This is quite convenient and the Santa Claus Bermuda Fund is now doing quite nicely. 

Protecting Reindeer Rights 
In line with the UK Modern Slavery Act, we revised all our reindeer contracts. We have committed, for the first time ever, to provide employment contracts where reindeer rights are explicitly detailed and grievance mechanisms are established. Since the introduction of these contracts, we have received 4 grievances. All of them were related to elf abuse. We discovered that certain elves are treating reindeer as their personal servants, and requiring them to bring them breakfast in bed, clean their living quarters and launder elf socks. After review, we determined that this is not an abuse of reindeer rights and we updated our reindeer contracts to reflect these new duties. This has resulted in a much happier elf population, very clean elf residences and far fewer smelly elf feet. 

Safeguarding against Dangerous Elf Merchandise
Over the years we have taken a strong stand against counterfeit Santa merchandise, ranging from Santa Farting Dolls, Santa apps, Santa toys and Santa movies. However, we have now turned our attention to a disturbing new trend relating to counterfeit elf merchandise. Many of you may know the book, Elf on the Shelf, by Carole Aebersold and Chanda Bell. Our elves did not object when this book was first published – what harm can a single book do? - but now, this appears to have gotten out of hand. The Elf on the Shelf website is packed with games and activities to entertain kids over Christmas in hundreds of ways. In fact, it’s so brilliant, we are annoyed we didn’t think of it first. The Elf Name Generator, for example, is extremely useful – we have already renamed several elves using the generator chart – Peppy Spiritson, Snickerdoodle Frostington, Bixby Winterville and Snowflake Candykirk are all newly named elves who are enjoying their new appellation. On the other hand, there have been reports that Elf on the Shelf is sweeping the UK and causing children to become paranoid. Believing that everything they do is scrutinized by Peppy and Snickerdoodle, children are becoming withdrawn and depressed. This created an opportunity for Santa to launch a child-dose version of SantaUpper which is already seeing sales growth. At the same time, we have decided to protect children everywhere by taking out an injunction against Elf on the Shelf for trademark infringement. By 2017, not only will elves not be on the shelves, the Santa Legal Fund will have benefited from a major influx of cash from fines paid.

Smart Distribution in Smart Cities 
In our increasingly connected world, we are finding that delivering toys has become much easier now that there are so many Smart Cities. We can now plan our delivery routes using GPS and smart mobility controls to ensure that we reach the right chimneys in the most efficient way. We also use smart parking facilities when we need to stop the sleigh to water the reindeer. The result is that we have reduced our environmental Santaprint by more than 43% in the last year alone. Not only this, we hooked in to a loophole in the smart city online infrastructures to ascertain the bank account numbers of all city dwellers. Demonstrating superior forward-thinking, we used these numbers to make generous donations to the Santa Retirement Fund, a worthy cause which we are sure all parents are happy to support, with or without their knowledge. Yes, Wells Fargo did us a BIG favor. 

Toy Quality 
As usual, we place great significance on toy quality as we aim to ensure our beneficiaries have a positive toy experience and do not become sick, or worse, dead. As a result, we took proactive steps when we discovered during routine tests that our life-size Santa Farting Doll emitted blasts with such a force that it propelled anyone in its way a distance of at least 27 meters. We therefore issued an immediate recall and recovered 23,400 dolls from 18 countries. The good news is we can now recycle these dolls, generating additional income for the Santa Retirement Fund. In future, we have decided to discontinue his line in favor of a Santa Augmented Reality Doll. All we need to distribute is a small Augmented Reality 3D viewer and our customers get the Santa Doll experience without any unpleasant consequences. 

Recognition from our Stakeholders 
As usual, this year, we received far more awards than we are able to mention in this report. Suffice it to say that the most welcome ones included a cash payment to the Santa Retirement Fund. 

Feedback on this Report 
We will be happy to receive your feedback on this report, as long as it's positive. For those of you who are unable to create your own feedback, you can use this short poll:

Please select the response you feel is most appropriate (multiple responses accepted)

Don't you just LOVE Santa's 2016 Material Topics Report ?

๏ผ Yes
๏ผ Yes
๏ผ Yes


So, until we meet again.....

We Wish You and Everyone in the World a Happy Holiday Season and a Happy New Year 

๐ŸŽ„๐ŸŽ„๐ŸŽ„๐ŸŽ…๐ŸŽ…๐ŸŽ…๐ŸŽ…๐ŸŽ…๐ŸŽ…๐ŸŽ…๐ŸŽ…๐ŸŽ…๐ŸŽ…๐ŸŽ…๐ŸŽ„๐ŸŽ„๐ŸŽ„




elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise Guide to Next Generation Sustainability Reporting  AND  Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via Twitter (@elainecohen)  or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm).  Need help writing your first / next Sustainability Report? Contact elaine: info@b-yond.biz 

Friday, November 25, 2016

The missing piece of the materiality puzzle

Earlier this year, I had quite a lot of fun as a GRI-appointed Quality Control Officer, whose role is to attend GRI training courses as an observer and report back to GRI if certified GRI training is being conducted professionally, competently and in line with GRI standards. This is fascinating for me, mainly because it's so interesting to hear what training delegates ask about and comment on during the course. In one session, a delegate asked the ultimate G4 (now GRI Standards) question - the very same one that I asked GRI Standards leading architect Bastian Buck of GRI, three years back:

Is it OK to write a G4 report with just one material issue? 

The answer of course is Yes and No.

Yes, because technically, if you have determined that your organization has only one material impact, then disclosing this and using GRI to report it does actually tick the box.

No, because, I believe, no organization can be so simple that its impact is entirely mono-dimensional. Even micro-businesses operate across more than one dimension. No business has just one stakeholder.

Behind this ultimate question, then, is the deeper consideration of how organizations define their most material impacts for the purpose of strategy development and reporting. It's not so much about whether you can ride the framework with one material issue; it's about the value you derive from understanding what's material for your business. 

Materiality and Strategy 
One of the positive developments following the introduction of G4 was the elevation of materiality from dormant to active in the minds of companies and reporters. Transitioning to G4 has generally appeared to cause companies to engage in some level of thinking about what's material and how to define it. In some cases, this has been a meaningful exercise where materiality is the result of insightful stakeholder dialogue and the precursor to a multi-year sustainability strategy and basis for reporting. In other cases, we are still seeing the disconnect - where companies have, on the one hand, a sustainability strategy and, on the other hand, a list of material issues that bears no resemblance to the strategy and a report which covers everything except what is deemed material. The next stage in materiality maturity is helping companies to see that this all plays out on the same playground. Sustainability strategy has to be the result of materiality analysis. Materiality can never be in a vacuum.

Materiality and Impacts
Which brings me to another interesting and highly geeky thing I did this week. I listened in on the GRI Global Sustainability Standards Board (GSSB) meeting (for the second time). It's fascinating to be a fly on the wall as the GSSB debates the different aspects of developing GRI Standards. I have to commend GRI and GSSB on full transparency here - all the meeting documents are available and the meeting itself is audio live-streamed (shame about the video!) - and it's a truly illuminating discussion... if you are a reporting geek like me.

One of the topics that came up this time around was the definition of materiality and the clarification of this in the new GRI Standards. GRI maintains that to date, people have "misinterpreted" the definition of materiality, and that the new terminology in GRI Standards makes this much clearer. GRI Standards 100:1.3 states: "Relevant topics, which potentially merit inclusion in the report, are those that can reasonably be considered important for reflecting the organization’s economic, environmental, and social impacts, or influencing the decisions of stakeholders. In this context, ‘impact’ refers to the effect an organization has on the economy, the environment, and/or society (positive or negative)."


In G4, material impacts were defined as follows:
In the GRI 100 Glossary of the GRI Standards, it is now clarified as follows:
A Sustainability Report should therefore report impacts OF the business and ON the decisions of stakeholders. It is not about the impacts of sustainability on the business. The guidance matrix in the GRI Standards remains the same in the GRI Standards is it was in G4 (though the colors have changed a little ๐Ÿ˜Œ) (NB: I remind you that a matrix is NOT necessary for GRI Reporting - a list of priority issues is perfectly adequate.)

This the application of this matrix - or specifically, the focus of each of the axes -  has commonly been misused in G4 reporting.

3M's 2016 Sustainability Report, for example, uses reputation on the Y axis and stakeholders on the X axis:

The Fedex 2016 Global Citizenship Report uses stakeholders and business success:


Both these approaches do not reflect the actual intention of the GRI framework. The GRI approach is designed to create a report that reflects impacts on the economy, people and planet. The shape and size of the impact of your specific business is key to defining your positive (or negative) contribution to society. The primary focus in sustainability reporting should be the size and nature of the impacts OF your business and how your business affects our lives. In the GRI Standards, that should now be crystal clear. The outcomes of the way your business addresses mitigating negative impacts or enhancing positive impacts is reflected in your reputation, business success and value creation.

In the conversation at the GSSB, where I was a fly, a concern was raised that some companies have spent fortunes on materiality assessments that include this measure of "importance to business success". "What should they do now?", was the question. Well, it's not the end of the world. There is some overlap. Quite often, these issues will naturally coincide. Almost always, in fact. But in the next review of material impacts, there's an opportunity to better align with the letter and spirit of the reporting standard (and stakeholder expectations).

Which brings me to the more important question: How do you prioritize material impacts?

Materiality and Prioritization
The big weakness in the GRI Standards is the lack of robust guidance for defining the process for prioritizing material impacts. GRI could have been prescriptive in this area. The GRI Standards omit the guidance that was contained in G4 around the stages of defining material impacts: identification, prioritization, validation and review. However, even that guidance did not prescribe a robust process for getting from the universe of many impacts to the fewer most material impacts.  Few companies, if any, actually report this process in a way that help us understand the voices that counted in prioritizing specific impacts.

It's easy enough to define the landscape of relevant issues. But the prioritization has often been reduced to a number-crunching exercise, where different groups give scores to different topics, the numbers are added up and voila - you have a matrix. The outcome of this process can vary widely depending on which voices you count, what weight you give to each voice, how each voice assesses the value of each impact and the weighting factors you use to roll that up into one coherent list of issues. These details are rarely disclosed by companies. The entire basis upon which material impact reporting rests is therefore not transparent and possibly, not robust.

Lloyds Bank publishes a Materiality Report.


The bank describes its process for defining material impacts:

This looks like an invested process. A universe of 50 issues was established. Representatives of six stakeholder groups (including employees as one group) took part in an online survey to rank the issues in order of importance. The online input was supplemented by the opinions of Lloyds external Stakeholder Advisory Group who provided "proxy representation on behalf of some of these groups". The responses were weighted according to "stakeholder group sample and data quality with priority given to direct feedback and Stakeholder Advisory Panel feedback". Then it was all rolled up into a set of 14 issues in 5 categories that appear to have equal priority as the most material impacts.



The issues look to be a reasonable mix of what we might expect a large banking group to prioritize at a general level. But they could also be the issues of any bank anywhere in any country. Trust in business, job creation, access to products and services, customer satisfaction - this tells me nothing about Lloyds Banking Group that is specific to that company. This begs the questions: How detailed was the initial universe of material issues? How was the weighting of stakeholder responses constructed?

Another bank, for example, presents a more company-sector specific picture. Westpac Australia's materiality matrix includes impacts such as positive impact finance, financial capability and empowerment, digital product and service transformation (an issue which is sweeping the banking industry worldwide for obvious reasons) and macroeconomic and demographic trends that are current in the materiality assessment period.

Westpac's matrix refers to impacts that are important to stakeholder and important to the business, but, despite this bank's detailed disclosure of stakeholder issues and responses, we are still left in the dark about the process used to assign prioritization to these top 18 material impacts. What influenced the positioning of the dots on this matrix? How were the different stakeholder inputs evaluated?

Next week, I will be presenting the findings of an analysis I performed on behalf of BSI, the UK's national standards body, of sustainability performance and reporting standards that are used predominantly today. The presentation will serve as a basis for dialogue at an event hosted by BSI to consider where standardization or additional focused guidance may assist companies in advancing sustainability performance and reporting. 

If materiality is central to reporting, does the process of defining materiality not merit greater structure and transparency? Good process, good outcome. But what is the process for determining materiality? Every company uses its own logic to develop a process that delivers a result. But if the process is flawed, then the result is flawed. How can we know that companies are reporting the most material issues? If the process is different in every case, the outcomes are not comparable. One of the recommendations I am tabling for discussion next week is that there should be robust process standards for the determination of material impacts. What do you think? I'd welcome your thoughts as we consider this fundamental question that goes to the heart of relevant corporate transparency. The actual event is fully booked with a long waiting list, so if you have a strong view, write to me here or comment on this blog. I am very interested to hear your views.

In the meantime, the good news is that companies are making efforts to define material impacts. Even an imperfect, undisclosed process is a start. As I often say, 80% of something is better than 100% of nothing.
 

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise Guide to Next Generation Sustainability Reporting  AND  Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via Twitter (@elainecohen)  or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm).  Need help writing your first / next Sustainability Report? Contact elaine: info@b-yond.biz   

Wednesday, October 26, 2016

Trump versus Clinton or SASB versus GRI

Topical as ever on the CSR Reporting Blog, although usually not party-political, I was struck by some of the similarities in the current U.S. Presidential Election and the sustainability standards reporting landscape. In fact, we might liken the Trump-Clinton adversarial position to the SASB-GRI position, where the stakes have just been raised with the official publication of the GRI Standards.  

GRI was created as the voice of the people in 1999 to support the inevitable need of wide groups of stakeholders for increasing transparency about business practices and corporate accountability. Over the years, GRI has remained steadfastly true to its multi-stakeholder process (sometimes, sadly, at the expense of speed and flexibility) and continues to deliver the only broad set of globally applicable standards for sustainability reporting available today. With the vast majority of reporting companies using GRI guidelines, and, I expect, an equally vast majority planning to transition to the GRI Standards in the next reporting cycle, GRI's voice has been a dominant one on the sustainability landscape for many years. Unfazed by the absence of a CEO in this current period, the mission goes beyond individual interests, and the Standards promise to elevate GRI's position in the global debate - especially in the political arena where governments make decisions and regulators earn their bread. The voice of GRI is the voice of how business affects us. Often, the actions of business affect our bank accounts, but for most of us, they affect the quality of our environment, the values we hold dear and the way we live happy, productive lives. (Cue: violins).

SASB was created in 2011 with a different purpose. Distilled into one sentence, that purpose (as I interpret it) is to help people who have more money make more money with sustainability in mind. SASB states its vision and mission as: "The Sustainability Accounting Standards Board sets industry-specific standards for corporate sustainability disclosure, with a view towards ensuring that disclosure is material, comparable, and decision-useful for investors." This is how it's portrayed in a video screenshot on the SASB website:



Helping investors make more money in itself is nothing to be ashamed of. SASB's approach has been to split the business of corporations into different sectors, and develop a comprehensive range of standards, focusing on the mostly sector-specific sustainability-related issues that affect the financial valuations of companies for investors. SASB has had an amazing crazy-busy time, consulting with corporations and investors and pulling together sustainability accounting standards across 79 industries in 10 sectors. The full set was published in March 2016. It's been a mammoth job and the outputs are very clear.

At the center of SASB's raison d'รชtre has always been that existing sustainability reporting is rubbish for investors. Sure, I don't recall SASB ever using the word rubbish, but that's how I understand it. For example, in a letter from SASB to the United States Securities and Exchange Commission in July 2016, SASB refers to Sustainability Reports as "glossy, attractive publications, often developed in consultation with a company’s marketing department or a public relations firm that describe a company’s achievements with respect to environmental, social, governance, and related matters" and "sustainability reports generally include information that is immaterial for purposes of investment decision-making. These reports tended to make the reporting company look as good as possible to stakeholders other than investors" and "Standalone sustainability reports are often prepared by corporate communications departments or public relations firms. They tend to be positively biased and do not provide investors with a true and fair representation of performance on material risks....This practice of producing a glowing sustainability report is known as “greenwashing”." No doubt then, that investors don't think much of sustainability reporting, according to SASB.

SASB goes further in its public comments to GRI during the Exposure Draft Period of the GRI Standards, submitting a 4-page letter, which includes the paragraph:




"Perhaps GRI is better placed in providing a forum for stakeholders to voice their concerns and ideas"? Seriously? After 17 years of driving the sustainability conversation by creating reporting frameworks that have been adopted and recognized as best practice by thousands of organizations globally, the suggestion is that GRI backs off and runs a chat-club while SASB's largely untried and untested Standards become the SEC endorsed/mandated reporting tool for a small pool of U.S. public corporations? That’s a bit off in my book. It made me think of the adversarial positions we are currently witnessing in the U.S. Presidential Election. In politics, for you to win, someone has to lose.

Portraying GRI as a virtually useless initiative that's encouraging companies to greenwash, and the thousands of sustainability reporters around the world as creators of imbalanced marketing blurb to make them look good is a distortion. SASB wants to be the recognized standard that the U.S. SEC endorses.  The above-mentioned letter to the SEC concludes: "Because of SASB’s approach, with its emphasis on due process and adherence to U.S. securities law, we believe it would be appropriate for the SEC to acknowledge SASB standards, once they become final, as an acceptable framework for companies to use in their mandatory filings to comply with Regulation S-K in a cost-effective and decision-useful manner." Now that GRI is a formal Standard, and not just a framework, SASB has real competition. 

Even before the GRI Standards were published, the GRI reporting guidelines (specifically G4) were used widely in both non-financial AND financial reporting. For example, using CaspianTM powered by DatamaranTM , eRevalue's brilliant corporate disclosure research tool, covering more than 44,000 corporate reports, it took me just a split second to discover that GRI was referenced 733 times in 2016 in financial reports and SEC filings, whereas, in this same period SASB was referenced just 18 times. That's in addition to the >800 non-financial (sustainability) reports that reference GRI, versus 51 non-financial reports that reference SASB. (Interestingly, SASB may be becoming a tool that's used more in non-financial reporting than for financial reporting. Oops!)  Of the 18 financial reports published in 2016 that reference SASB, only one actually reports against the sector indicators according to the relevant SASB Standard. All the others mention SASB once - in reference to the frameworks and guidance used in the preparation of a materiality matrix. Of these 18 financial reports, 14 include a full GRI G4 report with a Content Index, or refer to a standalone G4 report in addition to the financial report. The remaining four companies mention GRI as a guidance framework for the materiality assessment.  

Now, let's be clear. SASB has a very legitimate and useful agenda. Make sustainability disclosure more relevant and useful for the U.S. financial markets. Address the very specific information needs of investors. Help the financial markets enhance value creation. Efficiency. Comparability. Clarity. Focus. Sector-specific. It's all good. But as good as SASB is, SASB is not better by telling GRI to go and sulk in a corner because GRI has a different definition of materiality or because proper use of the GRI framework is evolving rather than perfect.

Sure, GRI-based reporting is fraught with issues of quality, good news rather than balanced news, and omissions. I have been a constant voice of the reporting quality mantra. It's true that some Sustainability Reports are glossy brochures. That's not to say the framework doesn't add value. GRI has been used tens of thousands of times over tens of years in hundreds of countries. How many times have the SASB standards been used in practice? How is the quality of adherence to the SASB Standards assessed? How many investors used SASB based disclosures and found them to be relevant to their investment decisions? What's the prognosis about how investors will actually use the information reported according to SASB Standards, if they are ever used by more than a couple of corporations?


In my work of more than 10 years as a sustainability reporting consultant, I know first-hand the tough deliberations that go into sustainability reporting and the processes companies go through to make quality and meaningful disclosure. I witness a genuine intent to present good and relevant information for stakeholders. I believe the reports of today are much more balanced than those of some years ago. But there is obviously still some way to go.

Marjella Alma, CEO and co-Founder of eRevalue, developer of a groundbreaking analytics platform for emerging ESG, regulatory and reputational risk assessment, is very much at home in this space. Marjella says: "The collective push for disclosure on sustainability issues is impressive. Irrespective of the specific framework, there is growing evidence that companies are including non-financial issues into all kinds of reports, including 10-K’s and Annual Reports. If you look at the issues, rather than the frameworks, you can see companies embracing the thought leadership and this push to more meaningful disclosure. GRI's work of the past 20 years is incredible; the global uptake including emerging markets, not just large multinationals, has made a big difference. The sector-specificity of SASB is a helpful addition. Ultimately, it's about helping companies understand 1. what issues are out there 2. manage them properly and 3. use the right metrics that reflect their business model. At eRevalue, we are making it much easier and much more efficient for companies to know what’s on the radar and do something about it."


What alarms me about the sustainability reporting landscape is this lack of respect and collaborative spirit. It may be that investors have different needs than non-financial stakeholders. It may be that materiality in sustainability reporting is used differently than materiality in a U.S. regulatory framework. But that doesn't mean that respectful, collaborative, constructive coexistence of these two approaches for maximum benefit would not be advantageous for financial markets. Both GRI and SASB organizations together are spending around $15 million per year to advance this - our - agenda. Perhaps that money could be used more efficiently with a greater degree of synergy. Instead of telling GRI to back off, maybe there should be a serious discussion about how to jointly provide guidance that meets the needs of SEC regulatory filings, investors and other stakeholders. I am sure this is possible. SASB has done amazing work in articulating sustainability priorities by sector. This is GRI's Achilles Heel. GRI has done amazing work in creating a strong framework that has put disclosure on the map around the world. There is surely something SASB can learn from that. Do we, as stakeholders, need to live with either/or? Can't we have both, in good spirit?

Which brings me back to the election. Only one candidate will win. One wins, one loses. It doesn’t have to be that way in sustainability. But then, I never was a politician but will always be an optimist.




 


elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise Guide to Next Generation Sustainability Reporting  AND  Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via Twitter (@elainecohen)  or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm).  Need help writing your first / next Sustainability Report? Contact elaine: info@b-yond.biz 

Monday, October 24, 2016

GRI Standards - the fun starts now

A while back I published an overview of the GRI Sustainability Reporting Standards Exposure Draft. Well, now, the Standards are no longer in draft form. They are in real-live-downloadable-usable-bloggable format. Get your free copy here on the GRI website. Not an awful lot has changed since the Exposure Draft. The main thing is GRIs optimism that this makes GRI a more welcome player at the high-stakes tables where governments, regulators and policy-makers play. As a guideline-maker, GRIs legitimacy was apparently not grounded enough to have equal voice. As a standard-setter, GRI has come of age and has the vote. For corporations who  transition to GRI Standards, though, the changes probably represent:
  • an administrative headache - all the basic templates and formats developed for G4 will now have to change
  • a change of language yet again - we all just got used to Aspects with a capital A - now it's back to topics
  • a fear of greater scrutiny at some point in the future, possibly certification, that means a more robust approach to reporting will be required, rather than the sloppy use of G4 that we see by many reporters who declare use of the G4 but do not actually make the grade
  • a fear that a price-tag will soon be placed on use of the Standards - GRI has to fund the GSSB somehow, right? 
  • an opportunity to influence the Standards development - changes may now be quicker and easier with the modular Standard format, as only one piece needs to change or be added instead of the entire framework. The change from G3 to G3.1, for example, was confusing - the whole framework changed because a couple of new indicators were added. 
Billed with just a smattering of hype as the First Global Sustainability Reporting Standards Set to Transform Business, the Standards offer some advantages over G4, but it will take more than this to transform business. The move to Standards is not, and was not designed to be, an overhaul of G4 to deliver a new wow version. No bells and whistles. The move to Standards does not incorporate significant elements which will improve the quality or robustness of reporting, the comparability of reporting, the way companies define and prioritize material issues Aspects topics and how they determine what and what not to report, the use and credibility of assurance practices etc. While there has been some tidying up of the silly bits in G4, and some clarification of the ill-worded bits, nothing substantive beyond the wordsmithing and number sequencing has changed.

Look beyond the numbers
However, you cannot simply change the numbers and that's it. You have to check in with each Standard. For example, one of the disclosures that few reporters actually report fully: GRI 403, formerly Aspect Occupational Health and Safety, including former G4-LA4, G4-LA6, G4-LA7 and G4-LA8:


Disclosure 403-2 is the former G4-LA6.  See the difference in the wording:



The former relates to (1) total workforce and (2) independent contractors. The latter, 403-2, relates to (1) employees and (2) everybody else. This is much clearer in the new Standard but may require a change in the way some companies report. 


Beyond these incremental improvemental differences, GRI Standards come with one critical change and one new demand:

One critical change
G4's 46 Material Aspects have now been converted into 33 topic-specific Standards. That's two fewer than in the Exposure Draft. The material topics table would now look like this (except the new Standards do not include such a table):


That's a total of three universal standards and 33 topic-specific standards - one for each topic.


All the Standards are in BMW-style series with no subsets: 200 series for Economic, 300 series for Environment and 400 series for Social. All former Aspects relating to grievance mechanisms are moved to the Management Approach Standard, and are not identified as material topics in their own right.

For reporters, this means that if you retain the same material topics, you still might need to revise the indicators you report. For example, if Marketing Communications were a material topic, Core reporters would have selected one of two disclosures - G4-PR6 or G4-PR7. Now, the new Marketing and Labeling topic includes both Product and Service Labeling, which was associated with three indicators - G4-PR3, G4-PR4 and G4-PR5. The new Marketing and Labeling disclosure has been trimmed down to exclude some disclosures that are now General Disclosures, leaving three possible options in GRI Standard 417, only one of which was formerly Marketing Communications (417-3).

Therefore,  as a Core reporter, you now have three options where you had one previously, but as a Comprehensive reporter, you have three mandatory disclosures where previously you had five. This might sound a little confusing, and it is. But for most of the disclosures, all you need to do is switch the numbers. In some cases, companies might have to realign their material topics to the GRI Standards and revise the selection of topic-specific disclosures. 

Another point to make here is that the GRI Standards now make it quite explicit that it's just fine to use a different indicator than the ones included in the 33 topic-specific Standards. Standard 101-2.5.3 includes the possibility to report "other appropriate disclosures" if there is no appropriate GRI Standard.


For example, you are a Food and Beverage Manufacturer and have selected Community Investment and Philanthropy as a material topic. Interestingly, philanthropy has never been identified as possibly ever "material" by GRI - this is rather odd, as strategic philanthropy can be a critical part of a corporation's impact on society - and most companies just LOVE to report on this. 

Funnily enough, this is exactly one of the material topics selected by PepsiCo in its very recently published 2015 Performance with Purpose Report, which I was just reading. PepsiCo deals with this in an interesting way. Instead of including an indicator in the GRI Content Index, PepsiCo explains: "At this time there are no relevant GRI indicators that directly correspond with PepsiCo’s material aspect of Global Citizenship. PepsiCo monitors and reports on this aspect through the KPIs discussed in the Global Citizenship section." 

Now, with GRI Standards, PepsiCo can define its own disclosure of measurement of progress against this material topic, provided these disclosures are subject to the "same technical rigor" as the GRI Standards. In fact, this was also an option under G4, but it was a sort of secret option that no-one knew about unless they asked. Now it's more explicit, and enables companies to select more meaningful performance indicators to reflect progress being made in different areas. 

One of the most perplexing aspects of G4 always was the limited flexibility to reflect the diversity of material topics. If your material topic was, for example, Alcohol Related Harm, as it is in the Diageo 2015 GRI Report,  you wouldn't find a related Aspect among the GRI pre-paid lists. What to do? One catch-all option in G4 was to use G4-EC8 - "examples of the significant identified positive and negative indirect economic impacts" for anything that was not covered by another indicator. I have pretty much used G4-EC8 to death over the years. Another option is to use a combo  of existing Aspects. This is what Diageo does:


However, this is not entirely satisfactory, as none of the Performance Indicators that Diageo reports under any of these aspects relate to alcohol in society - they all relate to safety of products manufactured, quality control and labeling requirements. None of these indicators actually address the material issue. Therefore, the only real option for Diageo under these circumstances is to do what we discussed above  - disclose the Management Approach and use a proprietary non-GRI topic and indicator. As it happens, Diageo does have a perfectly fabulous disclosure on this: 

It's a clear strategy statement and targets. This can be used with  G4 to disclose against this material issue. With GRI Standards, the fact that this is now explicit (Standard 101-2.5.3) might make the use of the Standards easier and more relevant for many reporters who suffered from Aspect perplexy.


One new demand

In the GRI Standards,the GSSB has snuck in something else:


Standard 101 - 3.4. If you refer to the GRI Standards in any way in your report (and there are a set of prescribed statements in the Standards that define how to say you did the GRI thing), then you are obliged to notify GRI - either by sending GRI a copy of the report or by registering the report with GRI on the Standards page. Except that at present, there is no link or form to use to notify on that page. I wonder what GRI will do will all these thousands of notifications ... let's assume 8,000 reports reference the GRI Standards in any given year, that's 30 notifications every working day. And who will know if reporters do not notify GRI? I can understand that GRI wants to keep tabs on use of the Standards, but this is likely to happen only when GRI charge money for certification or use of the Standards logo... forgive me for being skeptical that this is on the cards at some point. 


18 months to get ready and steady
In the meantime, GRI Standards will be free and effective for sustainability reports published on or after 1 July 2018. So you have plenty of time to get your disclosures in order. Early adopters gain the advantage of being early adopters. That is, you get first rations of paracetamol. Overall, the language is clearer, the repetition is less and the direction is more logical. You can download all the Standards in one consolidated set at the GRI Standards download center. Whew, that's a relief. And only 443 pages as well.



I am sure that we will see many GRI Standards-based reports published in 2017, ahead of the 2018 cut-off date. The fun is about to start.....




Ahem.. needless to say, I will be very happy to offer the expertise and incredible service of me and my company, Beyond Business,  to help YOUR company transition to GRI Standards and become an early adopter. Paracetamol included free with this service. Contact elaine NOW before stocks run out.
 



elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise Guide to Next Generation Sustainability Reporting  AND  Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via Twitter (@elainecohen)  or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm).  Need help writing your first / next Sustainability Report? Contact elaine: info@b-yond.biz 
Related Posts with Thumbnails