Monday, November 25, 2013

Dr Sustainability and The M Factor

It's been a long while since Dr. Sustainability came to visit. She has been sooooooooooo busy. All these conversations about G4 have completely caught her up in a whirlwind of activity. In fact, Dr Sustainability told me that she is considering calling herself Dr. G4, but that doesn't quite roll off the tongue in the same way that Dr. Sustainability does. And of course, when G5 comes out, she would have to change her name again. However, Dr. Sustainability is definitely thinking that G4 has the M Factor. 

Dear Dr. Sustainability: I have heard you talk about the M Factor. What does M stand for? Magnificent? Mammoth? Mega? Misguided? Myopic? Monstrous? Minimalist? 
Dear Curious: You have certainly come up with some options I hadn't thought of. But in the context of G4 reporting, The M Factor is of course Materiality. Delivering a sustainability report without The M Factor is going to get harder and harder. In fact, it's The M Factor that makes it a sustainability report. 

Dear Dr. Sustainability: I have written a G4 report. How do I know if it has the M Factor? 
Dear Stupid: Check out the Content Index. If there is no "omission" next to the disclosure that asks for the list of Material Aspects (G4-19), that's a good start. The next thing is to check whether you have described your process for defining Material Aspects. After that, you should check if stakeholders have provided input and if the frequency of engagement has been noted. Then you can look to see if your Specific Standard Disclosures and Disclosures on Management Approach are in line with the Material Aspects. Of course, don't forget to check whether your Aspect Boundaries are internal or external to the organization. Then, you can make a quick scan of the Principles for Defining Report Content and the Principles for Defining Report Quality. Then check if you have responded to all the General Standard Disclosures. You can also take a quick look at the CEO statement to see if it includes a description of strategic priorities for the short and medium term, including respect for internationally recognized standards and a reference to macroeconomical and political trends. After that, if you don't know whether your report has The M Factor, it probably won't matter. You will be in an institution.
Dear Dr Sustainability: Thanks for your reply. Next time, please reply in English. 

Dear Dr. Sustainability: Did you call it The M Factor just to cash in on a little free publicity? Is it a way to associate sustainability reporting with the incredibly popular mega-rating fabulously universal TV show The X Factor? Perhaps you think that The X Factor may lend a little spotlight to sustainability reporting and help it go viral? 
Dear Simon Cowell: The X Factor seeks out talented people by selecting a small number from the hundreds that start out claiming they have The X Factor. Almost all of them fall by the wayside. It's the same with sustainability reporting. Thousands of reports claim they have The M Factor, but eventually you come to realize that The M Factor is rather elusive and only a few reports are privileged to make this claim genuinely. By the way, isn't it time The X Factor produced a Sustainability Report? You could call it The XM Factor.

Dear Dr. Sustainability: Are there any other TV shows that you think are similar to Sustainability Reporting? 
Dear TV Addict: Actually, I don't watch much TV, but since you ask, Grey's Anatomy could be an interesting analogy. The skills required of the docs that run the ER are very similar to those required of today's Sustainability Officers. You have to be quick-thinking, know how to lead a team, make intuitive connections and improvise if you have to, think on your feet, act decisively and be prepared to amputate if you need to. That's just like publishing a Sustainability Report. Especially the amputate bit. In some cases, you might need to amputate the entire report. In other cases, just the CEO. 

Dear Dr. Sustainability: Is The M Factor an absolute thing? I mean can a report have The M Factor partially? Or does it have to be completely in full comprehensive M Factor? 
Dear Nitpicker:  There is only one M. Either you have it or you don't. Watch out for fakes. And watch out for companies who claim they have The M Factor when in reality they have one of any number of other factors:
  • The D Factor: D stands for Drivel. No explanation needed.
  • The Y Factor: Y stands for Why on earth did this company publish a sustainability report when they have nothing to report?
  • The OMG Factor: OMG stands for WOW, the CEO actually read this report he signed off on. 
  • The PR Factor: PR stands for Press Release. This is a report that looks great in a Press Release but not in a report.
  • The COTW Factor: This stands for Completely Off The Wall. Reports which are so out of sync with the issues that matter that they were probably written by PR firms. Or politicians.  
  • The JK Factor: JK stands for Just Kidding. You must have seen reports like this. As you read them, all you can say to yourself is: Are you kidding me? Sometimes this is called the S Factor. S stands for: Seriously? 
  • The A Factor: A stands for Awesome. Not many reports have this factor. It's when the report is fabulously designed, incredibly creative, pyrotechnically sophisticated and sleekly presented online, but the content is anything but material.  

Dear Dr. Sustainability: I hear that GRI is starting out with a new G4 Application Level Check, to see if G4 reports have The M Factor. What do you think of that? 
Dear Checker: It's a brilliant move on the part of GRI. According to the initial information GRI has provided, they are charging the same price as the G3 Application Level check while promising to check the presence of just 11 disclosures out of a possible 58 general disclosures, with no reference to all the DMAs and performance indicators that support material disclosures. In other words, half the check, half the report, same money. I definitely think that GRI has The M factor. M for Mastermind.  

Dear Dr. Sustainability: Did you manage to work out what the material Aspect Boundary in G4 is all about? GRI G4 says it's about where the impact occurs. But all of my impacts seem to occur in lots of places. How can I define my material Aspect Boundaries? 
Dear Boundary-challenged: Look, it's very simple. Think of it this way. You like ice-cream. You want to eat an ice-cream, but first you have to buy it. When you buy an ice-cream, the impact is external because you have contributed to creating economic value, enabling the ice-cream seller to earn a livelihood, pay back her small-business loan and send her kids to university. Buying an ice-cream has a fabulous impact on the world and therefore the Aspect Boundary is external. On the other hand, now that you have bought the ice-cream, you eat it. Here is impact is internal. Tomorrow morning, when you step on the scales for your daily weigh-in, you will find that the needle has moved a little more to the right, and when you get dressed you will notice a certain tightness around your waist. This is because the ice-cream is now stored in your body as superfluous calories, may contribute to your becoming seriously obese, preventing you from being a productive human being. This impact is most definitely internal, but it also has an external consequence as your obesity presents a worrisome drag on the healthcare system and society at large and your lack of productivity means that you are a burden on the state and ultimately people will have to pay more taxes.  Therefore, buying and eating an ice-cream has predominantly external material Aspect Boundaries, and if anyone tries to tell me otherwise, I will show them the G4 Implementation Manual. That should definitely clear things up.

Dear Dr Sustainability: You mentioned Aspects. I really don't understand this in G4. What if my material issues don't fit into the Aspects? Can I just create my own Aspects? And if so, what's stopping me from using only my own Aspects? Why do I need to force-fit my Aspects into the G4 template? 
Dear Rebel: Look, son, sometimes you just have to conform. GRI has spent hundreds of thousands of Euros developing G4 and creating a universal table of material Aspects. What sort of business are you in that makes it so different that none of the Aspects fit at all?   
Dear Dr Sustainability: My company makes Smoked Haddock Scented Air Fresheners
Dear Smelly Rebel: Enough said. 

Dear Dr Sustainability: What other parts of G4 are hard to understand?
Dear Easylife: The hardest part of G4 to understand is why everyone thinks G4 is so hard. It's not. It's just extremely difficult. Unless you have a great consultant. 

Dear Dr. Sustainability: There are some that say G4 is just a stepping stone to Integrated Reporting, and that when Integrated Reporting takes over, G4 will die. What do you think? 
Dear Pessimist: When Integrated Reporting takes over, I will die. Haha. Joke. Integrated Reporting has some merits when it is done well. The new Westpac Report, for example, can teach companies a thing or two about Integrated Reporting. However, we are far from the day when Integrated Reporting will become an effective reality for most companies. G4 can be a useful stepping stone to a more integrated approach. Before Integrated Reporting can take over, G4 must take over. 

Dear Dr. Sustainability: What's the best G4 report you have seen so far? 
Dear Optimistic: The one that hasn't been published yet. 

Dear Dr. Sustainability: What advice would you give a company wanting to publish its first Sustainability Report?
Dear Beginner: Stock up on ice-cream. 

elaine cohen, CSR consultant, winning (CRRA'12) 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   or via my business website   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm


eatehort said...

Hi Elaine,

Very nice piece. You should make a future post about this question: ¿What if my material issues don't fit into the Aspects?

Right now Im helping develop five GRI G4 reports and the connection between companies material issues and GRI aspects its not very clear.


elaine said...

Hi thanks for commenting. Yes, I agree, the issues to aspects conversion is one of the most challenging parts of G4 reporting. I had planned to cover more about that in future on the blog. Would be happy to hear your experience too. Nice to hear 5 more reports are in development :) Best, elaine

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