Common principles of materiality: April Fool!!!!

So, apologies for a few weeks of radio silence on the CSR Reporting Blog... sometimes that little thing called life just takes over .... but this April Fool's Day joke was too good to miss. It's the publication of the Statement of Common Principles of Materiality of the Corporate Reporting Dialogue in March 2016 which I just noticed yesterday via a Facebook post from eRevalue. 

The Corporate Reporting Dialogue is the consortium of the biggies or wannabe biggies in corporate disclosure:

• CDP
• Climate Disclosure Standards Board
• Global Reporting Initiative
• International Accounting Standards Board
• International Integrated Reporting Council
• International Organization for Standardization
• Sustainability Accounting Standards Board 

It was established in June 2014 as "an initiative designed to respond to market calls for greater coherence, consistency and comparability between corporate reporting frameworks, standards and related requirements".

So, after almost two years of dialogue, where, we might be inclined to ask, is the greater coherence, consistency and comparability? Aside from more and more connections and linkages and principles and frameworks and standards and indicators and pseudo-dialogue... there is little evidence of coherence, consistency and comparability.. on the contrary, there is more evidence of three different c's: confusion, complexity and conflict. And just to make life fun, yet another document on materiality that looks like more of an April Fool's Day joke than an intelligent response to the needs of reporters and their stakeholder communities appears proudly on our screens. 

The document is billed as responding to "market demand" in "clarifying reporting concepts". It starts with a full page introduction to Materiality... which, when boiled down into a couple of sentences, essentially tells us what we already know: what's material is different depending on who you are talking to, and, what is only a bit material now maybe a lot material in the future. Therefore, no-one has a "one-size fits-all" (sic.) definition of materiality but there is a "foundational principle" which is: "material information is any information which is reasonably capable of making a difference to the conclusions reasonable stakeholders may draw when reviewing the related information."

Note here that the reference is to "reasonable" stakeholders. Later this is explained as excluding from the reporting focus a "single or atypical stakeholder or one who is behaving unreasonably or irrationally". I wonder what this means? I know all stakeholders weren't created equal, but surely there is some element of stakeholder inclusion that suggests that by definition, a stakeholder (group or individual)  is affected by and affects the business of a corporation and therefore has the right to hear and be heard? Who judges what behavior is unreasonable or irrational enough to merit exclusion from the playing ground? GRI's definition of stakeholders does not exclude unreasonable or irrational stakeholders:

So, apart from the fact that companies are encouraged to play nice with nice stakeholders, there's nothing new in this introduction and it kinda reinforces what most of us have already known for a long time - that materiality without due process is subjective, self-serving and manipulable and no-one really wants the inconvenience of proving otherwise.  This document makes no reference to the process by which materiality is determined... only what materiality is or should be. As fundamental as materiality is to all things sustainable and reporting, we might have expected that the most invested minds in reporting thought-leadership today might have been able to come up with something more substantive.

Moving quickly onto the document's presentation of the principles. Oops. No principles... just (another) Introduction, Concepts and Application.

Six concepts are presented. I can distill five of them down to the following from the mumbo-jumbo technobabble of this coherent, consistent and comparable (not) document:

• Report materiality to your most important stakeholders (only) and assume they understand
• Leave out stuff which is not material
• Every company will have to decide how much detail to add in or leave out
• It's OK to include stuff which is not material, as long as it doesn't hide what's material
• Materiality is relative - depends on the context
• Even if a new standard defines something as material, if the reporting company's stakeholders don't think its material, it's OK to ignore it 

I challenge you to read the six concepts in full original technobabble and see if you can distill them down to even fewer words, or even, identify anything ANYTHING that is remotely different, new, enlightening or helpful in all of this.

Then there's the application. There are five points of guidance which I have distilled down into English:

• Materiality requires qualitative judgment, but if it's law, the law prevails
• Managers decide what's material but should take primary stakeholder (investor) input into account  
• Relevance of materiality changes over time, so if you've said it once, you can probably ease off in the future
• If you are making estimates when reporting material impacts, take into account the views of your reasonable stakeholders
• When disclosing material information, if you can't measure it, it doesn't count 

Then there are 4 pages of comparison of materiality definitions and approaches by Corporate Reporting Dialogue participants - a sort of copy-paste-plus of what's already out there.

So, I am wondering, apart from wanting us to have a laugh on April Fool's Day, what earthly purpose does this document fulfil and what are corporate reporters supposed to do with it? More importantly, if it takes two years of meetings, lunches and open dialogue to deliver this, frankly I think everyone should go back to their own corner and campaign for fragmentation, differentiation and splendid isolation. Unless the lunches are unbeatable.

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  

CSR: Time for some perspective

We all have perspectives. Sustainability Reporting is something that tends to give rise to many different perspectives - my last post being a case in point.  Some perspectives are more important than others. And some perspectives lack perspective. A new report from CorporateRegister.com now reveals many perspectives. My perspective on that is positive. 

CorporateRegister.com, who hosts and manages the global online directory of corporate responsibility (CR) reports, today launched the CR Perspectives report, combining data, insight and opinion to reveal how global CSR reporting has developed to date and where it might be headed. Available as a free download from www.corporateregister.com (login required),  the report CR Perspectives 2013 - Global CR Reporting Trends and Stakeholder Views looks at global CR reporting based on statistics deriving from the world’s largest CR reporting database (52,000 reports) and stakeholder views based on the  CR Perspectives online survey.

The report is structured into four sections looking at the Context, Content, Communications and Credibility of CR reporting. The online survey conducted in early 2013 received 300 responses from corporate CSR professionals (40%), CSR consultants (18%), academics and students (16%), and even investors (3%), as well as other stakeholder groups. 71% of respondents were from Europe and the U.S., with the remainder from pretty much everywhere else.

The Context of CR reporting 
While sustainability reporting continues to expand, it is doing so at a slower rate, according to CorporateRegister.com. Part of the reason for the slowing of this growth is the fact that, for the past 2 years, 2011 and 2012, there have been fewer first time reports than previously, breaking a pattern of year-on-year increase of first time reports every year since the year 2000. This is a big disappointment. I LOVE first time reports. Still, in 2012, 800 first-timers made their first foray into the transparency jungle, so that's about as many reports as I can reasonably read in a couple of months, so I guess things are not too bad.

Source: CR Perspectives Global CR Reporting Trends and Stakeholder Views 2013 p5

Survey respondents largely feel that CSR reports are an effective tool for building trust, and that reporting quality has improved over the past ten years. Surprisingly, perhaps, very few think that CSR reports are just PR. I could point them in the direction of a few choice reports to help prove otherwise, but gladly, I concur that today, while PR is always an element of almost every report, we are seeing more substance and more serious attention to important issues in sustainability reporting today.

Another perspective is that almost all survey respondents think that all publicly traded companies ought to be required to report on sustainability matters. A few think that even SMEs should be required to report. If you work from the premise that sustainability reporting is a highly useful internal management tool, then this makes sense. Perhaps CSR reporting finally moving out from under the shroud of illegitimacy?

The Content of CR reporting 
According to CorporateRegister.com statistics, integrated reports are increasing, but are not yet as widespread as generally assumed. They are still less than 10% of the total reports published, around 600 integrateds in 2012. However, integrated reports are not all born equal. Many of them are just an expanded financial report with a section on issues related to sustainability and no linkage between the sustainability-type information and the business-type information. The IIRC is piloting use of the new IIRC framework, with a wide range of respected and experienced reporting companies. In fact, the IIRC includes several examples of integrated reports in the Emerging Integrated Reporting Database which hosts integrated pioneer flagship reports. I took a look at one of them - the Gold Fields 2012 Integrated Report, which came top in Ernst and Young's Excellence in Integrated Reporting Awards for 2013. At 212 pages, it's an easy read :). There is a very extensive section on assurance which is as comprehensive as I have seen in any sustainability report. The report is not GRI based. There is no materiality matrix of list of material issues presented, although assurance statements indicate that the report complies with the principle of materiality - probably because of the inclusion of a risk matrix which includes both business and sustainability-type issues.

What I wondered, though, is how this report expresses the linkage between business sustainability (and risk) and sustainability performance. For example, the report contains a very detailed disclosure on human resources - as part of the "employer of choice" strategy. This covers everything from the "war for talent" and approaches to win the war, skills and leadership development, investment in operational training, increasing HDSAs (Historically disadvantaged South Africans) in the workforce, health and wellbeing, labor relations and illegal strikes, and safety and security. A very detailed disclosure by all accounts.

But as this is an integrated report, I would have expected to see some correlation of the degree of investment in employee development to the business outcomes - both in terms of the incremental costs of extensive human resources activity and the expected benefits. Employee turnover has reduced significantly over a five year period; is this the result of these efforts? How does this benefit the bottom line? What about absenteeism which I can't find mention of? Recruitment costs and effectiveness? And many other aspects of business performance affected by the company's approach to human resources.

In other words, in an integrated report, I would expect to find sustainability issues addressed from a more holistic standpoint - both in terms of impacts on people and society and/or the environment, and in terms of business growth, profitability and/or achievement of critical business objectives. If I understand this correctly, this is the principle of connectivity which the IIRC framework describes as follows: "An integrated report should show, as a comprehensive value creation story, the combination, inter-relatedness and dependencies between the components that are material to the organization’s ability to create value over time." Perhaps there is room for Gold Fields and other integrated reporters to make these connections more explicitly, as a demonstration of their "integrated thinking". It seems to me that, at present, integrated reporting is still very relative: relatively integrated, relatively more integrated, relatively not integrated, relatively kind of integrated. What appears to be generally the case, is that relatively integrated almost always means relatively very-long.

Another interesting result from this survey relates to use of reporting frameworks. GRI and CDP come out on top with sector frameworks remaining in high focus. Thumbs down for UN Global Compact, however, despite its attempt in recent years to make reporting more prescriptive and comprehensive. Relatively.

The Communication of CR Reporting
The CR Perspectives survey results suggest that stakeholders who are not as close to the direct operations of the organization are less important to the reporting organization. Employees are seen as the single most important report audience, and the general public comes bottom of a long list. A majority of respondents believe that large global companies should report at different levels which could be country level or even site level.

The Credibility of CR Reporting
Aha, the best bit comes at the end. After all has been said and done, can you really believe what's in sustainability reports? And it may not surprise any of you to know that almost all respondents listed BAD NEWS as the main thing that adds to the credibility of a sustainability report. A few failure stories, missed targets, operational spills or discussion of a major screw-up is going to make your report stand out from the crowd in terms of credibility. Everyone wants bad news. If you don't have any, you may find yourself in a real sustainability reporting hole. But what company has no bad news? ) Be careful, though, you don't want to add too much bad news..... don't give your stakeholders too much of a good thing :)

Other things that support credibility are provision of data and specific targets and using a known reporting framework. An external assurance statement is the fourth element which contributes to delivering credibility. Interesting that this is in fourth place, as improving credibility is the prime purpose of assurance. Perhaps, in general, the poor quality of assurance statements we have been seeing to date, not a small number of which, in my experience, have a de-assurance effect, is the reason they are not seen to be delivering their purpose.


There are many more perspectives in the CR Perspectives survey, and perspectively-speaking, it's useful to understand the perspectives at play in our sustainability landscape. My perspective on all of this is that you should take a look at CR Perspectives. Maybe you also have a perspective you would like to offer a perspective on?

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 www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm

The proposed GRI G4 GHG Emissions draft - explained

The plot thickens. After presenting the G4 Exposure Draft available for comment between 25th June and 25th September, the GRI has now published what it's calling Thematic Revisions, for public comment between 14th August and 12th November. I think that's what they call eating the elephant in two easy slices. Of course, the CSR Reporting Blog is here and ready with our analysis of one of the two new Thematics  - Greenhouse Gas Emissions - to make your life a little easier.  The other one (Anti Corruption) will be the subject of my next post.

First, download the draft GHG Thematic document here. It's 55 pages. Get them all. You're gonna have your work cut out as you go through this document.

According to the draft, the proposed revisions align with the GHG Protocol, jointly released by the World Resources Institute and the World Business Council for Sustainable Development, and the ISO 14064 Standard. The proposed GHG Emissions Indicators are fully aligned with the GHG Protocol’s grouping of emissions into three subsets (Scopes 1, 2, and 3), as well as the ISO 14064 grouping. Energy Indicators have been modified to align with the GHG Emissions Indicators and intensity Indicators were added for both energy and GHG emissions. More about intensity later....

Specifically the draft contains:

• New disclosures and guidance for the Energy and Emissions Aspect (Environmental Category)
• Edits to Indicator EC2 (Economic Performance Aspect, Economic Category)
• Edits to Indicators EN3 – EN7 and Indicators EN16 – EN20 (Energy and Emissions Aspects, Environmental Category)
• New indicators under the Energy and Emissions Aspects, Environmental Category

Before discussing the changes in detail, it might be worth listing the new EC2, EN3-7 and EN16 -20 and new indicators proposed in this section. First point to note is that 11 indicators now becomes 13 indicators, and this includes two intensity measures, energy intensity and GHG emissions intensity. As promised, more about that later.

• CORE EC2: Financial implications and other risks and opportunities for the organization’s activities due to climate change
• CORE EN3 Direct energy consumption
• ADD EN4 Indirect energy consumption
• CORE G415 Energy intensity
• ADD EN5 Reduction of energy consumption
• ADD EN6 Reductions in energy requirements of products and services
• CORE EN16 Direct greenhouse gas (GHG) emissions
• CORE G416 Energy indirect greenhouse gas (GHG) emissions
• CORE EN17 Other indirect greenhouse gas (GHG) emissions
• CORE G417 Greenhouse gas (GHG) emissions intensity
• ADD EN18 Reduction of greenhouse gas (GHG) emissions
• CORE EN19 Emissions of ozone-depleting substances (ODS)
• CORE EN20 NOx, SOx, and other significant air emissions

So what's different? Intensity, as we've seen.  But more about that later.

GHG Protocol framework

A key difference is the clarification in definitions for energy and emissions reporting. The GRI has aligned itself with the leading carbon reporting standard - the GHG Protocol in which direct and indirect energy are classified into three scopes of emissions.

• Direct Energy > Scope 1 emissions
• Indirect Energy > Scope 2 emissions
• Other Energy > Scope 3 emissions

You probably already know this, but for those of us who are not environmental experts, it does take some getting your mind around. Scope is a classification of the organizational boundaries where GHG emissions occur.

• Direct (Scope 1) refers to emissions are created by sources owned or controlled by the organization. For instance, a coal-powered power plant which makes electricity.
• Indirect Energy (Scope 2) refers to emissions resulting from the generation of the electricity, heating, cooling, and  steam that is purchased by the organization. Scope 2 emissions occur at facilities which are owned or operated by other organizations. For example, using electricity purchased from the coal-fired power plant (probably via a national grid) is classified as Scope 2, because the emissions were generated in producing the electricity and not in your organization.
• Other Indirect  Energy (Scope 3) refers to emissions resulting from the organization’s activities, but are not created by the organization. This includes emissions from outsourced activities, such as the transportation of goods by haulage companies using vehicles that are not owned or controlled by the organization.

In other words, most companies report fuel and coal as direct energy sources and purchased electricity as an indirect energy source. In environmental reporting, the  energy source and what you do  with it is less important than where you do it. If the emissions occur in your factory, cue Scope 1. If they occur in someone else's factory, cue Scope 2 and if they happen on the bus to work or on a truck to China, cue Scope 3 (provided you don't own the bus or the truck).  

The John Lewis Partnership CSR Report for 2011 contains a good graphic that makes this all crystal clear:

Which emissions to account for: Control or Equity
The key to defining what to count is the precise scope of where emissions occur. On the face of things, it sounds straightforward, but in practice, there are two definitions are available: the equity or control method.

The control method calls for a company to account for the total GHG emissions from operations over which it has control, whether this be financial or operational control. It does not account for GHG emissions from operations in which it owns an interest but has no control. In other words, if you lease a factory, and you run it, and all the people working there are your employees, and all the materials used in the factory are sourced by you, and the final output is your products, then you have control.

The equity method calls for a company to account for GHG emissions from operations according to its share of equity in the operation. For example, if you have a 51% financial share in an operation, or even a lower financial share but full management control, you would report your emissions proportionately, according to the percentage share, and not full control.

This is an important distinction and must be applied consistently throughout the entire reporting spectrum. It could significantly change the level of emissions reported, so watch for the fine print when you are reading reports.

Alignment is Good
Closer alignment with the GHG Protocol (which is also used as the basis for CDP reporting) clearly makes sense, and hopefully will encourage greater comparability in energy and emissions reporting. At present, there are still wide variations but some do it well. ENEL, the energy company, for example, reports  for 2011 in classic textbook G4 style:

ENEL 2011 reporting EN3

ENEL 2011 reporting EN4

ENEL 2011 reporting EN16 Scope 1 Emissions

ENEL 2011 reporting EN16 Scope 2 emissions

ENEL 2011 reporting Scope 3 other emissions

Oh, did we mention intensity ?
G4 includes two new indicators relating to Energy Intensity (G415) and GHG Emissions Intensity (G417). This is a way of normalizing consumption and impacts to a common denominator which may be financial ($ of revenue), human (per person), physical (per square meter of factory or office space, or per vehicle) or per product (units sold, units produced) or, in fact, any other factor that you can imagine which is relevant to your business (or which makes your numbers look better than the absolute numbers). In most cases, my experience tells me, the intensity figures will always look better than the absolute figures - companies use more and more energy and generate more and more emissions, but on a per something basis, they proudly show a major reduction.  Take these examples:

Air China reports in the 2010 Corporate Responsibility Report on fuel consumption and carbon emissions by PTK (per ton/kilometer), stating that they have achieved "remarkable results" as they have reduced fuel consumption PTK by 6.6% in 2010 versus 2009. We do not know what the total fuel consumption was during this period.

Delhaize, the Belgian supermarket chain, shows fabulous energy intensity results per m2 sales in the company's 2011 CR Report. A 7.5% percent reduction over three years. (It is not clear whether this is all three Scopes, but I assume just Scope 1 and 2)

Delhaize 2011 reporting on emissions intensity

Delhaize does not disclose the total number of carbon emissions. Delhaize also reports to the Carbon Disclosure Project and you can access their report (after several clicks and registration on the CDP website) but you will find that the 2011 report covers 2010 data, and is therefore not comparable to the CSR Report 2011 period. After a quick calculation, I note that Delhaize absolute Scope 1 and 2 emissions increased by 3%, using 2008 as a baseline. Turning an increase into a decrease is the power of the intensity measure. This might have been achieved by increasing some prices, changing the sales mix or recording some currency adjustments and wow, suddenly the carbon emissions performance looks actually quite positive.

NH Hoteles 6th's CSR Report includes both absolute emissions and intensity rates per guest per night. Absolute emissions fell by 8.82% while intensity emissions fell by 11.9%.

What did NH Hoteles choose to highlight in its reporting narrative ? Intensity, of course.

 

 

CapitaLand's Sustainability Report for 2011 also shows a similar picture, in one handy graph.

Again, you can see that on an absolute basis, there is an increase of emissions by 39% since 2008 but intensity on a square meters basis reduces by 11.1% since 2008. CapitaLand's emissions target is an intensity target reduction of 20% by 2020, but there is no absolute target.

BT uses yet another model for calculation of emissions intensity and that is emissions per GBP million value added - which is EBITDA plus employee costs.  This formula is what BT has called its Climate Stabilization Intensity Target - a measure of carbon emissions in relation to its (financial) value added as a company and the contribution it makes to a country's GDP. Hmm. Make more profit, improve your carbon emission performance. BT's absolute emissions reduced 53% versus their 1997 baseline, and intensity improved by 61%.

What would be interesting to know is what specific factors contributed to this intensity improvement. BT report that they have improved energy efficiency, invested in renewable energy generation and purchased low-carbon energy. Wonder how much of what went into that 61%? And how much was a change in profit and employee costs?

Ericcson, on the other hand, report a different type of intensity. According to Ericcson's 2011 CSR Report, the carbon dioxide emissions associated with the lifetime operation of delivered products totaled approximately 24 Mtonnes in 2010. This is the measure used for carbon intensity. Don't worry about the fact that while carbon intensity was reducing every year, absolute emissions were increasing by 8% between 2008 and 2011.

Procter and Gamble have a lofty goal, stated in the P&G 2011 Sustainability Report: of powering their plants with 100% renewable energy. In the past few years, however, total carbon emissions (Scope 1 & 2, Scope 3 is off the radar) have increased  by 5% in 2 years. This doesn't prevent  P&G from proudly displaying the intensity figures:

As you can see, P&G refers to intensity per unit of production. Hmm. Now would that be a 5kg pack of washing powder, or a tube of Crest toothpaste, or a pack of Eukaneuba for dogs Denta Defense®, a type of micro-cleaning crystals that help reduce tartar by up to 55%?

Enough of intensity. By now you get the picture. Carbon emissions can be normalized to practically anything at all, depending on what a company wants to manage or what it wants to show to the world. In almost every single case you can find, intensity measures will always beat absolute measures. If only the planet would respond to intensity and become more sustainable. If every company were emitting carbon emissions relative to the number of expense claim-forms submitted, or the value of bottle-caps sold or the number of emails sent per hour, we might find carbon reporting much more interesting but it would hardly be saving the planet. If only we could become more sustainable by becoming less intense.

Why would the GRI choose to add two intensity measures to the G4 reporting framework? The GRI says this: "In combination with an organization’s absolute GHG emissions, disclosed with Indicators EN16, G416, and EN17, GHG emissions intensity helps to contextualize the organization’s efficiency, including in  relation to other organizations."
 
Normalizing energy consumption or carbon to financial values - turnover, sales or profit - or to other operational values - may be a way of comparing the performance of companies of different size in a similar sector. The carbon footprint of a cellphone is comparable whereas the manufacturers of cellphones may be very different in size and scope of operation. This might help investors (the ones who understand) to make decisions. Similarly, whatever the normalization factor, if a company consistently uses this to benchmark its own performance, it can be a management assessment and decision making tool. However, the trick is in the selected normalization factor. If such a factor has no direct relationship to whatever causes or influences the level of emissions, it may simply be a way to present good-news numbers. If my operations are the same size and my turnover increases because of a price-hike, or a change in currency exchange rates, I may still be generating equal or more carbon emissions but all of a sudden, my intensity plummets. We will have to be vigilant of the way that intensity measures are used in reporting, and ensure they are never  a replacement for absolute measures.

Some Less Intense General Points
The environmental disclosures as with, I think, all other disclosures in the proposed G4 framework are not time-specific. This means that the reporting company could report data only for the declared reporting period. I believe it would make sense to require organizations to present 5 years data on these critical data points. Of course, those who do not have 5 years data cannot do this. But of the many companies who have been producing sustainability reports over the years do have the data available (and several already include this). As we look at sustainability with a long-term lens, it is often frustrating when companies report only current and prior year data. We should require a little more perspective in G4.

Similarly, I believe that the G4 could be tightened up by requiring explanations of how performance has been achieved. For example, it would make sense, if energy consumption has decreased by 20%, to know what the organization has done to reduce this. The G4 proposals  in the updated EN5 (Reductions in energy consumption) and EN6 (Reduction of energy requirements in products and services) require listings of the reductions achieved but not a full explanation for HOW they were achieved. Adding such information would be helpful both for internal review and for external stakeholders. Companies who have made serious efforts to reduce carbon emissions should be able to say what actions caused the reduction. Unless it was all a lucky strike!

The Last Word (it's not intensity)
Overall the new GHG Reporting Thematic Revision tightens up environmental reporting and makes several aspects both clearer and less overlapping. G4 also ups the stakes a little (a lot). The G4 framework requires reporting on all three scopes of carbon emissions as core indicators (EN16, EN17, EN18). This is also the case in G3 (EN16 and EN17), but in G3, companies had the option to report at Application Level B or C, reporting Scope 1 and 2 emissions under EN16 and avoid Scope 3 emissions in EN17. With G4, every company which includes climate change as a material issue will be required to report all three Scopes in order to be In Accordance with the G4 framework. Sounds like there's gonna be a lotta scrambling around for data going on, and suppliers of goods and services to In Accordance reporters are going to feel the heat.

Whew! Glad that's covered. I hope  Anti-corruption is not so complicated. Watch this space.
   

 

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen   on Twitter or via my business website www.b-yond.biz (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

GRI + CDP = headache

Being an Organizational Stakeholder (OS) of the GRI, along with all the other OS, I get advance updates of new things such as ... publications.

This time it's a GRI publication which explains the link between the GRI FRamework and the CDP which answers the question: How do the Global Reporting Initiative Reporting Guidelines match with the Carbon Disclosure Project questions?

The purpose is to provide a tool which will make the reporting process more efficient for reporters.

This is of course an important connection. The CDP is fast becoming the global standard for carbon reporting, just as the GRI has become the global standard for sustainability reporting. Over 3,000 organizations in some 60 countries around the world now measure and disclose their greenhouse gas emissions and climate change strategies through CDP. Understanding the way these two frameworks link together has probably not been a key element in sustainability report planning to date, but as most leading companies are now doing both, it is perhaps an interesting idea to try to address the CDP requirements through the sustainability report (just as many sustainabilty reports include the UN Global Compact Index). This is another building block in the complex attempt to achieve harmonization, which is a key consideration in the new G4 guidelines development.

The new Bayer Sustainable Development Report for 2010  (just profiled on CorporateRegister.com) has a reference to Bayer's CDP submission which is hyperlinked from page 27 of the report.

I tried to make a quick comparison between the CDP submission and the Sustainability Report using the new GRI linkage table in the document. I went to a simple comparision. GRI EN4 should be CDP 12.2.

In the Bayer Sustainability Report (page 56, table 16) direct greenhouse gas emissions is stated as 4.57 million metric tons of CO2e. 

In the CDP submission, total gross Scope 1 emissions is stated by country, so I added it all up and it comes to 4.57 million metric tons (which is actually the answer to CDP 12.1.) but compares with the direct emissions stated in EN4. So that makes sense.

However, CDP also appears as a correlation with EN3, which compares with CDP 12.2 and 12.3. But when I tried to find CDP 12.3 in the Bayer CDP submission, it was not there :). It looks like it had been cut off in the conversion of the form to PDF format. Funny.

Anyway, there seems to be some connection! However, this linkage document only works one way - if you first look for the GRI indicator and want to know what is the corresponding CDP question. Actually, I would have thought that it would be  useful to have this both ways, as more companies report to CDP than they do to GRI and  CDP disclosures may be a preparatory step ahead of full sustainability disclosure. Reporters may wonder what they need to include in their Sustainability Report to make it also CDP compatible (even if they still have to fill out the CDP form separately).

Therefore, if you want to check this out as you prepare for your own GRICDP Report, here is my distillation of the GRI Linkage Report.

EN16, by the way, in the GRI Framework is: Total direct and indirect greenhouse gas emissions by weight. Here you can see the level of detail in the CDP disclosures versus the GRI indicator and an indication of the complexities of harmonization. The comments provided in the Linkage  document attempt to shed some light on the detailed differences.

However, until the G4 becomes reality, assuming it does manage to integrate different reporting frameworks successfully, harmonization is still a big stretch.



elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices   Contact me via www.twitter.com/elainecohen  on Twitter or via my business website www.b-yond.biz/en  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)