The new GRI 3.1 guidelines explained

One of the big advantages of being an Organizational Stakeholder of the GRI is the opportunity to attend no-charge webinars on diverse and interesting aspects of reporting. Sometimes the webinars are corporate Sustainability Officers presenting their experience of the challenges, successes, best practices etc of reporting, and sometimes it's the GRI expert staff providing news and updates. I try to attend every one and blog about as many as I can, time permitting. It's almost worth being a GRI Organizational Stakeholder just for these webinars :)

This week, I was online with Letshani Ndlovu and Bastian Buck of the GRI as they walked us through our paces on the new GRI Technical Protocol and the updated 3.1 Reporting Guidelines.

The new GRI Technical Protocol

The Technical Protocol (TP) was created to provide process guidance on how to define the content of a sustainability report. This includes deciding on the scope of a report, the range of topics covered, each topic’s relative reporting priority and level of coverage, and what to disclose in the report about the process for defining its content. In defining content, we all know by now that "materiality" should be a prime consideration. The TP gives a detailed explanation of materiality, starting with: Material topics for a reporting organization should include those topics that have a direct or indirect impact on an organization’s ability to create, preserve or erode economic, environmental and social value for itself, its stakeholders and society at large. Why is this important? Because: Sustainability impacts create both opportunities and risks for an organization. The ability of an organization to recognize opportunities and risks, and act effectively in relation to them, will determine whether the organization creates, preserves or erodes value. Each organization defines its own material issues, using feedback from stakeholders as well as internal and external scans of sustainability impacts.

Defining the reporting content is an "iterative" process which can be shown in the following diagram:

For details of how to apply all these stages, download the Technical Protocol from the GRI website. Note that the TP is an advisory document and supports reporters in providing responses to Profile Disclosure 3.5: "process for defining report content". This assumes, of course, that a reporting company uses a process to defining reporting content... and strange as it may seem, most do not. The TP should help companies move away from "shopping-list" mentality to a "what's material" mindset and guide reporting content accordingly. A defined approach should be used for prioritizing material issues and this should be "systematic, documented and replicable, and used consistently from year to year. Changes to the assessment approach, and their implications, should be documented." This should also help those providing assurance for Sustainability Reports. Note that the TP is a supporting document and does not directly influence the assessment of the report's Application Level.

The new 3.1 Guidelines

The 3.1 guidelines are a stepping stone to the big promise of G4 in 2013 and address just three specific aspects of the current G3 framework relating to: community impacts, human rights and gender equality.

Community impacts:

This replaces the former SO1 performance indicator with three new ones which refer to (1) the percentage of operations with implemented local community engagement, impact assessments and development programs, (2) those with significant actual and potential negative impacts on communities and (3) prevention and mitigation measures to address these negative impacts. The assumption is that everyone is always delighted to report about positive impacts (yes, we know!), so requiring reporting on negative impacts balances up the picture.

Note that the GRI does not define performance indicators for community investment in the form of strategic philanthropy, donations, pro-bono support or employee volunteering programs. Actually, this is one of the most commonly found elements in Sustainability Reports but the GRI does not consider this to be related to the core business model. Bastian Buck explained that these aspects are an "add-on" and therefore not an essential part of a sustainability program. I recently performed a benchmark study for a client on community investment reporting by 12 large companies in the hi-tech sector (more about that in a future blop), and it is notable that this is (a) always reported and (b) vastly inconsistent in the way it is reported.  I disagree that this is not core to a company's business model. Community investment is I believe quite a strategic element of sustainability programs, serving to help companies get closer to stakeholders, enhance reputation and most significantly, attract, retain, develop and engage employees. Even if the GRI does not consider this as material as the negative impacts, the fact is that every reporting company wants to report about this. Why not make the GRI framework a little more accommodating and provide guidelines and indicators for reporting on these issues as well? 

Human Rights impacts: 

The updates in the Human Rights section of the GRI Guidelines are based on the work of John Ruggie, the UN Special Representative on Business and Human Rights and his "Protect, Respect, Remedy" guidance. Several of the framework Management Disclosures have been updated to reflect this new thinking on Human Rights and two new indicators (HR10 and HR 11) have been added relating to (1) the percentage and total number of operations that have been subject to human rights reviews and/or impact assessments and (2) the number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms. The methodology for conducting human rights assessments is not prescribed, leaving companies to decide for themselves what a human rights assessment actually is and to what extent due diligence should be applied. Is a human rights assessment sitting round a table at HQ discussing potential issues or is it a third party verified audit of all human rights risks in all parts of the supply chain? Reporters will have to work this out for themselves, but I feel that new 3.1 indicators could have been a little sharper in their requirement of minimal accepted good practice in defining and assessing human rights impacts for reporting purposes. 

Gender Equality:

The focus here is on non-discrimination against women and the advancement of women's rights. There has been much work done in recent years relating to women's rights which are enshrined in internationally accepted basic human rights documents and are internationally recognized as being fundamental to sustainable development. Yup. We agree, don't we gals? The 3.1 framework includes several changes to Management Disclosures to include more specific reference to gender equality, an update of LA14 Performance Indicator (this has been updated to refer to salary AND remuneration ratios between men and women, rather than just salary alone, recognizing that there can be major differences between the two), and a new Performance Indicator LA15 which covers return to work and retention rates after parental leave by gender. What constitutes "return to work" and "retention rate" is left to companies to decide. However, much of the complexity here is precisely in the nature of these definitions: Does return to work mean return to the same of similar job with the same prospects for advancement? Does retention rate mean one month, three months, one year or more after returning to work? In response to LA15 we will need to be aware of the small-print nuances in gender equality accounting and whether meaningful measures are used as a basis for reporting.

The 3.1 guidelines are available now (download here) but they will not become mandatory for the declaration of report Application Levels until they are incorporated into the new G4 which will replace G3. In declaring a reporting level, companies will be able to choose to continue to report against G3 or step up their game and report against 3.1, but in either case, A, B or C Application Levels are available.

 
Confused? No Problem. All you need is a good consultant :).

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)

33 reasons to attend a conference on reporting

The  main reason I attend conferences is to keep up to date, learn new stuff and gain new insights from inspiring people doing inspiring things. Of course, networking is a big bonus, and more and more these days it's about meeting people face-to-face after months or years of positive interaction on social media, as well as catching up with those you have not seen in a ling while. As plan my trip to the UK later this month, I thought I would share my 33 reasons for attending the Justmeans Redefining Value: Integrated Reporting and Measuring Sustainability Conference in London on 25th March 2011.

33. The Agenda looks great
32. It's about sustainability reporting.. my favorite subject in the whole wide world (sorry Chunky Monkey)
31. I haven't been to a Justmeans conference before, and it's about time I checked them out
30. Some of the great thought leaders in sustainability and reporting, and sustainability reporting will be on stage - Wim Bartels, Thomas Conde, Toby Heaps, Judy Kuszewski and more
29. I am interested to hear what Niels Christiansen, Vice President of Public Affairs, Nestle S.A, has to say, given Nestle's sometimes not so comfortable positioning in the media.
28: It's in London, a very convenient location and the home of fish and chips.
27. There are plenty of breaks to download emails whilst networking.
26. The winners of the Social Innovation Awards will be announced. I always like a scoop!
25. I will be interested to hear Carsten Ingerslev, Director, Danish Government Centre for CSR, given Denmark's prowess in so many areas of sustainability including mandatory ESG reporting.
24.Maybe they will serve ice cream in the breaks.
23. The venue is close to Oxford Street. Yeah! Shopping.
22. The GRI, CDP and A4S will be updating us on the State of Reporting. Three leading lights.
21. I won't have to make dinner for the kids.
20. I won't have to make dinner period.
19. The attendance list reads like the top 100 corporate citizens list.
18. The venue is corporately responsible
17. This line is intentionally left blank.
16. The Social Innovation Awards shortlist is intriguing.
15. I happened to have March 25th free.
14. Integrated reporting is a complex topic and thinking is evolving. It's important to be where integrated reporting is being discussed. Every voice counts.
13. I can't attend the pre-conference workshop so the conference will be my compensation.
12.I am looking forward to watching everyone tweeting from the conference (what was that hashtag again?)
11.The conference promises to showcase best practices from companies at the forefront of reporting. Who would want to miss that ?
10. You never know, there just might be someone attending who is looking for a great Sustainability Reporter to help them write their next Sustainability Report. (Darn! I told myself I wasn't going to plug the services of my company, Beyond Business, in this post. I always had a problem with self-discipline.)

Keep going. Only 9 more to go. I saved the best till the last.

9. I get to meet up again with Martin Smith, the Justmeans mastermind.
8. It's something to do before my flight back home.
7. I am hoping to meet many co-#CSR-tweeps. #CSR tweeps are fabulous.
6. The conference is on a Friday. That means we can #FollowFriday it.
5. It's something to tell the folks back home about.
4. Do you really think they will serve ice cream in the breaks?
3. I will have lots of material to blog about.
2. It sounds like fun.
1. It's gonna be a blast.
0. I have the opportunity to be really generous and pass on a substantial discount to just a few people who register quoting a secret code that I am able to reveal to a few lucky friends. (If you also have 33 reasons to attend this exciting conference, just drop me a line and I will see what I can do.There are just a few places still open).

If you are at the conference, please come and say : Hi Elaine, how about ice cream?


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)

Measuring socio-economic impacts : new report

Social and Economic Impact : Measuring Evaluation and Reporting. A must-have guide for companies operating in vulnerable communities. This is the title of the fascinating new research paper written by Peter Davis and published this month by Ethical Corporation, and which I promised to blog about when released. Now it the time to deliver on that promise :)

Ethical Corp sent me a free review copy but they didn't tell me (or ask me) what to write.

"Corporate interest in socio-economic impact is increasingly driven by much more important drivers than simply external reporting. Certainly reporting remains important, but more and more companies are realising that understanding socie-economic impact - the interrelationships beteen the company and the societies in which they operate - is also a vital tool for strategic and operational management and decision making."

This quotation from the introduction to this study of socio-economic impact proves that it's not just about numbers for numbers sake. It's about deriving value from measurement and reporting. This is quite heartening, despite the fact, as is also mentioned in the report, that at present, there is only a very small pool of (primarily large) companies who even get close to the level of measurement and reporting that actually delivers value. However, the authors of this report point to a fundamental redefinition of the role of business in society and the engagement of business in what otherwise might be known as "development projects" (as the NGO community tends to refer to them) such as poverty reduction, healthcare and human rights.

The report was developed using data from a wide range of sources including a literature review, 2 anonymous surveys of CSR professinals and practitioners (116  and 50 respondents), a round table discussion atended by 100 experts, review of 60 MNE's CSR communications and reporting and around 30 telephone interviews with key CSR practitioners. Enough to get a good overview of the key issues, I would have thought.

The report identifies four models of socio-economic impact monitoring:

Meeting global standards - selecting which performance indicators to measure, eg. the GRI

As we all know, there is a plethora of external standards and indicators used by companies ranging from the loosely structured UN Global Compact, through various specific initiatives and indexes such as DJSI, CRD Global 1000 and more, and culminating in the  "ubiquitous" Global Reporting Initiative which claims that over 1,500 companies use its framework. Most companies use some sort of framework in deciding how to measure and report their social performance and economic impacts. There are upsides and downsides to this approach, described in the report.

Managing supply chains - standards which govern labor and procurement such as Sedex

This tends to be prevalent in apparel, coffee, tea, timber, chocolate and footwear industries, to name but a few, with a focus on human rights rather than wider economic impacts. There are well known frameworks including the ILO Labor Conventions and others which address these issues, with auditing being one of the most widely spread tools. Sedex offers a plaform for inputting audit data so that customers can evaluate the manufacturer's performance in this area.  A case study from Nike described in the report helps understand the implementation and issues surrounding such auditing processes. Another case in point is the recent hullabaloo around the Hershey's cocoa sourcing supply chain, which you can read in my blop here, and the supply chain sourcing standards established in this industry sector.

Assessing integration into the local community -  such as the Anglo American SEAT toolbox

This type of assessment tends to be used by companies which have a strong socio-economic footprint in a particular geographic area and is particularly relevant for the extractive sector. The report cites the Anglo American Socio-Economic Assessment Toolbox as one of the best-known tools to help companies understand their local impacts. In addition, a number of multi-stakeholder partnerships operate in specific sectors or industries to ensure consistent development of standards, management of expectations and a sort of level playing field for all. The report assigns primarily a commercial interest to the development of this type of assessment becuase the proximity to local communities creates a kind of interdependency which is critical to the success of the project or venture.

Contributing to social and economic development -Unilever in Indonesia or Heineken in Rwanda 

This type of assessment is rare, and adopted by companies who have a sustained long-term interest in coutries or territories in which they operate. Unilever, Procter and Gamble, Vodafone  and Heineken are cited as examples in this area. Heineken for example employs 1,000 people directly in Rwanda but estimates that its activities in that country provide employment for over 35,000 people. This is a significant level of influence and Heineken has developed a tool to help them understand their impacts in more detail which is discussed in this report. You can also read about this in Heineken's Sustainability Report.

One of the things that surprised me in this report is the assertion that, whilst there are various states of play in measurement and evaluation of socio-economic impact by the corporate players, as mentioned above, there is much greater discipline and advancement in this area by the NGO community, including the DCED Standard for Results Measurement in Private Sector Development programmes, which focuses on the scale  of initiatives, the increase in income by the targeted enterprises and the net additional jobs created. This seems to be a very interesting tool, though the extent to which  it is effectively used is not quite clear to me. Other frameworks such as the WBCSD model which was published in 2008 are also discussed in some detail. The use of these tools in the corporate sector is extremely fledgling, though there may indeed be some relevance to the argument  that there is learning to be gained from NGO's in this area.

Some of the key findings which are quoted in the Summary Report which can be downloaded free from the Ethical Corpporation website include:

67% of 116 corporate sustainability professionals who responded to an Ethical Corporation survey said their company “measures social and/or economic impact of their business on the communities where they operate”

 

73% of respondents indicated that communication of their business impacts is one of the main reasons for conducting the studies. 71% of survey respondents said that the results of impact studies directly affect their

business strategy.

What are the things most companies are measuring ?

The summary report also covers some practical information which gives some benchmarking value to practitioners as they decide to embark on their own impact study. 30% of those who have performed such studies confirm they are not a five  minute job, but take longer than 20 days to develop. (This surprised me, I would have thought that any serious study would take significantly longer than 20 days!) . 28% pay $10,000 or less for such a study, and 18% pay between $30,000 and $100,000 (40% didn't spill the beans).

All in all, this 55 page report provides a very interesting overview of most of the key points in this vastly complex area of CSR and Sustainability practice, which is growing in importance. To quote the report, "Where the leaders lead, others follow", and there is no doubt that some of the advanced practices by the more forward-thinking companies are catching on. The report offers suggestions as to the directions this enitre field of  activity is taking and some recommendations for those thinking of developing their own practices. It's a good piece, informative, thought-provoking and educational. I personally gained important new insights from this report. I hope many companies will do also.  

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, 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  CSR consulting and Sustainability Reporting firm)