Reporting is fun with Virgin Media

I have long been an admirer of Virgin Media's approach to responsible business, sustainability practice and reporting. It's smacks of personality, completely fits the brand presence and uses plain language and a range of creative mechanisms to get the message through, equally targeting the internal employee population and the customers who use Virgin Media's services, as well as others who are interested, including me, a reporting geek. (I'll disclose that I have worked with Liberty Global, Virgin Media's parent company, on Liberty Global's global reports over many years, but I have not worked directly with Virgin Media.)

This year, Virgin Media's Sustainability Performance Report for 2019 is a wrap-up of five years of consistent implementation of the strategy the company set for itself in 2015, based on a concept of five goals in five years. 

Today, in 2020, Virgin Media has achieved four of the five goals, and made important progress on the fifth. Let's have a quick look at some of the milestones on this journey.

 

I took the opportunity to pose a few short questions to Katie Buchanan, Virgin Media's Head of Sustainability and the mastermind of the five year strategy and implementation. 

ME: Remind me how you developed your 2015-2020 strategy. You describe it as focusing “on where we should and can have the most impact”. 

KATIE:  Before we developed our 2015-2020 strategy and our 5-in-5 goals, we had relationships with 31 charities and 25 sustainability targets. It meant our work wasn’t focused and we weren’t able to make a significant impact – both inside our business or with the communities we operate in. That’s why I took the decision to simplify to achieve a more significant social impact. I knew that if we achieved these big goals we would transform our business and people’s lives. And by having a more targeted approach, it gave us the head-room to focus on creating lasting impact, and I’m really proud to say we’ve done that.

 

ME: How did you determine what “the most impact” is? How was this strategy developed?

KATIE: When setting our 5-in-5 goals, I went through a lengthy process to determine the right areas of focus. This involved listening to our customers, people and experts to identify what was most material to our business. The idea of exploring digital as an enabler became our vision (‘digital that makes good things happen’) and ‘independence’ emerged as the top theme to address. We then identified disabled people as the audience who could benefit from this combined focus. Importantly, we also looked at how we could have the greatest impact with our brand, connectivity and UK-wide footprint: our strategy had to have our core capabilities at its heart and be authentic to our brand. 

ME: What has been the impact for the disabled communities you have supported?

KATIE: Five years on, with our Transforming Lives goal, I’m proud that we are on track with our charity partner, Scope, to support 1 million disabled people with the skills and confidence to get into and stay in work by the end of 2020. We’ve also taken steps to become a better employer of disabled people, such as offering dedicated training for our line-managers so they can better support disabled colleagues and, via our #WorkWithMe programme, we’re supporting businesses across the UK to become better employers of disabled people too - creating an online community where peers can learn disability employment best practice from each other. This goal has helped us achieve positive social change for disabled people across the UK – whether they're looking for employment or are employed via Virgin Media or other brands.

ME: Well done on nailing four out of your five 2020 goals. Which of these gives you the greatest satisfaction and why? 

KATIE: There has been a lot of work over the past five years that I’m really proud of. One of the biggest highlights has been how we’ve taken Virgin Media’s sustainability programmes mainstream, from donating our shirt-sponsorship of Southampton FC to Scope for two Premier League matches, to seeing our Chief Operating Officer, Jeff Dodds, take to the stage at One Young World conference. I am also proud of how we’ve engaged and supported our people. For example, we have created a unique product scorecard which is a practical guide for enabling teams across our business on how to make each of our products more sustainable than the last. For our example, our Hub 4 router is 39% more power efficient than our previous hub when in use (when adjusted for functionality), and it uses 36% less plastic. In addition, our ‘squad selector’ tool – which we created in 2018 - helped our employees to understand how they can get involved in sustainability in their everyday roles. We’re a small but mighty team whose work is having an impact across our business – from our Board to our engineers. 

ME: The one goal you did not fully achieve was being more inclusive, focusing on gender and disability. What’s the learning from this as you move forward into the next phase? 

KATIE:  Although we didn’t quite achieve our ‘inclusion’ goal, we actually had a greater impact on driving positive change in this area thanks to our work with Scope, which took us in a more focused direction. Our #WorkWithMe programme – launched two years after we set our inclusion goal – has helped transform the lives of disabled people, and improved the way Virgin Media and other big businesses employ and support disabled people. Ironically, it’s the one goal we didn’t achieve that has perhaps given me the greatest satisfaction. Under this goal we’ve driven lasting positive change both inside and outside of our business despite not quite hitting the mark. In terms of moving forward, here is the learning I’ll carry forward: 

# Partnerships power change: We’ve made huge progress on transforming our business for disabled employees and customers. While there is more to do, a lot of this success is down to our partnership with Scope. I think we have achieved this by leveraging their skills, so I think our future inclusion strategy will include partners who can help guide us and hold us to account as deep subject matter experts 

# Long term focus: We need teams that have difference and togetherness, this is not only the right thing to do but it helps us to drive business growth. But it takes time. Setting goals that give you the ability and time to get underneath an issue is important. Significant change does not happen overnight especially when a culture change is required. 

# Make it part of your everyday: The way we talk about sustainability or inclusion matters. We’ve worked hard to make it something everyone can understand and get behind (i.e. no jargon). It’s not something that the People team or Sustainability team is responsible for – enabling your people to know how to get involved and take part is important. The same goes for finding opportunities to talk about our work – we took disability to the Premier League through our Shirt Swap donation activation. Going forward we will continue to find ways to make these thorny issues part of the everyday. 

ME: You deliberately deliver a report that is fun, creative, uses everyday language... one that can appeal to your employees and consumer base, as well as other stakeholders. In developing your 2020 strategy, did you also have a reporting strategy? If so, what were the objectives for that and how did you do?

KATIE: We have consistently evolved our reporting – we’ve gone from disclosure, to engagement and now enablement. We want to make sustainability accessible for everyone – our people, customers or other industry professionals. That’s why we introduced the world’s first 360° corporate sustainability experience, had a football-themed report, and have used funny cat GIFS. Our reports not only focus on the "what" we’ve done’ but also the "how we’ve done it" as we want to show that sustainability storytelling can be engaging, insightful and fun. 

ME: And digital is a big part of your reporting strategy, right?

KATIE: Yes, absolutely! Over the past decade, we have embraced digital storytelling so the reporting of our performance is accessible. It’s my vision that we use our reporting as an opportunity to engage with all of our people in order to bring them along with us, as of course, everyone has a role to play in ensuring we operate as a responsible business. In addition, we want the report to engage AND enable our industry colleagues so they can take our learning and make a positive difference in their organisations, too. With this 2019 report, we’ve incorporated our team’s reflection on our performance as we want to share our learning with other industry colleagues. We’re encouraging other sustainability professionals to learn from our tips and slip-ups so they can apply them in the delivery of their own sustainability strategy, or consider them as part of their own strategy setting exercise. Also, we make a real effort to ensure our reports are clear and understandable as sustainability should open to everyone. We don’t want our report to passively live on a webpage – we want to use it as a tool to connect with our audiences, and drive environmental and social impact in the same way our core strategic programmes do. Ultimately, nobody wants to read an 80-page document, and we as sustainability professionals have a role to play in engaging and enabling our key stakeholders – whether they are employees or customers. People are increasingly becoming in tune to sustainability issues – from protecting the environment to how you treat your employees. Therefore, we aim to enable people to engage, understand, learn and act from our reporting.

 

ME: Can you explain your choice not to follow a widely-used reporting standard such as GRI? 

KATIE: We follow the principles of GRI reporting – for example transparency and a clear governance framework is incredibly important for underpinning our strategy. Our parent company Liberty Global takes responsibility for standards such as GRI, DJSI and CDP etc. We work very closely with them – for example they lead the data collection and assurance approach with KPMG. Our efforts (and budget) at Virgin Media go towards engaging and bringing to life our story for our people and our customers. I have a small (but mighty) team and know that this combination is powerful – we have the best of both worlds! 

ME: And the question everyone is asking right now, the COVID-19 differential. How do you think the COVID19 experience will influence your sustainability strategy going forward?  

KATIE: As a company we’ve been working really hard during the pandemic to provide the best connectivity – whether that’s to support NHS workers on the front line or to help our customers stay connected to the people they love – which is more vital now than ever. We’re in the process of setting our next five year sustainability strategy and connectivity is at the heart of it. We are looking at how we can use our connectivity to connect communities across the UK. The past few months have been horrific for many, yet, we’ve seen communities come together and people looking out for one another – something that we’ve not experienced for decades. So we’re assessing how we can harness that as we know that life will be different once the pandemic ends and communities will need businesses to play a role in supporting them. We want to be in that space and it’s a really interesting time for my team and I as we develop our plans. Stay tuned! And when it came to reporting, there was never a question in our mind about delaying reporting this year. It’s business as usual, perhaps more so than ever for Virgin Media, as we work really hard to keep communities connected. Working virtually hasn’t changed our ability to wrap-up our five year strategy in a way that our people can particularly be proud of. But we have made some adjustments, for example, our videos and GIFs have been filmed at home – rather than out and about – in order to keep people safe. 

 

ME: Finally, your top three tips for people writing sustainability reports? 

KATIE:  

# The ‘how’ as well as the ‘what’: As mentioned earlier, we have embraced digital storytelling for a more than a decade. From hand-held video cam recordings (before smart phones were around), to the world’s first 360° corporate sustainability experience, a tool to show our people their role in helping us to operate a responsible business, to sharing funny GIFS - we want to make our reporting is accessible and enjoyable for everyone. Therefore, it’s equally important to think about the ‘how’ when highlighting your performance, as well as ‘what’ you have done. 

# Sustainability for all: Reporting your performance should be engaging, insightful and fun. Ultimately, nobody will read an 80 page PDF – so really focus on the design, language and length of the report. Reports should be aimed at your customers, employees, and as a tool for your peers to take learning. As sustainability professionals, we are all striving to create an impact with our work and we should be proactive and proud to learn from each other – which ultimately will have a positive effect on where we work and the communities we serve. 

#  Think about your audience: Establish the principles which are unique or fundamental to your brand (I call them your consistency compass). Ensure your communications are authentic and engaging. Understand who your key stakeholders are and how they want to consume information.

******

These are amazing insights from Katie and both strong performance and commitment to transparency with the delivery of the five in five strategy. As you will have read, Katie stresses that reporting should be engaging, insightful and fun. And, I fully agree. Sustainability information should be accessible, in language that people can relate to and it has value in teaching others in the industry about what can be done. I always talk about reporting as an empowering experience, and I think Katie demonstrates how this can work optimally. 

And there's another insight here that's so important. As a part of a global organization which takes care of the more formal disclosure elements of transparency (reporting to GRI Standards, CDP submissions, engaging with sustainability indices such as DJSI and rankers and raters), the local business can focus on making it happen in its own unique way in its own unique context. This is a wonderful example of how a global organization can be super-relevant and less constrained by formal frameworks and language at the local level while managing resources efficiently across the enterprise. This is a model that any global business can apply, and some do so very well. I have always loved, for example, Heineken's Message in a Bottle, and Intel Israel has for years published a local report with a similar approach of local relevance backed up by the formal disclosures of the global parent company (disclosure: Intel Israel is a client). 

At local level, reporting is not just about transparency, it's far more about empowerment, impact, and, as Katie says, enablement. Reporting is not just a report. The Virgin Media journey is proof. 

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Owner/Manager of Beyond Business Ltd, an inspired Sustainability Strategy and Reporting firm having supported 100+ client reports to date; author of three books and several chapters on Sustainability Reporting and the Human Resources connection to CSR; frequent chair and speaker at sustainability events and judge in several sustainability awards programs each year. Contact me via Twitter , LinkedIn or via Beyond Business

GRI Standards: And Now For The Fine Print

If you have read all my posts on the Exposure Draft of the new GRI Universal Standards in this past fortnight, you are probably more boggly-minded than I am, and GRI Standards overload may have caused you to deplete all your stock of mint choc chip ice cream. I am predicting an ice cream world shortage as people start delving into the Exposure Draft and considering their positions. But don’t worry, we can always move to frozen yogurt as a stop gap. And, you will be pleased to know that this is the last post in this series, so you can get back to Netflix and home schooling.

A quick recap of what we covered so far:
Shape up or Shape Out: An overview of the proposed changes with a focus on the new In Accordance rules
Human Rights Quadrupled: A look at the way human rights have infiltrated the GRI Standards better than than stray cats in a fish farm
Materiality: You've been doing it all wrong: Description of the new materiality definition and its implications
Governance Galore: An overview of the way governance now governs
Sector Standards: Back on the Map: The re-entry of sector differentiation to underpin material disclosures

And if that's not enough, here is the fine print. This post will cover a few changes that I thought were a little odd, outside of the main changes I have highlighted so far.

Disclosure Requirement A-7: Provide a statement of use
This In Accordance mandatory disclosure requires reporting organizations to include a statement from someone on the highest governance body or most senior executive, using the wording in this example:
“The Board of Directors (or CEO) acknowledges responsibility for the following statement of use: The information reported by ABC Limited for the year ending 31 December 2020 has been prepared in accordance with the GRI Standards.”

In other words, the Chair or CEO must confirm that the report has been prepared in accordance with the GRI Standards. What’s the purpose of this? Isn’t the CEO statement that is a mandatory part of the report enough of an endorsement? I can understand a statement that requires the CEO to accept responsibility for the information contained in the report as an accurate reflection of the organization’s impacts and performance. Why make it about adherence to GRI Standards? Is it really expected that CEOs will go into detail about the way the Standards have been used? If this type of statement is required, then the Reporting Manager or Sustainability Lead should sign off. Or the assurers – isn’t that what they are paid for?

GRI virtuoso Bastian Buck, Chief of Standards explained:
BASTIAN: “There are a couple of trends here, and honestly, we are not sure if we have landed in the right place with this one – the GSSB has discussed this issue at length and would like to hear from stakeholders on this. GRI-based reporting is increasingly regulated in different ways, for example, for listing on Stock Exchanges. Many jurisdictions are using GRI as recommended options for compliance with reporting requirements. Stakeholders and regulators want to know what this means and whether company’s GRI reporting is living up to expectations. They want clarity that the reporting standards have been applied in the way organizations promise, including application of the reporting principles and disclosure of material impacts. This Statement of Use requirement is modeled after what other standard setters have done. Often it can be achieved through the involvement of a third party who performs all the checks and enables the Board or CEO to make such a statement. But I agree this is an area where we need more discussion. There was not 100% consensus on this. On the one hand, we need to respond to the expectation of regulators; on the other hand, we do not want to overburden reporting companies with disclosure that does not add value.”

My view is that if a company is publishing a report, the CEO, who reports to the Board of Directors, must stand by the fact that this report is published in their name and that the claims made in the report are accurate. The CEO introductory message, which is part of the report, reinforces the CEO’s accountability for the report content. I do not think we need the CEO to say: “Just in case you were wondering, we have done what we claimed to have done.”

The contact point has disappeared 
In the current GRI Standards, Disclosure 102-53 requires the organization to state a contact point for questions regarding the report. The new Universal Standards Exposure Draft removes this. I found this really weird. Reporting is an engagement tool. Surely reporters must provide a channel for engagement - somewhere to direct your inquiries to? I occasionally write to companies about things I notice in their reports, and I do so using the contact point they publish. More often than not, I get a response.

Now, some companies offer a generic email address – such as sustainability@icecream.com or responsibility@mintchocchip.com. This is fine, and assumes these emails will be monitored by members of the reporting team. Not everyone wants to make their individual work email public, given the amount of spam and other rubbish you get via email. Ideally, I like to see the name of a person and a job title. Take this good example from Man’s 2019 CR Report:

Although the email is generic, the name of the senior person accountable for the report is included.

GRI maestro Bastian Buck, Chief of Standards explained:
BASTIAN: “We removed the contact point disclosure because we didn’t feel it was serving the purpose as intended. Most companies include generic emails. Feedback we have received indicates that it is often difficult for stakeholders to get through to the relevant contact in the reporting organization The information can be found on the organization's website and organizations can still report it if they wish.”

I say: BRING THE CONTACT POINT BACK! I think it is both useful and a signal that companies invite feedback and queries.

Disclosure REP-3 Reporting period and frequency 
This disclosure in the Exposure Draft requires organizations to specify the reporting period, and the reporting frequency (both are in the current standards) and also “if the organization has audited consolidated financial statements or financial information filed on public record, specify the reporting period for its financial reporting and provide an explanation if it does not align with the period for its sustainability reporting”.
This last part is new. The additional guidance states: "The organization should align the reporting period for its sustainability reporting with the reporting period for its other statutory and regulatory reporting, in particular, its financial reporting." 

I see this as another troubling consequence of force-fitting sustainability reporting into financial reporting frameworks to meet the needs of money markets. The timescale required for sustainability reporting may not align with financial accounting for many and varied reasons. As long as a company is reporting consistently, and on a regular frequency, and within a reasonable time-frame after the close of the reporting period, that works for me. While there is obviously a linkage (usually created by investors or investment analysts, for example, who analyze environmental performance normalized to revenue – a useless comparison, in my view), I think sustainability reporting serves different needs and is subject to different review and approval pressures, and does not need to be dictated by the money market calendars. On the contrary, there is benefit in all companies reporting a calendar year on sustainability, which is far more comparable than different financial year periods.

What is vastly more important, in my view, is the publication date. Companies should be encouraged to improve their reporting efficiency and ensure they publish within a reasonable time after the end of the sustainability reporting period – ideally six months. I think that the requirement of a disclosed publication date should be included in the new Universal Standards, pretty much like the example of Man’s report shown above. Their sustainability reporting year is calendar 2019, the report was published June 2020. Their Annual Report was published in March 2020.

GRI guru Bastian Buck, Chief of Standards explained:
BASTIAN: “Companies have numerous reporting requirements. All this information only makes a lot of sense if stakeholders have comprehensive information available. We have to bring this whole practice into a regular rolling schedule and that may include the integration of non-financial into financial reporting. We see it as a necessity to co-locate these disclosures. It’s not about monetizing everything, but it’s important that stakeholders have the whole picture.”

I disagree. But you know why. I said so above. But what do YOU think? Have your say on this point and other points made in this post and other posts, and anything else in the Exposure Draft that I didn’t get to in this series of reviews. The Exposure Draft is open for comments until 9th September 2020.

And that’s a wrap for the time being. This concludes six aspects of the new GRI proposals, all of which have implications for reporters and report users. Overall, I welcome this initiative, the new structure of the 101,102,103 Standards makes sense to me, key principles and definitions have been clarified in useful ways and some new areas of emphasis will support improved reporting on different topics. On the other hand, some of the proposals place unnecessary burden on reporting companies, and some don’t go far enough. It will be interesting to see how this plays out and what makes the final cut.

I’d like to thank Bastian Buck and Laura Espinach for their time and insights and their endless patience with me in a discussion with covered even more ground that I have been able to record in these posts. It’s been a fascinating exercise for me, a self-professed reporting geek, and I hope it’s useful for you.

Stay safe, stay well, stay optimistic! 

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Owner/Manager of Beyond Business Ltd, an inspired Sustainability Strategy and Reporting firm having supported 107 client reports to date; author of three books and several chapters on Sustainability Reporting and the Human Resources connection to CSR; frequent chair and speaker at sustainability events and judge in several sustainability awards programs each year. Contact me via Twitter , LinkedIn or via Beyond Business

GRI Standards: Sector Standards: Back on the Map

This is another short(!) post in the GRI Standards series – an anatomical dissection of the Exposure Draft of the new GRI Universal Standards and what it means for reporters and report users. This fifth post is all about sectors. You’ll recall that Sector Standards were a thing a long while ago at GRI, and a number of Sector Standards were developed. Then it stopped. 

It’s clear that sectors enable segregation of companies into categories that often share the same context and same issues. That’s why there are so many sector associations, several of which have developed their own sustainability and reporting standards (in addition to bespoke Codes of Conduct and sustainability initiatives). IPIECA, for example, the oil and gas industry association, has a sustainability reporting manual for its members, now in its fourth edition. The World Steel Association has a sustainability reporting indicators guide for its members. The Responsible Business Alliance (for companies from the electronic, retail, toy and auto sectors) has a guide for transparency in procurement for its members. Cosmetics Europe has a sustainability guide for its members, that includes sustainability reporting with recommended indicators.The Better Buildings Partnership in the UK has a guide on reporting and metrics for its members. And the list goes on. 

(By the way, the High Meadows Institute recently released a super-useful Business Leadership in Society Database of global partnerships and industry associations with detailed profiles of each that can help you check out what’s happening in your sector anywhere in the world, and companies that subscribe to these initiatives.) 

Sectors is definitely a thing. And Larry Fink did not mince words when he wrote to companies that Blackrock is investing in, requiring them to publicly disclose using SASB Standards. SASB (Sustainability Accounting Standards Board) as you probably know, was established in 2011 and has developed a list of 77 sector-aligned Standards designed to encourage companies to report on financially material sustainability topics within their corporate reporting for investors. Originally targeted at the U.S. market, SASB believes you cannot get enough of a good thing and therefore now promotes these standards globally. With 77 Standards, they pretty much cover the sector spectrum. 

Time to let GRI have their say. I directed a few innocent questions to GRI expert-in-chief, Bastian Buck, Director of Standards. 

ME: What’s the point in developing sector standards? Hasn’t SASB already done this work? 

BASTIAN: "The Sector Standards complete and strengthen the GRI Standards. One of the main criticisms of sustainability reporting and of GRI has been the lack of detailed guidance for determining materiality, so we are addressing that through the Sector Standards. It’s important to remember that we are not changing the approach on stakeholder engagement, and companies should continue consulting stakeholders on materiality. Our Standards will define what is likely to be material in each sector. We don’t want to prescribe, but there is evidence that certain topics will be material by sector and GRI wants to ensure that these will be considered as part of any materiality assessment." 

ME: Why not simply reference the SASB Standards and not waste a whole lot of money and time reinventing the wheel? 

BASTIAN: "It’s not about entering into a competition about what’s financially material, we see ourselves as building on what others have done in this space. We don’t want to start with a blank sheet of paper and that is why there is stronger emphasis on research and existing sources in this program. At the heart of the whole rationale for GRI’s standard setting and therefore also the sector program is the point that GRI focuses on impacts on others, not primarily on the risks to companies or issues that affect them. This necessitates the consideration of a wider set of topics than ESG topics considered by SASB. It is likely that we will observe that the gap between the two offerings in terms of topics covered is considerable. The reason is a fundamental difference: we look at a much wider set of considerations. To ensure we don’t lose sight of the potential overlaps and alignments, we have included SASB in our first pilot project which looks to resources such as SASB as an input to the process. We expect to see considerable if not complete overlap for most sectors and a SASB representative was included in the first pilot project for the GRI Oil and Gas Sector Standard."  

ME: There are also several sector standards developed by industry associations such as IPIECA. Why not simply refer to those where they exist and/or encourage associations to develop these where they do not? 

BASTIAN: “We recognize the strong work done in this space by many sectors, and we hope to collaborate with them as we do with SASB, IPIECA and other relevant players. It’s important to remember that industry associations may not have the same multi-stakeholder impact-driven focus. Often their reference point is regulatory considerations. Remember, industry associations are industry led. Our role is to ensure balance across all stakeholder expectations with our Sector Standards.” 

ME: How long will it take to develop a full set of Sector Standards? How many sectors are expected to be covered? 

BASTIAN: “We are currently piloting three sector standards – Oil and Gas , Coal , and Agriculture and Fishing. The idea is to scale relatively quickly with 5 – 10 standards being developed concurrently at any given time to deliver a total of around 45 once the program is complete.” 

ME: Why make Sector Standards mandatory to be In Accordance? That means that some companies must report with the Sector Standards while others will not have to because they have not been developed yet. This is creating an uneven playing field for reporting over a long period of time. Why not make them optional / recommended? 

BASTIAN: “We believe we need to address one of the shortcomings of sustainability reporting, and that is that it’s too easy to avoid reporting on certain things. The Standard Setter has to play a role in this. We are not mandating the use of all the topics but only the use of the Sector Standard. At the end of the day, the requirement is for an organization to consider the topics described in the applicable Sector Standard. Each Standard will apply to all companies in a certain sector - so all companies in the same sector will be equal. This will make sustainability reporting more comprehensive and complete and help to address the the issue of underreporting of material topics. It can also be used as an engagement tool. We believe that having a reference point for the dialogue between stakeholders and companies is pivotal to leverage the true value of the transparency exercise for all stakeholders and society at large. It will be interesting also to see how the sector standards fuel further dialogue across industries – elevating certain issues so that they are not only a struggle for an individual company, but part of a wider set of considerations. The EU and OECD are already driving work in this direction.” 

And that concludes the Sector story for now. And if you want to see what the first one looks like, the Oil and Gas Sector Standard Exposure Draft is now open for consultation (until 6th October). It’s only an 87-page document including glossary and bibliography with 22 material topics for the sector to consider, so working through it should be a piece of cake. 

What do you think about Sector Standards? Is the rationale for a whole load of time and investment in this area entirely justified? Will it add value? Will this ensure that companies report on topics they have conveniently (or unwittingly) avoided in the past? Have your say before Sectors get locked down with the new Universal Standards. The Exposure Draft is open for comments until 9th September 2020. 

Stay tuned for loads of Sector Exposure Drafts coming your way in the not too distant future. In the meantime, don't go anywhere as I will soon be publishing the next and final post in this series on the Universal Standards and a few other changes that may not appear obvious at first glance. 

Stay safe, stay well, stay optimistic!

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Owner/Manager of Beyond Business Ltd, an inspired Sustainability Strategy and Reporting firm having supported 107 client reports to date; author of three books and several chapters on Sustainability Reporting and the Human Resources connection to CSR; frequent chair and speaker at sustainability events and judge in several sustainability awards programs each year. Contact me via Twitter , LinkedIn or via Beyond Business

GRI Standards: Governance Galore

This is the fourth post in the exclusive read-only-on-the-CSR-Reporting-Blog unraveling of the GRI Universal Standards Exposure Draft that is now open for public comment. At 106 pages, the draft may seriously turn lockdown into meltdown. That is, of course, unless you give the technobabble a miss and skip to the juicy nuggets. Thanks to Wes Gee for this tweet.

Check out the first posts here: The overview. The human rights spotlight. The materiality clarity.  Or dive straight into today's ton of juicy nuggets ... all about probably the part of sustainability reporting that most reporters find intensely boring...governance! How many really exciting and fun governance disclosures have you spotted in sustainability reports?

(One of the most colorful and human presentations of governance disclosures I have seen recently is in the Del Monte Pacific 2019 Sustainability Report - makes you think that governance might not be so boring after all!)

Anyhow, the thing you might unwittingly overlook if you have been a regular GRI Standards Core Level reporter, is that the new proposed In Accordance rule now includes ALL the general disclosures on governance. Currently, at Core level, all you need to do is report Disclosure 102-18 on covering governance structure and Board Committees, including those with responsibility for economic, environment and social topics. Generally, this information is reported anyway by public companies in their annual reports, so a brief reference in the sustainability report often did the trick. Not overly stretching, and not overly transparent either.

The new Universal Standards Exposure Draft changes all that. There are no less than 15 governance disclosures that organizations wishing to remain In Accordance must report, with no acceptable omissions.

• GOV-1 Governance structure and composition 
• GOV-2 Nomination and selection of the highest governance body
• GOV-3 Responsibilities for sustainable development topics and delegation
• GOV-4 Stakeholder consultation on sustainable development topics
• GOV-5 Chair of the highest governance body
• GOV-6 Conflicts of interest
• GOV-7 Role of the highest governance body in setting purpose, values, and strategy
• GOV-8 Collective knowledge of the highest governance body
• GOV-9 Evaluation of the performance of the highest governance body
• GOV-10 Identification and management of impacts
• GOV-11 Role of the highest governance body in sustainability reporting
• GOV-12 Communication of critical concerns
• GOV-13 Remuneration policies
• GOV-14 Process for determining remuneration
• GOV-15 Annual total compensation ratio 

All these disclosures require more than easy-to-draft one-liner responses – they almost all have several parts requiring comprehensive responses. (There is a little loophole here, that is, if you do not have something in place such as a policy or committee or process, then you can report that this does not exist, and that would meet the requirement for disclosure. The disclosure does not come with an obligation to implement new actions, but to report those that are in place. A bit of a double-edged sword, but it may provide some relief to those who do not have extensive governance structures in place, maybe suitable for smaller or privately-owned companies.) 

Now, although GRI is saying that this is a simplification from 22 separate disclosures in the current Standards to 15 disclosures, in practice, several have been combined, resulting in a governance section that is almost a report in itself. In my view, many of these disclosures are part of mandated corporate financial reporting, and rather superfluous to sustainability reporting.
For example, GOV-6 Conflicts of interest: The organization shall: 
a. describe the processes for the highest governance body to ensure that conflicts of interest are avoided and managed; 
b. report whether conflicts of interest are disclosed to stakeholders, including, as a minimum, the following conflicts of interest: i. Cross-board membership; ii. Cross-shareholding with suppliers and other stakeholders; iii. Existence of controlling shareholder; iv. Related parties, their relationships, transactions, and outstanding balances. 

For a sustainability-focused stakeholder who assumes that conflicts of interest are addressed and disclosed as part of fundamental corporate governance, this is just noise. I think it’s unnecessary to burden the sustainability reporting process with this additional content.

Or this one: GOV-7 Role of the highest governance body in setting purpose, values, and strategy: The organization shall: a. describe the role of the highest governance body and of senior executives in the development, approval, and updating of the organization’s purpose, value or mission statements, strategies, policies, and goals related to sustainable development topics.

Sorry, but, frankly, who cares? Do we really need a load of unnecessary verbiage saying the Exec Team had a discussion and then the Board had a discussion and then they all had a discussion and then they agreed on the purpose, values and strategy? Since Disclosure GOV-11 covers the role of the highest governance body in sustainability reporting in which the purpose, values and strategy are disclosed, what’s the point of another disclosure adding who said what and who agreed?

GOV 13 and GOV 14 require detailed descriptions of remuneration processes for the Board – all this is covered in other corporate governance reporting. I think it’s irrelevant here.

Similarly, what does it help us to know “the ratio of the annual total compensation for the organization’s highest-paid individual in each country of significant operations to the median annual total compensation for all employees (excluding the highest-paid individual) in the same country” (GOV-15). It’s all very nice for those who want to cap CEO compensation (and there is some merit in this thinking) but frankly, this is not about sustainability impacts and not even really about ethical conduct. It’s about capital market forces that enable or even encourage these types of compensation processes. I would leave this to other corporate reporting platforms and leave it out of the sustainable development dialogue at this level of detail.

Personally, I suggest slimming down the mandated governance content to three or four disclosures related to Board accountability for sustainability topics that are not typically reported anywhere else.

I covered this in my conversation with GRI experts, Bastian Buck, Chief of Standards and Laura Espinach, Head of Technical Development.

ME: Does this now significantly increase the reporting requirement for companies who reported Core to date? Is this a deliberate new focus on governance? Won’t this make reports longer  😟?
BASTIAN: “When we first introduced the governance disclosures, in G4, I think we were ahead of the curve. At the time virtually no company was disclosing this information. But today, many already disclose more than what’s required to be In Accordance at Core level. If you look at all the data providers that send ESG queries to companies and at the regulatory domain where governance disclosure has become a lot more comprehensive, you see a clear trend of investor interest and demand towards more structured governance disclosure in both the financial and ESG reporting domains. As this became a more commonplace expectation, so companies went beyond the minimum disclosure. The GRI Global Sustainability Standards Board (GSSB) often wrestled with the question of whether this is too much – but input we received confirmed that this is important from a governance best practice perspective and interestingly enough, none of the other standards in the ESG space features these disclosures. It still holds true that you can reference other reporting you already publish – as long as this adequately fulfills the requirement of the GRI governance disclosures.”

ME: As GRI Standards are supposed to apply for all organizations, including private companies, SMEs, nonprofits etc., is it reasonable to expect that all organizations will report on all these governance disclosures? Some of these disclosures will be extremely awkward for all but the largest corporations - is it GRI’s intention to reduce the number of companies that can report In Accordance?
BASTIAN: “Let’s be clear that the requirement to disclose does not mean you have to put in place mechanisms that do not currently exist. It’s perfectly acceptable to disclose the absence of certain governance aspects. It’s understandable that certain organizations may not have all these governance processes in place that are required for large companies.”

ME: Another point: I note that many continue to include governance as a material topic. But, as the materiality definition has changed to focus on impacts of the organization, does it follow that governance should not be included as an IMPACT but part of the organizational approach and due process? Would a company including governance as a material topic then not be In Accordance with the Standards? 
LAURA: “What is important is that in the GRI Standards as proposed, governance is relevant to all organizations and all will therefore have to report all governance disclosures. Governance cannot be subject to a materiality assessment. But there is nothing that prevents an organization identifying governance as material (in addition to reporting the disclosures in GRI 102) as long as they can identify the impacts of governance and can justify the impacts in the context of the GRI standards.”

Let’s do a little poll: please read the question below and select the response that most reflects your view:

Question: Do you think several of the governance disclosures in the Exposure Draft are unnecessarily detailed and nitpickingish and do little to enhance our understanding of an organization’s commitment or capability to manage its impacts?

Answers: 

• Yes 
• Affirmative 
• Definitely 
• Absolutely 

Good, glad we got that sorted. Prepare for governance galore in the next iteration of the GRI Standards. If you like this, or do not like it, have your say before it gets locked down in the publication of the new Universal Standards sometime in the near future. The Exposure Draft is open for comments until 9th September 2020.

Stay tuned for the next post in this series which is all about the rebirth of Sector Standards. YAY!

Stay safe, stay well, stay optimistic! And eat lots of ice cream 🍦🍧🍨🍦 

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Owner/Manager of Beyond Business Ltd, an inspired Sustainability Strategy and Reporting firm having supported 107 client reports to date; author of three books and several chapters on Sustainability Reporting and the Human Resources connection to CSR; frequent chair and speaker at sustainability events and judge in several sustainability awards programs each year. Contact me via Twitter , LinkedIn or via Beyond Business

GRI Standards: Materiality: You’ve Been Doing It All Wrong

There you have it. The infamous materiality matrix has disappeared from the GRI Standards (in the new Exposure Draft of the Universal Standards). Haha. About time. I have always maintained that the matrix and the plotting of dots was nothing but a distraction. (Check out my post from 2014, “Why the materiality matrix is useless”, before GRI Standards became G4, and another from 2016, “The missing piece of the materiality puzzle”.) 

Is this a total U-turn by GRI or is it an attempt to realign reporters with what’s really important, that is, defining the material topics, rather than developing creative visualizations of arbitrarily prioritized dots? I am reminded of a quote by the late Stephen R. Covey, the Seven Habits creator, who said: “If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster.” 

And so it has been with materiality matrices, where most companies have taken to plotting material topics on two axes – importance to stakeholders and importance to the business, and prioritizing the topics that scored high on both axes. This was never the intention of GRI and it’s rather odd actually that the practice developed in this way. The intention of GRI Standards was that (1) companies should list the priority material topics (2) topics are most material if they score high on EITHER axis, not necessarily on both of them and most importantly, (3) that the horizontal axis represents the significance of the impact OF the business, not ON the business. Such a lot of companies reporting for such a long time on topics that were all prioritized against the wrong wall. How weird is that? 

I asked the GRI experts, Bastian Buck, Chief of Standards and Laura Espinach, Head of Technical Development, about this. 

ME: What are companies going to do now with all their materiality matrices? Many have invested loads of time and money perfecting the dots. Has this all been a waste of time? 

LAURA: “Let’s be clear that the use of the matrix was never a requirement. It became the practice that companies were including the matrix. We have now removed it first and foremost because the definition of material topics has changed. This also helps us address issues of how the matrix was applied in practice, with companies prioritizing topics that ranked high on BOTH axes, even though GRI Standards say that topics are material if they score high on one dimension. Will companies continue to use the matrix? Well, we don’t know. They can still choose to display the selection of material topics visually. What’s important is that if they opt to use a matrix, they must include the topics as required in the new GRI 103 Standard.” 

ME: Is the expectation that companies will now redo all their materiality assessments in order to align with the new definition of materiality? 

LAURA: “The answer is no, if they have been following the materiality principle as intended, that is, based on significant impact. That’s still the case. What’s different is that we recommend the approach to prioritizing impacts based on severity and likelihood but this method is not specifically required and organizations can select their own method and explain it. This may not therefore result in many changes to the material topics. But, if the company did not use a method that is aligned with the intention of expressing impacts through the material topics, then the new definition may require some changes.” 

ME: But what about all this new guidance on assessing the scale, scope and likelihood of topics? Wouldn’t it be better if GRI had provided some more specific guidance here? It’s still rather vague.

BASTIAN: “It’s important to note that the identification and assessment of material topics is not done for reporting purposes. The report reflects the impacts and actions of the companies throughout their activities. We offer options to use different methodologies and dimensions to assess material topics, but actually, GRI is not the tool that determines this. GRI is the disclosure tool, and we require companies to report their approach and methodology. The Standards do not prescribe the methodology.” 

I am pleased to see the revised definition of materiality in the proposed Universal Standards and new guidance – minus matrix. Material topics are redefined as topics "that reflect the organization’s most significant impacts on the economy, environment, and people, including impacts on human rights."  This is clear enough. (See my post entitled GRI Standards: Human Rights: Quadrupled for a discussion on how human rights snuck into that definition). 

The proposed new standard GRI 103: Material Topics includes guidance for identifying material topics and related disclosures. There are three required disclosures in the new GRI 103 (all mandatory for reporters wishing to claim “In Accordance”): 

Disclosure 1: (MT-1 Identification of material topics and related impacts) Includes the way an organization has identified its material topics and prioritized them, as well requiring disclosure of the stakeholders whose views informed the identification of material topics. Also, organizations should point out changes in materiality from the prior reporting period.

Disclosure 2: (MT-2 Material topics and related impacts) Includes listing the material topics, describing the impacts related to each topic and whether the organization is involved in negative impacts directly through its activities or as a result of its business relationships. 

Disclosure 3: (MT-3 Management of material topics and related impacts) Replaces and extends the scope of the Management Approach Disclosures of the former GRI 103 Standard. It requires for each material topic a whole load of information: 

• Policies or commitments 
• Actions taken to manage the topic and its related impacts 
• Actions taken to prevent or mitigate potential negative impacts, or address actual negative impacts through remediation 
• Effectiveness of actions taken 
• Process for tracking the effectiveness of actions taken including goals and targets, evidence of effectiveness and lessons learned 
• Ways stakeholder engagement has informed the actions taken and if the actions have been effective
• Reason for not addressing a material topic if the organization does not do anything at present and plans to manage it in the future if there are any. 

There are a few things worth noting here. Most of these requirements were already part of GRI Standards, but some bits that stand out are:

First: Change materially. Do you find yourself scrambling around to see what companies said were material last time? Ever since the G4 Framework, a disclosure requirement was for companies to report significant changes in material topics from previous reporting periods. Although, honestly, I have noticed only a few companies actually including explicit information about what changed. So you had to do a bit of scrambling around. The new requirement in MT-1 requires organizations to report changes in the material topics compared to the previous reporting period. That is, all changes. I suspect this won’t be such a burden as most companies revise their material topics every few years, and even then, not much actually changes. But it's worth reminding organizations of this requirement, as no report is standalone, it's always part of a disclosure continuum and changes in materiality by definition are not incidental.  

Second: Get descriptive. In addition to the requirement to report how the organization has identified actual and potential, negative and positive material impacts and how it has prioritized them, the new requirement is to describe the impacts for each material topic. Currently the requirement is to report why the topic is material - which can be a bit repetitive as most companies are fairly generic about why child labor is not good or why diversity is fantastic. The move to describing impacts could lead to greater specificity in what material actually means in terms of how the organization affects our lives.

Third: Preventive precaution. The requirement to state how you uphold the precautionary principle (currently General Disclosure 102-11), which most reporters didn’t really understand anyway, has now been changed. The proposed Standard (RBC-2) asks companies to state whether the precautionary principle is applied as part of its policy commitments. The precautionary principle is seen as one form of prevention of negative impacts, which applies in specific situations (where there is sufficient reason to expect serious or irreversible damage even though there is no complete scientific understanding or evidence of that). So maybe it's time to revisit how you talk about this and update your policies to bring precaution into the frame.

Fourth: Get authentic. You can not report any of the above on any material topic as long as you explain why you are not doing so. Hah! I don't recall seeing many reports saying we have loads of material impacts but we are not doing anything about them. But, the “report or explain” principle has been fairly effective in some jurisdictions, e.g. Denmark, in catalyzing action, so it worth reminding organizations of this requirement, which was included in current and prior GRI iterations. It's a recognition that not every company has all the answers all the time, and that it is better to disclose that this is the case than simply omitting reference to what might be an important impact of the company. It's rather uncomfortable to do this, and I suspect it's easier to conveniently deprioritize an impact which you are not prepared to deal with. The optimistic view is that companies will realize there's value in telling it like it is and will use this as a way to either report more authentically or get a meaningful approach and an action plan in place before their report is published.

In general, while there is still a lack of more explicit methodology for defining materiality, I am confident the new materiality definition will help improve the quality and relevance of disclosure. If you agree, or disagree, have your say before it gets locked down in the publication of the new Universal Standards sometime in the near future. The Exposure Draft is open for comments until 9th September 2020. 

Stay tuned for the next post in this series which focuses on the changes in disclosures on governance. 

Stay safe, stay well, stay optimistic! 

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Owner/Manager of Beyond Business Ltd, an inspired Sustainability Strategy and Reporting firm having supported 107 client reports to date; author of three books and several chapters on Sustainability Reporting and the Human Resources connection to CSR; frequent chair and speaker at sustainability events and judge in several sustainability awards programs each year. Contact me via Twitter , LinkedIn or via Beyond Business

GRI Standards: Human Rights - Quadrupled

It can’t help but strike you when you review GRI’s Exposure Draft of the new Universal Standards (See my first post on this topic: GRI Standards: Shape Up or Shape Out) that human rights is just everywhere. A quick PDF search shows that in the new proposed revised Standards 101, 102 and 103, the term human rights appears more than 90 times, whereas in the 2016 version of these standards, the term appears less than 25 times. That’s an almost quadrupled helping of human rights in these new Standards. Now, if anyone offers me quadruple ice cream, I say: Yes please! But a disclosure Standard that’s so totally human rights flavored, well, that might just give you a little bit of indigestion.

If you read the Explanatory Memorandum that GRI published to accompany the Exposure Draft, you will have noticed that it started out with the sentence: “The primary objective in reviewing the Universal Standards is to address the recommendations from the GRI Technical Committee on Human Rights Disclosure.” Human rights even snuck into the new definition of materiality: “a topic that reflects the organization’s most significant impacts on the economy, environment, and people, including impacts on human rights”.

A quick glance at the 2019 Corporate Human Rights Benchmark shows that “More than half of the 200 benchmarked companies score less than 20% and only 1 in 10 companies score more than 50%. These extremely low scores reveal poor levels of implementation of the UNGPs by the vast majority of companies assessed.” So there is clearly more work to be done.

I asked Bastian Buck, GRI Standards Guru-in-Chief and Laura Espinach, GRI Standards Technical Development Guru-ess-in-Chief, about the human rights changes in the Exposure Draft. 

ME: Why the need to explicitly add human rights in this definition? Does impacts on people not automatically assume human rights? 

BASTIAN: “Even ten years after the publication of the UN Guiding Principles on Business and Human Rights, we are seeing that is still deeply uncomfortable for companies to disclose in this area.” 

LAURA: “Impacts on people should automatically assume human rights, but this has often been underreported by organizations. One of the main challenges the Human Rights Technical Committee grappled with as they were making these revisions was how to drive more reporting on human rights. They discussed some of the reasons for lack of reporting, for example, many companies do not think of their activities as having human rights impacts either because they don’t know what a human rights impact is or because they only think of human rights impacts as gross violations or issues that are life threatening. There has also been a historic masking of human rights within the economic, environmental and social framing of disclosure, so human rights issues were often overlooked. In fact, this is the reason we have moved from referring to social impacts to referring to impacts on people.” 

ME: Does this all imply that human rights are more material than everything else? 

LAURA: “The normative expectation in the UN Guiding Principles is quite unique. Human rights is one of the few areas that has been elaborated in this high level of detail about companies’ expectations and responsibilities, so we thought it was important to highlight that in the definition of material topics. This doesn’t mean that human rights are more material than anything else. We are trying to signal, of the impacts companies can have on people, human rights are the most acute / important ones. While it should be automatically assumed that impacts on people include human rights, this is not generally understood. By signaling this we hope to drive more reporting against the normative expectation that exists.” 

The Glossary in the Exposure Draft includes a definition of internationally recognized human rights, which is an addition to the current glossary. “These rights are understood, at a minimum, to include the rights set out in the International Bill of Human Rights (consisting of the Universal Declaration of Human Rights and the main instruments through which it has been codified: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights), coupled with the principles concerning fundamental rights in the eight International Labour Organization (ILO) core conventions as set out in the Declaration on Fundamental Principles and Rights at Work.”

I think many companies have become familiar with reporting labor rights (based on the ILO core conventions), although not necessarily doing so under the banner of human rights. The same, I think, applies to supply chain standards – companies report practices on Supplier Codes of Conduct, or ethical procurement etc., without necessarily referencing human rights. There are some areas of human rights that I believe have not benefited from broad disclosure, such as impacts on indigenous peoples, land rights etc. And of course, the International Convention on the Human Right to Ice Cream has been virtually ignored.

But by making everything about human rights, there’s a danger that we focus on the rights and not on the people – a bit like saying, the operation succeeded but the patient died. There just might be cases where the rights were upheld but the people were not. For example, non-discrimination. Companies declare they are non-discriminatory and list all the ways in which they are upholding equal opportunity for all. Then you look at their Board of Directors and Executive Teams, and they are predominantly white, male and middle aged. Somewhere in the system, therefore, discrimination is present, even though it might be tough to admit. In promoting human rights disclosures, we must be careful not to forget the people - which means that disclosures need to be underpinned with relevant practice.

I shared this concern with the GRI Standards experts, and Laura responded as follows:
LAURA: "Human rights is all about outcomes for people. I think the issue in the example may have more to do with how these issues are dealt with in practice, than with how this is framed in the Exposure Draft. The overall framing in the Exposure Draft is ‘impacts on people’ which include human rights-related impacts. And the changes to the definition of stakeholder also aim to focus reporting on individuals or groups that are or could be affected."

(Note here that the revised definition of stakeholder is: "individual or group that has an interest that is, or could be, affected by the organization’s activities and decisions". This is different from the previous definition which reflected a dual interaction - referring to stakeholders as being both affected by the organization and affecting the organization. The new definition aligns more closely with the focus on impacts of the organization on stakeholders, people, environment and society.) 

Nonetheless, the intention of GRI is clear and it’s helpful. I believe it will drive greater awareness, action and reporting. Now is the time to start assessing your organization’s impacts on human rights and the people who have them, if you haven’t already done so. If you think this is a great new direction, or excessive in emphasis, have your say before it gets locked down in the publication of the new Universal Standards sometime in the near future. 

The Exposure Draft is open for comments until 9th September 2020. The next post in this series will cover the new definition of materiality and what that means for the infamous materiality matrix.

Stay safe, stay well, stay optimistic!

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Owner/Manager of Beyond Business Ltd, an inspired Sustainability Strategy and Reporting firm having supported 107 client reports to date; author of three books and several chapters on Sustainability Reporting and the Human Resources connection to CSR; frequent chair and speaker at sustainability events and judge in several sustainability awards programs each year. Contact me via Twitter , LinkedIn or via Beyond Business