SustainAbility provides input to public comment period for GRI's G4 development process

02 Dec 2011 – Headline

November 24, 2011

Nelmara Arbex
Global Reporting Initiative
Metropool Building, 5th Floor
Weesperstraat 95
1018 VN
Amsterdam, Netherlands

Dear Nelmara,

On behalf of SustainAbility, I write to provide input to the first Public Comment Period for the G4 development process. As an organization which believes that sound sustainability disclosure is vital to well functioning companies and markets, we recognize and support the vital role that GRI plays in driving such disclosure.

While the comments expressed below are SustainAbility’s, they reflect discussions with the members of our Engaging Stakeholders network, a group of multinational companies working to advance corporate transparency and accountability. We assume many of our members have provided input via the public survey, as have several SustainAbility staff.

Our key recommendations are as follows:

• Proactively seek input on the G4 from mainstream investors: In order to scale and advance our collective sustainability efforts, it is imperative that we engage mainstream investors in the conversation. We firmly believe from our experience that this group, despite being nominally engaged in certain initiatives, is largely absent from the discussion. We thus implore GRI to spend time speaking with investors – particularly the “disbelievers” – to understand what they want from companies in terms of sustainability information, and then refine the G4 accordingly.
• Further refine the materiality principle: Materiality in the sustainability context is a vexing issue, the resolution of which will help companies better engage with mainstream investors. GRI’s own definition (issues “reflect the organization’s significant economic, environmental, and social impacts or that would substantively influence the assessments and decisions of stakeholders”) illustrates how materiality in the sustainability realm compels companies to report on many topics rather than the few that are truly important. We thus end up with lengthy reports that “check many boxes” yet provide too little detail on the core issues and impacts. We understand that GRI’s intent is very much for companies to report on the most important issues, and thus encourage it to further elaborate on this principle for the G4.
• Encourage reporting organizations to define the key topics and indicators: Reporting organizations such as companies are best positioned to define their own material issues, and GRI should encourage them to take this lead. We believe it is impossible for GRI (or any external organization) to develop standard sets of indicators which apply to entire sector, as companies within sectors can vary considerably in terms of their strategies, value chain and context. GRI can play a key role by providing a standard, manageable set of indicators as a blueprint, and emphasizing the need for reporters to fully elaborate on why issues are deemed to be material.
• Reconsider the Application Level: Amongst our Engaging Stakeholders members, there is disagreement about the value of the Application Levels. Some believe it to be a sign of quality and credibility, while others believe the letter grade scheme encourages companies to go for quantity over quality. SustainAbility falls more on the latter side, as we believe high quality, meaningful reports go deep on the most material issues facing companies. Such reports may garner Cs or Bs, which imply reports of lesser quality than A reports. We thus encourage GRI to consider alternate ways of signaling the quality of reporting (which SustainAbility would be pleased to support).
• Consider the role of GRI in a “targeted reporting” world: After a decade plus of corporate sustainability reporting, companies have become quite good at communicating to the “professional” stakeholder circuit (SRIs, NGOs, academics, etc.). While this is well and good, we know from experience that the value of reporting to this audience is fading, and thus many leading companies, including those in our Engaging Stakeholders network, are increasingly communicating in different and targeted ways to other audiences – suppliers, employees, consumers, etc. We firmly believe that this sort of targeted reporting is vital to gaining wider adoption of the sustainability agenda, and thus encourage GRI to consider how the G4 principles will interface or support these efforts.

We offer these with sincere support of the G4 development process, and offer to discuss these further at GRI’s request

Respectfully,

Michael Sadowski

Vice President, SustainAbility, Inc.
155 Water Street
Brooklyn, NY 11201