12-13 December 2005

From: "Business Unusual: Partnerships as Strategic Investments" Conference

 

Berlin, 12-13 December 2005   

 

Resource Persons:

 

Alan Knight Head of Standards, Accountability

Cornis van der Lugt Program Officer, UNEP

Hans-Peter Meurer Group Environmental Affairs, RWE AG

Ralph Thurm Chief Operating Officer, Global Reporting Initiative

 

Moderator:

 

Nicolaus von der Goltz, Desk Officer PPP and CSR, Federal Ministry for Economic Cooperation and Development

 

Key Outcomes:

 

-          Both pressure from financial markets and the public will further help to promote corporate sustainability reporting.

-          Not only companies but also public agencies should publish Sustainability Reports.

-          Companies put a big premium on the voluntary nature of sustainability reporting schemes and reject governmental regulation.

-          The publication of a report should be the result of an internal process and dialogue and not just an exercise in collecting data.

 

During the past decade, reporting on non-financial indicators (‘sustainability reporting’) has seen tremendous growth, greatly supported by programs such as the Global Reporting Initiative (GRI). Today, more than 600 organizations in all sectors explicitly recognize using the GRI Guidelines for reporting on their economic, environmental, and social performance. However, so far, the market for sustainability reporting is far from fully leveraged. While many companies, especially large firms, have adopted sustainability indicators in their regular reporting practice, corporate environmental and social reporting is still very much a minority practice. Also, many industry sectors have not yet developed industry consensus on performance indicators for reporting against their specific sector’s progress and gaps. Finally, there still exist multiple standards for sustainability reporting, making comparison across companies and industry sectors difficult if not impossible.

 

The manifold background of the workshop participants’—businesses, international organizations, and foundations—reflected the multiplicity of different stakeholders interested in sustainability reporting of companies. The experiences of Cornis van der Lugt, Program Officer at UNEP and Ralph Thurm, Chief Operating Officer of the Global Reporting Initiative in this field served as an effective starting point for discussion. Cornis van der Lugt emphasized four items that should be taken into consideration when talking about the GRI:

 

First, he stressed the role of the GRI as a multi-stakeholder partnership initiative. Second, he touched on the debate over standardization. There is as of yet no consensus on this matter as some prefer guidelines and some prefer standards. Thirdly, he identified the role of public agencies as reporters. For example, UNEP has started last year to produce its own sustainability report. Finally, he turned the topic around and focused on UN agencies as users of such sustainability reports. In this context he referred to the UN-system policy in which GRI guidelines are frequently used when assessing business partners.

 

Van der Lugt concluded that in all likelihood in the future there will be combination of regulatory and voluntary elements concerning sustainable reporting. Both pressure from financial markets and governments will foster reporting practices among companies. The role of governments should not be to add layers of reporting requirements, but instead to rationalize legislation.

 

Ralph Thurm emphasized the role of the GRI as a means to creating transparency which is the fundamental base for trust and partnerships. He pointed out the unique role of the GRI as a globally accepted reporting initiative which at the same time competes with industry specific guidelines. By publishing its own Sustainability Report the GRI wants to demonstrate that a small enterprise can produce its own report. That 3,000 companies use the GRI guidelines, 100 declaring to report in accordance with GRI guidelines, shows that there is a business case to sustainability reporting, according to Thurm. This does not just apply to industry but also to other organizations such as the World Bank, other public agencies, or cities (such as for example Melbourne and Vancouver that have started to report against GRI Guidelines). Thurm said that in his experience, the rankings and ratings of sustainability reporting are much appreciated by the financial community.

 

For companies who are reporting against GRI Guidelines, producing a good and comprehensive company sustainability report is of course a key goal. What may even be more important, Hans-Peter Meurer of RWE AF argued, is the internal process that is set in motion by the corporate decision to produce such a report in the first place. Meurer also emphasized that GRI reporting and the production of a Sustainability Report is a key cornerstone of RWE’s corporate responsibility practice. The company uses the report to invite feedback from key stakeholders in civil society, politics, and academe. As such, RWE understands sustainability reporting mostly as a management tool and not just as a public relations.

 

Alan Knight, the Head of Standards for AccountAbility, spoke about new research on transparency that is being conducted in his organization. He said that while sustainable and social reporting among companies has picked up in recent years, many partnerships find transparency a complex issue. He raised questions of how to balance transparency and privacy in light of new internet technologies and suggested that instead of focusing on being seen as trustworthy by all, companies should instead focus on specific constituencies. Transparency needs to take a forward-looking not historical approach, he concluded.

 

During the discussion, participants first raised the question of whether companies should publish just one annual company report, combining traditional baseline data with sustainability indicators, or whether reports should be produced separately. Many in the room agreed that it is difficult to target all stakeholders with one report, and therefore many companies will choose to retain two separate publications. In general it became clear that companies are not interested in general standards and would rather try to avoid governmental regulations, according to Hans-Peter Meurer. Instead, companies have to initiate an internal process to foster sustainability, which cannot be limited only to the communication department within the company. Furthermore, intensive dialogue between companies and their stakeholder plays a crucial role within the sustainability reporting process. According to Meurer, reporting does not only mean collecting data, but also  understanding and managing data, which implies an internal dialogue between departments and changes within the companies. Understanding reporting in this sense means the publication of a report is rather a result of an internal process. The discussion revealed that companies have to have a clear idea of the relevant fields on which they report and which their future challenges and goals are. Reporting then can play a key role as a driver for sustainability within the company. In addition, the discussion showed the importance of the closer examination of the companies’ suppliers in developing countries. This relationship will be a major reporting issue in the future.