Improving Transparency and Communication of Corporate Sustainable Development Practices

1. Improving Transparency and Communication of Corporate Sustainable Development Practices Alyson Slater, Milan, 2 December 2003 The Role of the GRI Sustainability Reporting Guidelines

2. outline • why improve transparency & communication? • what is GRI? • integration of the CSR landscape

3. transparency … an old concept "It is wise to disclose what cannot be concealed." Friedrich von Schiller (1759-1805), German Dramatist

4. …with new relevance “ Transparency is on the rise, not just for legal or purely ethical reasons but increasingly because it makes economic sense. Firms that exhibit openness and candour have discovered that can better compete and profit”. Tapscott and Ticoll, Wall Street Journal, 14 Oct 2003

5. investors market analysts customers consumers regulators environmental and social advocates better non-financial information for decisions on: investments purchasing legal liability employment campaigns transparency imperative w a n t www.globalreporting.org

6. Johannesburg 2002 “ We agree that there is a need for private sector corporations to enforce corporate accountability, which should take place within a transparent and stable regulatory environment” (WSSD Declaration) Governments agree to “encourage industry to improve social and environmental performance through voluntary initiatives … including public reporting on environmental and social issues …”. (WSSD Plan of Implementation)

7. Johannesburg 2003 ‘Transparency is both an integral part of effective public governance and a core feature of international investment policy rules.’ ‘Participants recognise the key role of governments to : • promote transparency • enhance … accountability’ Draft Co-Chairs’ Statement, OECD Global Forum on International Investment, 18 November 2003

8. market • Investors demanding more non-financial information “ Investors cannot make judgments about the way business is managing sustainability and corporate responsibility issues unless companies disclose relevant information”.– Henderson’s Global Investors, 2003 • Governance codes Australian Standard 8000, King Commission, etc. • Stock exchanges • U.K. expanding the definition of “materiality” for financial reporting • Johannesburg Stock Exchange

9. investors Share value Share value Licence to operate Human capital intangible assets Reputation Brand Tangible assets financial reporting

10. the naked corporation Tapscott & Ticoll, 2003 Level of information vanguard trust ‘mushroom’ danger level of activism

11. benefits? • “The amount of informationcompanies provide in their annual reports is correlated to market risk and valuations.” • “Companies that distinguish themselves by disclosing more informationlower their market risk and therefore lower their cost of capital.” • “Non-financial disclosure in annual reports needs improvement.” “Transparency and Disclosure” study by Standard & Poor’s

12. corporate governance • “…companies no longer act independently from the societies and the environment in which they operate”. • “… social, ethical and environmental issues … can no longer be regarded as secondary to more conventional business imperatives South Africa : King 2 Report on Corporate Governance, 2002

13. outline • why improve transparency & communication? • what is GRI? • how the OECD MNE and GRI guidelines can help.

14. sustainability dilemmas • what does ‘sustainable development’ mean in practice? • what should I communicate on? • who am I communicating with? • how do I know it is useful information? • what system do I use (industry, sector, national, international?)

15. GRI’s mission a generally accepted global framework for sustainability reporting

16. mission • to make sustainability reporting as routine & valuable as financial reporting • used by all organisations • based on a multi-stakeholder process for producing generally-accepted guidelines for voluntary use

17. GRI products GRI sector supplements if available GRI 2002 reporting guidelines GRI technical protocols all organisations GRI resource documents if preferred 17

18. products Guidelines Sector Supplements Protocols Resource documents process multi-stakeholder framework learning forum continuous improvement what does it offer?

19. demand-driven business plan

20. consistency one framework, worldwide links local, national, global links to international goals: MDGs, A21, etc. potential for common software, etc. credibility developed by stakeholders market leader widely used and supported by business, government and stakeholders what does it offer ? comparability • analysts • investors • employees • tax-payers • suppliers • CSOs

21. communicating sustainability info company customers investors suppliers civil society regulators data sources communication info users organisation/ company data management systems: ISO, TQM, EHS, etc. could onesize fit all ?

22. GRI reporter uptake 2005Target 600+ 340+

23. Global : GRI reporters (by country)

24. GRI governance

25. official recognition governments agree to “encourage industry to improve social and environmental performance through voluntary initiatives … taking into account such initiatives as … the Global Reporting Initiative Guidelines on sustainability reporting…”. UN WSSD Plan of Implementation, Sept. 2002

26. business recognition “… the GRI and AA1000 are your best bets, not only for reporting, but for building structured models for transparency-driven stakeholder engagement.” Don Tapscott and David Ticoll, The Naked Corporation – How the Age of Transparency Will Revolutionize Business, (2003)

27. market recognition “ Investors cannot make judgments about the way business is managing sustainability and corporate responsibility issues unless companies disclose relevant information. … Overall, we view the GRI as setting the global benchmark for disclosure and encourage companies to produce reports which are in accordance with the GRI guidelines.” SRI Annual Report, Henderson Global Investors, May 2003

28. outline • why improve transparency & communication? • what is GRI? • understanding the global CSR landscape

29. around 300 separate CSR codes, principles, performance standards, management standards, etc. covering one or more of environmental, human rights, or labour sectors national, regional, international scope by company, by sector developed by individual governments, industry associations, academics, etc. CSR ‘initiative proliferation’

30. Benefits encourages creativity no ‘one size’ solution multi-level engagement underlines interest Burdens ‘white noise’ market confusion reduces use limits learning increases cost CSR “initiative proliferation”

31. a global CSR management toolkit high value features : • global • voluntary • triple-bottom line • multi-stakeholder • flexible

32. CSR : drivers market ethics politics nature

33. CSR : the road map ILO Core Conventions Treaties on climate, biodiversity,POPs, etc. UN Summits (e.g. 2002 Johannesburg, Rio 1992) OECD Bribery Convention

34. CSR : getting on the road assurance principles drivers Performance & management standards codes reporting traction direction

35. CSR : getting on the road UN Global Compact AccountAbility drivers ISO, SA8000 etc. OECD (MNE Guidelines, Corp. Gov. Principles) GRI how do we get there? where do we go?

36. conclusions • transparency is a key element of sustainability • existing initiatives can be strengthened through collaboration • promote learning, partnerships

37. get involved • GRI invites you to : • use its Guidelines and provide feedback • propose and fund development of new tools • become an Organisational Stakeholder • Projects, grants, and secondments