The Global Reporting Initiative - Essay Example

? Global Reporting Initiative of the of the of the Global Reporting Initiative (GRI) Introduction: GRI was founded in 1997 and its mission is to provide a credible and trusted framework for sustainability reporting used by companies of different size or location. The necessity and scale of threats and risks to collective sustainability with increasing opportunities and choices have make transparency about social, environmental, and economic impacts, a basic component in effective shareholder relations, market relations, and investment decisions (GRI 2011). To hold these expectations and to communicate clearly about sustainability, a global framework model and continuous metrics and language is required and Global Reporting Initiative (GRI) fulfills this. GRI relies on association of the expert from large networks in collaboration with consensus seeking consultation from groups of stakeholders. Since the foundation of GRI, these consultations with practical experience have constantly improved the framework of GRI (GRI 2011). Sustainability Reporting and GRI: A sustainability report allows the organization to reveal sustainable information in such a way that it looks similar like financial reporting. Comparable data that include metrics and agreed disclosures is given in systematic sustainability report. It is an organizational report that gives relevant information regarding economic, environmental, governance and social performance of the company. For the organizations sustainability, the capacity to resist or maintain depends on the performance of these key areas. Many companies want to make their operations sustainable and by making a sustainability reporting process, it helps them to set goals, manage change and measure performance. In a sustainability report, communication is made for positive and negative impacts for sustainability (ACCA 2005). A reporting cycle set by the organizations to produce a sustainability report in which data collection, communication, and response included in this reporting cycle. This indicates that sustainability performance of organizations is monitored on regular basis and it is an ongoing process. Senior decision makers are provided data on regular basis in order to make effective strategy for the company and improve its performance. This reporting is an important step for managing change to a sustainable global economy in which long-term profitability with social justice and environmental care is involved. The rising interest and focus on the impact of businesses on society and environment have increased the awareness level of people and demand for improve and better disclosures that are beyond financial figures have increased as well. The basis of sustainability is now dependent on social, environmental, and economic performance (Barner 2007). Best practices will tell that companies holding triple bottom line concept, are best positioned in terms of their competiveness and brands. The benefits for those companies include better risk management, reputation, and improved infrastructure of governance. Organizations are now expected to do and show more than just fulfilling their duty to give information to stakeholders in their company reports. It is very common now a days that global companies reports on all areas of sustainability reporting that is known as triple bottom line in which companies report on social, economic, and environmental responsibilities. Usually, the economic aspects of reporting have been the main theme of annual reports but now, the strength of annual reports is the disclosure of social and environmental performance (Elkington 1994). Improve reporting and disclosures, beyond the requirement of law or statement are the first step of sustainability report. Following are the drivers towards responsible businesses: Greater Disclosure and Accountability Demand: Different stakeholder groups give immense pressure to companies to display good controlling practices in all fields of their business operations. Disclosure on environmental and social performance has increasingly demanded by stakeholders, including financial performance of the company. Rising Importance of Intangibles: Companies on its brand and reputation give greater importance and value. If companies are associated with some activity that is causing damage to the environment or low standard labour practices, then it can harm companies’ brand value and its reputation can be ruined. Attract Talent: People want to join those organizations that are willing to invest in long-term human capital. Companies misbehaving with employees result in unfavorable consequences for society and environment, and they find themselves in such a place where people avoid them to be a part of them (Magness 2003). Pressure from Supply Chain: In global market, supply chain pressure goes beyond the boundaries and it is felt by any supply whether they belongs to the same country or not. Pressure from corporate responsibility has begun to increase from wider supply chain where customer demand has increased regarding high standard of suppliers. Encouragement and Support by Regulators: Regulators play a key role in pushing greater corporate responsibility. The UK and USA, regarding environmental reporting and management have made regulations. In France, companies having more than 300 employees are required to produce a social report and Brazil may follow this rule as well. Regulators have signaled in Asia that they will work to make enterprise more responsible (Roberts 1992). Non-Governmental Organizations: The NGOs are increasing very rapidly and similarly their complexed and high profile activities are increasing too. This led the companies to expose in a negative way and they are held responsible for damaging the environment and social impacts due to their contented approach towards environmental and social issues. Proceedings in Communication Technology: The communication technology has improved and information has become public to a wider audience more quickly than before. Bad news transmitted around the world within seconds and to more people faster than ever before. Many high profile events have shown the risk to reputation and image of the organization associated with poor sustainability management. Stakeholders and their Need for Information: In today’s world, companies are no more judged by their financial success and they are expected to do more than financial responsibilities for their shareholders and perform well on areas that include human rights, labour conditions, impact of their operations, products in society, and environmental impact (Global Reporting Initiative 2004). Organizations are aware that in order to meet the growing demand made by their stakeholders, they need to change the way in which they do their business. Being more transparent and accountable for the social, economic and environment consequences in their activities is the change that they can bring into their business. This includes accepting responsibility for complete range of positive and negative effects rising from corporate decisions. The informational needs for shareholders are given below: Employees: The stakeholder groups require information that employer in the organization is a respected citizen that contributes to the well-being of society successfully. They also need assurance on safety grounds and health. The interest of employees is increasing regarding information about their retirement benefits, level of remuneration and professional development opportunities (Lo and Sheu 2007). Marks and Spencer’s annual report of 2011 shows that employees are getting reward for their good performances. A new spotlight program for store employees has been started in which on the spot recognition given for exceptional customer service. The company given response to more than 10,500 pledges given by employees for their well being and improve their lifestyle. Various retirement packages are given to employees for their benefits through Marks and Spencer UK Pension Scheme. The company have shown the amount of money spend on its pension scheme in which total group retirement benefit costs ?22.4m last year (M&S 2011). Environmental Organizations: Presenting a broad range of interest that includes human rights, social issues, and environmental protection, stakeholders need a basis to know company’s vision, principals, and values. The reports provided by companies build greater trust and improve communication with stakeholders. BP sustainability report of 2011 shows their objective to create value for stakeholders by meeting the growing energy needs of the world, responsibly and safely. BP is working with federal and state agencies to watch and evaluate impacts of environmental accidents and implement plans for restoration. In this report, company has shown various efforts to make the environment clean. The company has work throughout 2011 to clean Gulf shore coastlines that were affected by 2010 oil spill. BP to ensure that wildlife is not affected by environmental hazards also performs wildlife monitoring (BP 2011). Vodafone have also presented in their sustainability report of 2011 that company is working hard to decrease carbon footprints and contributing to its target to cut carbon dioxide by 50% in the year 2020. Vodafone is also focusing on the improvement of energy efficiency and use renewable energy where it is possible (Godelnik 2011). Policy Makers and Regulators: Information sustainability shows corporate progress and commitment and it can help in minimizing regulatory intervention in future. Many reporters make efforts to identify their stakeholders and established dialogues with them to make sure that published report meets their needs. Comprehensive survey for stakeholders is a vital pre-requisite for publishing a sustainability report. Conclusion: Sustainability reporting is appropriate for all businesses and especially for those operating in industry that is susceptible to environmental risk (KPMG 2011). The main benefit of sustainability report is that it improves financial performance and helps the organization to improve the relationship with its stakeholders. Another important benefit of sustainability report is that it make better understanding of non-financial material risk and due to growing demand of ethical investment funds, it improves investor relationships. The top most companies are publishing their sustainability reports and they are trying to fulfill all requirements of GRI in their annual reports. List of References ACCA, 2005. Sustainability Reporting Guidelines for Malaysian Companies. Research. London: The Association of Chartered Certified Accountants. Barner, M., 2007. Be a Socially Responsible Corporation. Business Review, 85, pp.59-60. BP, 2011. Sustainability Review. Research. London: BP Plc. Elkington, J., 1994. Towards the Sustainable Corporation - Win-WinWin Business Strategies for Sustainable Development. Management Review, 36, pp.90-100. Global Reporting Initiative, 2004. Synergies between the OECD Guidelines for Multinational Enterprises (MNEs) and the GRI 2002 Sustainability Reporting Guidelines. Research Report. New York: GRI. Godelnik, R., 2011. Vodafone UK’s Latest Sustainability Report is a “Responsibility Store”. [Online] Available at: < http://www.triplepundit.com/2011/11/vodafone-uk-responsibility-store/> [Accessed 10 April 2012]. GRI, 2011. About Sustainability Reporting. [Online] Available at: [Accessed 10 April 2012]. KPMG, 2011. Sustainability Reporting,Sustained Advantage. Research Report. Geneva: KPMG. Lo, S. and Sheu, H., 2007. Is corporate sustainability a value-increasing strategy for business? Corporate Governance-An International Review, 15, pp.345-58. MandS, 2011. Annual Report and Financial Statements. Annual Report. London: MandS. Magness, V., 2003. Economic values and corporate financial statements. Environmental Management, 32, pp.1-11. Roberts, R., 1992. Determinants of Corporate Social Responsibility Disclosure - an Application of Stakeholder Theory. Accounting, Organizations and Society, 17, pp.595-612. Read More