Pros And Cons Of Global Sustainability Reporting

There are some pros and cons of global sustainability reporting:

1. Reporting becomes too burdensome": Much of the current criticism has to do with the number of indicators expected and the inclusion of value chain assessments in order better define an organization’s broader negative and positive impacts. Critics say this is too complex for multinationals and too burdensome for smaller organizations.

2. Value chain assessments are too complex": The G4 draft for public comment is a clear reaction to areas of non-delivery of reporters since the release of G3 in 2006, namely the failure to go beyond legal boundaries. Is it really any wonder that the multi-stakeholder community working on G4 would not accept this any longer? Sure, value chain assessments are complex, especially for organizations with various product groups and business models. But why not start with one example and set targets for a couple of years and learn from the pilots? It is somehow strange to accept that an organization that has developed its business model wouldn't be planning to look at the positive and negative impacts of their business upstream and downstream. That's especially true today, where we start to think of a circular economy, shifts from ownership to use, scarcity of resources and supply of a capable workforce.

3. Sustainability reporting is too costly": What do we do with an organization that says that sustainability reporting would be too costly? I have seen companies that spend $50m on their annual report, which is often not read page by page by more than 200-300 industry specialists and some important shareholders. But the same companies find $500,000 too much for the sustainability report, which tends to be downloaded and read way more. Hopefully with integrated reporting, this discussion may fade away, but reporters should be aware what they signal when they use this argument.

4. Too many indicators": The report process principles in the GRI guidelines normally avoids the use of more indicators than necessary and is in line with the completeness principle through the use of omissions. The much bigger question for the GRI and also the IIRC, however, is whether the indicators are the right ones. There is now much more information available to start building 'impact-based reporting' by developing micro-macro-link indicators on those areas defined for example by the Stockholm Resilience Center or through the Sustainable Society Index (SSI) published by the Hague Center for Strategic Studies. Every reporter that thinks about value cycle impacts can start to develop a better picture of whether they are part of the problem, part of the solution, or most likely still, part of both.

So reporting needs an impact-based meaning that closes the existing sustainability context gap in order to be meaningful. The discussion about the number of indicators in the GRI Guidelines is simply ridiculous.

5. Top management isn't ready for more disclosure": We more and more realize that a crisp understanding of the position of the organization towards sustainability, long-term targets and the right tone from the top are delivering wonders when it comes to motivate the organization and build reputation with customers and other stakeholders. Integrated thinking needs integrated boards and top managers.