Higher Quality Disclosures Directly Linked to GRI Reporting Framework
Companies that follow GRI’s sustainability reporting framework provide higher quality disclosures than those that don’t, according to a recent study by US-based consulting firm, the Governance and Accountability Institute Inc. High quality data leads to better decision making by the company, investors and other stakeholders, which can help drive both the bottom line and sustainable development.
The Governance and Accountability Institute Inc. (G&A), which also functions a GRI Data Partner, teamed up with The CSR-Sustainability Monitor® (CSR-S Monitor) research team at the Weissman Center for International Business, Baruch College/CUNY, to combine the two organizations’ “Big Data” sets.
Analysts examined the quality of information and degree of verification provided in 572 large-cap companies’ reports published in 2014. Companies were scored on their disclosure on 11 contextual elements, including:
- Chair’s / Executive Message
- Philanthropy & Community Involvement
- External Stakeholder Engagement
- Supply Chain
- Labor Relations
- Human Rights
- Codes of Conduct
- Integrity Assurance
The analysis found that a supermajority of the large-cap companies follow the GRI framework (84% in this study), and following the GRI framework makes a big difference in most of the 11 categories listed above.
“The results of this study highlight the reason we promote the use of the GRI Sustainability Reporting Standards,” explained Tim Mohin, GRI Chief Executive. “They help companies disclose higher quality sustainability information. Higher quality information leads to better decision making. And that is the whole purpose of sustainability reporting.”
Some of the greatest differences between companies following the GRI Guidelines and those which did not were seen in the comprehensiveness and depth of information offered on topics, such as human rights, and in the degree of third-party verification. Reports that did not follow GRI tended to be more narrative and less quantitative.
“The simple fact is that standardized sustainability reporting helps companies and its stakeholders, including investors to better utilize the information disclosed for decision making,” said Louis Coppola, Executive Vice President and Co-founder, Governance & Accountability Institute. “Companies not following the GRI framework, by far the most commonly used sustainability reporting framework in the world, are consistently out-classed by their GRI reporting peers.”
While the findings are encouraging, there is still a way to go in increasing the quality of reporting. It is hoped that the new GRI Standards, released in October 2016, will pave the way for more concise, consistent, and comparable reporting. By standardizing sustainability reporting, higher quality data can be leveraged for more effective decision making.
“We want companies and their stakeholders making decisions that lead to profits, but also to the preservation our precious resources and human rights,” explained Mohin. These findings are encouraging but they also demonstrate that we still have a lot of work to do in order to achieve sustainable development.”