But all this does not necessarily lead companies to produce public reports on these topics and this is what GRI Guidelines is about: Supporting companies to report publicly about relevant issues for the company and society. This might start to happen as these sectors are put on the spot more and more by stakeholders.
State-owned companies have also become the target of more transparency requirements, both for financial and non-financial performance. After the financial crisis, rich and poor states bought part of companies to rescue them, so there is a increasing ‘electors’ pressure’ on the performance of these companies. This also might lead to regulations on different levels of transparency, including reporting.
Especially while talking of new industrial projects popularly known as ‘green-field’ projects, it has been found in many instances that there is a lack of commitment towards the needs of local communities. While these projects appear to adhere to the ‘prescribed’ statutory requirements, there is a perceptible gap between “what the company delivers” and “what the local communities need”.
ThinktoSustain.com: Do you think governments must also revamp or upgrade their national policies (related to land acquisition, compensation, rehabilitation, etc.) to make the environment congenial for organizations to opt for sustainability reporting?
Nelmara Arbex: Sure. Governments are not always the quickest organizations in society, normally a government starts regulating after the rest of society has an opinion about it, or when it represents the interest of a well organized group. In this case, in my opinion, governments are late and they are key players in defining the type of future we and business will have.
Economic, environmental and social impacts need to be balanced out for a company, organization or government to be sustainable: It’s not just financial and tangible capital that counts. Although it may be advantageous to create protected areas in the physical environment, the negative impact that could have on local communities needs to be taken into account.
Governments could also improve the reporting landscape by reporting on their own impacts and performance.
Also, in some sectors, community impacts such as relocation of people are a bigger concern than in other sectors. For example, in the mining and metals sector, this is an indicator that is often reported on. However, due to current legislation, many companies may feel reluctant to be open about their activities. In this case, governments could help encourage reporting by updating their policies.
ThinktoSustain.com: If GRI is to be made mandatory for large and medium-sized companies, what institutional mechanisms would need to be focused on or strengthened to support organizations?
Nelmara Arbex: Firstly, it is important to clarify that this is not exactly what we are aiming for; we are aiming for all these companies to do publish sustainability reports. If it becomes mandatory or not is another issue(*).
If reporting became mandatory, and when the number of reports scales up, GRI offers guidance to all organizations, regardless of size, sector or location. The Guidelines are free to use, translated to more than 20 languages, and GRI also offers report templates for companies just starting out on the reporting process. GRI counts on an international network of more than 60 Certified Training Partners offering training in more than 40 countries in their local languages. We could and should extend this network and link it to other training structures in society to scale up. We would be glad to do so.
(*) (GRI recommends a report or explain approach to reporting, where companies can report on their sustainability performance or explain why if they do not. In either case – mandatory or voluntary – regulators would need to provide clear instructions to companies explaining what they need to report on. This could be achieved by adopting the GRI Guidelines and specifying which indicators to use.
Also, some regulators require reports to be assured. GRI recommends that reporters have their data assured by a third party. This verifies the information, making the report more robust and reliable.)
The recent additions to GRI – human rights, local community impact, gender issues, etc. – have touched upon very sensitive concerns currently plaguing the industrial environment. Climate change awareness has deepened interest on some highly neglected issues especially indigenous peoples’ rights, forest cover protection, etc., which have left governments grappling with unpleasant scenarios.
ThinktoSustain.com: In what ways, do you foresee the new extended guidance on human rights, gender and local community impacts bring in new challenges for companies in preparing their sustainability reports?
Nelmara Arbex: If these topics are material or relevant for the reporting company, the new Indicators in G3.1 will help them be more transparent about their gender, human rights and local community performance. Of course, an effort must be made to put systems and procedures in place, to capture the necessary data and information for the report. But this is an intrinsic challenge of reporting in general, not just for G3.1.
ThinktoSustain.com: Do you think these new guidelines would act as a trigger for governments to mandate GRI reporting as these would now intricately touch issues intersecting corporate governance, society expectations and government policies?
Nelmara Arbex: No more or less than the entire content of G3 or G3.1. This is because many sustainability issues are already under some kind of regulation – labor relations, consumer relations and environmental impacts, for example. But this does not necessarily mean that companies will publish a report on the data they collect.
Studies have revealed that a majority of CEOs agree that ‘sustainability reporting’ is needed to ensure longevity of their organizations but very few actually do something about it.
ThinktoSustain.com: What do you think could be the reasons behind it?
Nelmara Arbex: Sustainability reporting is a process that will be permanent to a company. After starting the process, it is rare for a company to stop publishing reports. As companies are exposed to several other requests for information on non-financial performance through other channels, the publication of a report is often postponed.
This is one of the reasons some organizations and experts do campaign for mandatory reporting.
