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Green Dialogues: Ernst Ligteringen, Chief Executive, GRI

green_dialogues_t2sThe recently concluded Rio+20 Earth Summit appreciated the importance of Corporate Sustainability Reporting and encouraged companies to consider integrating sustainability information into their reporting cycle. Companies – large or small – operating in rich or poor nations – need to have better commitments towards environment and society.

Ernst Ligteringen, GRIA strong move by governments and industry groups to incorporate sustainability reporting can bring positive changes and directly link to the larger goals of Rio+20 – to ensure an economically, socially and environmentally sustainable future for our planet and for present and future generations.

On these contours, ThinktoSustain.com catches up with Ernst Ligteringen, Chief Executive, Global Reporting Initiative (GRI), who was a key delegate at Rio+20 Summit, to know about the latest developments for corporate sustainability reporting, emerging issues and challenges, and future implications.

Green Dialogues is a brand forum of ThinktoSustain.com engaging thought-leaders in a dialogue on emerging sustainability issues. In case of any query related to this feature, do drop in a mail to editor@thinktosustain.com.


ThinktoSustain.com: What have been the key developments and achievements for corporate sustainability reporting at Rio+20?

Ernst Ligteringen: The first achievement for sustainability reporting is that it was one of the most debated issues at Rio+20. This is a signal that sustainability reporting, which was a pioneering practice only a decade ago, is becoming an established factor on the global community’s path towards a Green Economy.

Following a call by UN Secretary General Ban Ki-moon earlier this year urging governments to work together on a framework that asks companies to Report or Explain why they do not, significant momentum has developed to come to a statement on sustainability reporting in the Rio+20 Outcome Document.

This call has been reinforced by various coalitions of investors, business and civil society, making it a point not just for governments but for businesses and their stakeholders.

Paragraph 47 in the Rio+20 Outcome Document addresses corporate sustainability reporting. Brazil, Denmark, France and South Africa announced during Rio+20 that they will form a ‘Friends of Paragraph 47’ group to work together to develop a roadmap for the implementation of the paragraph. The Group of Friends asked the United Nations Environment Programme (UNEP) and the Global Reporting Initiative (GRI) to support them.

These countries are pioneers in sustainability reporting practice and policy. They are now joining together to spearhead the follow up on the Paragraph by developing a roadmap for further work with interested governments.

ThinktoSustain.com: After Rio+20, what are the key changes expected for corporate sustainability reporting, in near future?

Ernst Ligteringen: From the outcome of Rio+20, it is clear that we will continue to see growth of sustainability reporting, both in quantity and quality.

More governments and stock exchanges will follow Brazil, Denmark, France and South Africa, and create an expectation that companies report their sustainability performance. In China, Malaysia and Singapore, among others, stock exchanges are already recommending companies to do this. The launch of the Sustainable Stock Exchanges Initiative at Rio+20 will no doubt be a driver for action by more exchanges.

Business associations will take note of the call of the World Business Council for Sustainable Development (WBCSD) for sustainability reporting by all large companies, and they will look at the example of the International Council on Mining and Metals (ICMM), which has committed its 22 members to sustainability reporting, and move their members to report. This is an effect that will ripple up and down the value chains of these companies.

Many of the world’s largest businesses that report – and 95% of the global 250 largest companies do – are looking to make their supply chains more sustainable and transparent as well. Wal-Mart’s sustainability score card is one example where the largest company in the world is demanding sustainability performance information from its suppliers.

Sustainability ReportingIn addition, demand from investors will only increase, judging by the growing number of companies that market research firms such as Bloomberg and Thomson Reuters are gathering sustainability information on. Companies will realize that even if an individual investor might not ask for their sustainability report, there are market players making judgments about their quality of management, based on what they say publicly about their sustainability performance, and how well they say it. This is also the case in India, where S&P has created a sustainability index that is outperforming the market.

On the other hand, there will be qualitative shifts. Sustainability reporting is a relatively young practice, so each year, each new reporting cycle generates a wealth of new knowledge and experience for companies and their stakeholders. These insights are being brought to bear on some important innovations.

First is GRI’s G4 Guidelines, the fourth generation of Sustainability Reporting Guidelines, to be published in May 2013 at the GRI global conference. G4 will build on the experience and new knowledge gathered since G3’s launch in 2006, and will provide more robust, unambiguous guidance on sustainability reporting. Next to updated topic content, it will provide updated guidance on materiality, how to improve the accessibility of reported information, for instance through XBRL (eXtensible Business Reporting Language), and importantly, how sustainability reporting can be linked with Integrated Reporting.

Integrated reporting, the second point, is a key new emerging development. A growing group of companies and investors are looking at how they should connect sustainability performance with financial performance, and both with business strategy. The International Integrated Reporting Council (IIRC), of which GRI is part, is developing a high level, principles base framework for this purpose.