Communicating Sustainability: The Indigenous Perspective (Part 1)

Corporate commitment to sustainable development has changed considerably and with it, the propensity to publicize sustainability reports on a regular basis. Sustainability reports have been seen to rise in recent years. The auditing giant KPMG conducted a survey and reviewed the sustainability/corporate social responsibility disclosures of 2,200 multinationals that included Global Fortune 250 and N100 largest companies (measured by revenue) in 22 countries (KPMG International Survey on Corporate Responsibility Reporting, 2008). Said survey found that sustainability reporting in 2008 increased by 35 percent from its baseline data in 2005. Seventy-four percent of the top 100 U.S. companies published corporate responsibility information in 2008, either as an integrated section in the annual report or as a stand-alone document. A bigger 80 percent of the Global Fortune 250 revealed that they have been reporting on their environmental and social performance. The Global Reporting Initiative (GRI), the organization that created the widely accepted sustainability-reporting framework recorded a rise of 58 percent from 2007 to 2008. In 2010, there was increase of 22 percent sustainability reporters.

In 1997, CERES (Coalition for Environmentally Responsible Economies) began working on a standard non-financial reporting framework akin to the Generally Accepted Accounting Principles (GAAP). CERES was able to catch the imagination of entities that eventually became partners in developing the Global Reporting Initiative index. The United Nations Environment Programme (UNEP) joined as a partner in 1999, the same year that an exposure draft was released. In 2002, CERES set up the GRI as an independent body with a mission to “integrate and unify the many standards in the marketplace into a single, generally accepted sustainability reporting framework, encompassing environmental, social, and economic performance” (GRI website). The GRI released its first reporting framework and guidelines in 2000, its G2 revision in 2002, and its current version, G3, in 2006. G4 is currently in the works and a new version is expected to come out in 2013. The G3 guideline is being adopted voluntarily by about 1,500 companied worldwide. G3 has core contents and are subdivided into three parts.  Part 1 covers reporting principles, including materiality, stakeholder inclusiveness, sustainability context, and completeness. Part 2 covers standard disclosures in three areas that should be included in a sustainability report: strategy and profile, management approach, and performance indicators. Part 3 covers the 79 performance indicators used in reporting the firm’s performance in the main categories of economic, environmental, social, labor and human rights sections.

The literature showed that research on corporate sustainability reporting has been conducted mainly on multinational companies. There is too little literature available on local companies. Much of the knowledge that we have about sustainability reporting is gained from the experiences of multinational companies. More often than not, their sustainability reports use the Global Reporting Initiative (GRI) framework as the most preferred reporting guideline. GRI was developed by an agglomeration of international non-governmental and people’s organisations and could be argued that its international orientation may have neglected the unique reporting contexts of local companies. In the Philippines for instance, the first GRI-based sustainability report was first published in 2005. Since then only 13 other local companies have started producing similar reports. GRI-based sustainability reporting is a phenomenon that is obviously being observed in large multinationals. Yet, how do we also observe the experience of non-multinationals when it comes to the adoption of GRI? Why is it not catching up among local companies and how is this affecting the comparability of their triple bottom line performance when compared with that of the multinationals’?

In adopting the GRI sustainability reporting framework, what benefits accrue to the firm? Would the same benefits apply to both multinational and local companies? But before these benefits could happen, what are the challenges that the firm faces vis-à-vis adopting the framework. Again, would the challenges be the same for both multinationals and locals?

Aiming to shed light on the phenomenon of corporate sustainability reporting in general and the Global Reporting Initiative (GRI) Framework in particular, this author has took on the challenge of conducting a research on why companies are producing sustainability reports and especially how the sustainability communication process is being implemented by non-multinationals. What is the experience of local companies as opposed to those of the multinationals, which have already generated ample attention in previous studies? The GRI guideline is especially interesting as it is a global guideline and there is a certain interest to see what the experiences have been so far from using the guidelines. This research also wants to know whether GRI is the way to go if the company is thinking about its Triple Bottom Line reporting.  Are the GRI guidelines useful for a company and for what purposes?

In the next six days, a Philippine-based company will publish a B+ GRI Sustainability Report that will undoubtedly be the country’s first ever corporate report to attain the highest level of application and comparability as far as the Global Reporting Initiative is concerned. This unfolding event highlights two very interesting facts:

1) A non-MNC from an emerging economy has embarked on one of the most rigorous reporting exercises quite unseen in companies of its kind before;

2) The local company has exceeded its reporting target by employing a more stringent set of indicators specific only to its industry or sector thereby demonstrating the ability to use indigenous approach to an otherwise predominantly Western business practice.

On the second installment of this article, I will be posting the details of that highly anticipated sustainability report on the day of its launch. There is a vast void of knowledge that is yet to be fathomed when it comes to understanding the commitment (or non-commitment) of non-MNCs’ sustainability reporting practice. By focusing the spotlight on this ground-breaking report, perhaps we can begin to rationalise the significance of such a practice especially for a country that is still grappling with the idea of sustainable development vis-a-vis business viability in the 21st century.

Stay tuned for the next sustainability update.


About janusalmighty

Janus Almighty is an avid sustainability junkie. While shamelessly promoting sustainability of the corporate kind, he only does so to advance the practice of disclosing sustainability performance in the Philippine business sector View all posts by janusalmighty

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