As an organisation that’s almost two decades old, the Global Reporting Initiative (GRI) has weathered many booms and busts of the global economy. But one thing that has enabled it to thrive through the years, says its chief executive Michael Meehan, is its relentless quest to remain relevant to businesses.
Thanks to this spirit of innovation, the international non-profit organisation - founded in 1997 in Boston, United States – is today behind the world’s most widely-used sustainability reporting framework known as the GRI Sustainability Reporting Standards, which has been through many revisions and upgrades over the years.
Sustainability reporting is a practice in which businesses disclose their environmental, social and governance indicators such as in greenhouse gas emissions, workplace health and safety, and business ethics.
It has grown from a niche concept two decades ago to become a mainstream business practice today, valued for the transparency and information it provides to financial markets. According to the GRI, 93 per cent of the world’s largest 250 companies currently report on their sustainability performance. Many bourses across the world have also made this mandatory for their listed companies, or are starting to.
Sustainability or corporate responsibility reporting is set to gain even more prominence in the wake of the Paris Agreement, in which almost 200 nations agreed to a set of actions to tackle climate change.
As the world transitions to a low-carbon economy, massive investments will be made, especially into developing countries, and investors will be demanding high levels of transparency - from climate-related disclosures to other environment and social indicators - from these geographies, says Meehan.
A technology entrepreneur for two decades before joining the Netherlands-headquartered GRI, Meehan says that nowhere is this trend more evident than in Asia, which is the fastest growing region for corporate responsibility reporting over the last four years.
“The eyes of the world are on Asia,” he says. It is also the reason why GRI opened up an Asia office in Manila, Philippines this week. While the region continues to be a magnet for foreign direct investment, countries must work to create transparent economies and GRI is “here to support these ambitions”, he adds.
Meehan, who took over the helm at GRI in 2014, has advised many organisations globally, including the White House, United Nations Framework Convention on Climate Change (UNFCCC), and the California State Senate.
Here, he speaks to Eco-Business about how he is drawing on his experience to chart a new direction for GRI, and the organisation’s role in helping businesses worldwide make sense of the new economic landscape.
You’ve recently taken the helm of GRI, can you outline your vision for the organisation and what sort of role it plays in the global business landscape?
GRI is about more than sustainability reports. We focus on four things. First, on policy, so we work with a lot of stock exchanges and governments to promote the use of sustainability information to raise transparency.
Second, on corporate reporting, we strive for a world of more reporters and their increasing quality. They are important because they enhance the level of trust in markets, and this is crucial especially for regions like Southeast Asia. The more transparent markets are, the less corruption or less human rights abuses there is. And with less risk, investors get better buys.
Third, we want to go beyond reporting and focus on using information to build better policies, businesses or investments. And lastly, we focus on innovation – how we can use big data and technology to unlock sustainability reports and liberate the data so it can interact with other systems.
You mention Southeast Asia. What’s your outlook on this region?
Well, the eyes of the world are on Asia. GRI has set up a new office in Manila and the region is very important to us. In the past year, there’s been a mass exodus: about a trillion dollars have fled from emerging markets. But Southeast Asia has been an exception. Foreign investment has been going up for sometime, and it’s bucking the trend.
It’s a frontier economy and countries are starting to compete among each other for investments. That’s great but we must also be careful that they don’t cross the line into things like human rights lapses or environmental degradation.
So GRI acts as a filter. We look at these issues right off the bat. This is also important in the context of climate change. It’s more than just carbon or energy. Businesses are going to have to grapple with other issues like human rights, inequality, corruption and even terrorism. Look at the Syrian crisis, there are studies that showed environmental degradation and climate change led to some of these problems.
So what are GRI’s specific plans for the region?
The amount of investment that went into Asean last year was US$150 billion, so even though it’s growing it’s still pretty small. Why? Because the region still grapples with problems like child labour, corruption, human rights abuses, as many emerging countries do.
The reason it does is because it doesn’t have a pervasive reporting regime yet. That’s why it’s important, because as trust in these countries increase, they will become more credible places to do business. That’s what GRI is all about – to create more credible markets.
Asia must ensure that both corporates and governments work together to create a transparent, inclusive and resilient economy, and we are here to support these ambitions.
Are you happy with the pace of progress?
Well, of course not. Things are happening, but is it fast enough? No. But we’ve been around for 20 years, we’re here for the long haul.
There are many differing standards and frameworks in the market right now. How can companies make sense of all these?
The problem is that people are re-inventing the wheel. Instead of using what’s been done before, people are coming up with different standards and it creates confusion in the marketplace, and there are too many reports to do.
For GRI, we see ourselves as a big basket of risks. We’re not specialists in any one area, but we cover 50 broad different issues. We’re there for the broad view to help companies identify their risks, challenges and opportunities. And we link to more than 100 different standards and frameworks to go deep into any specific issue.
The confusion of the market is because we do a poor job at communicating how we fit together.
Reporting can be quite technical and laborious. The common feedback we get is only big companies have the resources for it. What’s GRI’s view on this?
Yes, it can be expensive. The framework is large because the problems are large. So our approach to getting away from a ‘tick box exercise’ is to focus on materiality and our definition is quite broad.
So G4 is about deepening the focus for companies into a few specific areas that are of most significance to them. If materiality is well defined, then the reporting process should be much less onerous – and cheaper.
As for the Transition to Standards which we announced at the end of last year, we are making changes so that it can be modular. This means that organisations can choose to use certain parts that are most relevant.
This also enables us to update the standards on a continuous basis to take into account the issue specific developments and align to best practice. So long as you reference the standard, we’re happy, even if it doesn’t result in a report.
This is a game-changer, there’s no standard that does this right now, it’s going to unlock the entire supply chain. Large companies are already using subsets of GRI on say, corruption or climate change, as long as they are referencing us, they don’t have to create a whole new standard themselves to get visibility on these important issues.
All the time, we are working with organisations to come up with standards for particular sectors, say, mining. And as we design better standards, the amount of information that’s disclosed comes down, so does the cost.
But there’s a line, a balance that we have to achieve in the interim. But as we announced last year, we are aiming for the Transition to Standards to be completed and released by the end of this year following a thorough and multi-stakeholder public consultation.
You came from a tech background. Share with us what you’re planning for GRI in this area.
GRI is the architect of the world’s sustainability data. All the data is in these reports, so why do we lock it up? We need to be able to take it and merge it with other things. At the moment, this is done manually by analysts who go through all the hundreds of reports. It’s insane if you think about it.
We are aiming to digitise it so people can access this information anytime and they can use it for their own anaylsis. This is all public information, so let’s liberate the data out of this stuff so we don’t need to be throwing hundreds of people at this to tease the data out.
If you look at the rankings in the market, they’re doing great work but they’re a black box. We don’t really know how they rank the companies. It’s a barrier in the marketplace. Once we digitise the information, we can be more transparent about the analytics done on any organisation around sustainability. You can trace it back to something open and public, instead of relying on somebody’s interpretation of your own report, which I think is the wrong thing.
So you’re saying there’ll be a common platform where they’ll input their metrics?
Yes. This includes three pieces. The first is a data platform, a place where we can store or reference to all the instances of the use of our standards in the marketplace. Then we can put it in a central repository, and give public access to it for free.
We don’t need to make money, that’s a liberating thing coming from the private sector. So we have a clear strategy.
Then the second piece is a consortium we have brought together to talk about how reporting should be in 10 years’ time called the Sustainability and Reporting 2025 project. They’re made up of the world’s leading software companies who will talk about how we use this data to build better businesses.
The third piece is around innovation – it’s going to involve hackathons, for instance, we’re running one at our global conference. We’d like people to go crazy with our data, go nuts with it and figure out what we can do.
Finally, you’ve been more than a year at the job now. How has it been?
Even though it’s different, I’m enjoying it. You can make a huge impact in ways that you just can’t in the private sector.