Companies that follow GRI’s sustainability reporting framework provide higher quality disclosures than those that do not, according to a recent study by U.S.-based consulting firm, the Governance and Accountability Institute Inc.
The Governance and Accountability Institute Inc. (G&A), which also functions as 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 conduct this research.
Combining 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 / Executive Message
- Philanthropy and 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 followed the GRI framework (84 percent in this study), and that following the GRI framework made a big difference in the quality of disclosures 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 GRI Chief Executive Tim Mohin. “The GRI Standards help companies disclose higher-quality sustainability information. Higher-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. And that is the whole purpose of sustainability reporting.”
Some of the greatest differences between companies following the GRI reporting framework, as opposed to those that did not, were seen in the comprehensiveness and depth of information provided on topics such as human rights and in the degree of third-party verification. Reports that did not follow the GRI framework tended to be more narrative and less quantitative. The table below shows the scores from 0-100 for GRI and non-GRI reports, on each of the categories listed above, with 100 being the best score.
(source: Accountability Central.com)
“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 outclassed by their GRI reporting peers.”
While these findings are encouraging, there is still a long way to go in increasing the quality of reporting. It is hoped that the revised 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 to make decisions that lead to profits, but also to the preservation of our precious resources and human rights,” elaborated GRI Chief Executive Tim Mohin. "These findings are encouraging, but they also demonstrate that we still have a lot of work to do to achieve sustainable development.”
Read more information on the study here.