Sustainability Reporting: Gen 4 GRI using XBRL
Sustainability reporting is common practice throughout the world. Here in the United States, corporations have been under increased pressure from investor groups and the SEC to increase the disclosures on an organization’s most critical impacts – positive or negative – on the environment, society and the economy. Thousands of reports are issued each year but the data on the reports is hard to gather and aggregate. Imagine attempting to accumulate voting data from a state wide election if the county’s voting booths each had different ways of reporting results. By using common guidelines and common technology, organizations receiving sustainability data could generate reliable reports upon which to assess risks and opportunities for decision making.
Michael Meehan, Chief Executive, GRI recently wrote
“Many stakeholders, such as investors or civil society, have found it increasingly difficult to access the information they need from corporate reports, both annual reports and traditional sustainability reports. This has led to the emergence of new frameworks, standards, and approaches in the market designed to help organizations utilize sustainability information. With data “locked up” in separate reports, the public demand for information has increased which has intensified the reporting burden on companies, while also raising questions about the quality, auditability, and comparability of the data.” https://www.globalreporting.org/resourcelibrary/GRI%20Technology%20Consortium%20Leaflet.pdf
For the last several years, momentum has been gathering world-wide behind the concept of corporate social responsibility reporting. Although the concept still has many names such as Corporate Social Responsibility (CSR), Global Reporting Initiative (GRI), Carbon Disclosure Project (CDP), Dow Jones Sustainability Index (DJSI) and others, they share a common theme. GRI defines the reporting initiative as helping “businesses, governments and other organizations understand and communicate the impact of business on critical sustainability issues such as climate change, human rights, corruption and many others.” (See About GRI ). For simplicity, we will refer to the reporting initiative as GRI.
John Elkington, Chairman and Chief Pollinator, Volans and chairman of The GRI Technology Consortium is focused on how to take the initiative into the future.
“Annual reports have been the main focus to date, but the digital revolution will disrupt this field, too. Companies producing printed sustainability reports are like saddle makers thinking they were sitting pretty as the first Model T rattled around the corner. The Consortium is tapping some of the most radical innovators on the planet to help ensure that sustainability reporting is fit for the future.” – John Elkington, Chairman and Chief Pollinator, Volans
The team at Global Reporting Initiative (GRI) defines their mission as follows:
GRI is an international independent organization that has pioneered corporate sustainability reporting since 1997. GRI helps businesses, governments and other organizations understand and communicate the impact of business on critical sustainability issues such as climate change, human rights, corruption and many others. With thousands of reporters in over 90 countries, GRI provides the world’s most trusted and widely used standards on sustainability reporting, enabling organizations and their stakeholders to make better decisions based on information that matters. Currently, 40 countries and regions reference GRI in their policies. GRI is built upon a unique multi-stakeholder principle, which ensures the participation and expertise of diverse stakeholders in the development of its standards. GRI’s mission is to empower decision-makers everywhere, through its standards and multi-stakeholder network, to take action towards a more sustainable economy and world.
GRI and XBRL
The GRI movement can trace its roots back to 1994 the Global Reporting website reports that there is still plenty of work to do to make the information contained in the reports accessible. Huge reporting initiatives with the need to communicate to wide and diverse audiences is a formula for XBRL success. XBRL The Business Reporting Language has proven time and time again to contain the basis foundation for digital reporting. According to Deloitte Netherlands’ Sustainability Manager Mark van Rijin as reported here, Deloitte found three reasons to use XBRL with G4 (fourth generation) GRI reporting.
“There were three main reasons why Deloitte used the GRI Taxonomy in its reporting cycle: “Firstly, because we see it as the way forward in sustainability reporting. It offers advantages that traditional sustainability reporting doesn’t – it facilitates data comparability, and will be a tremendous asset in the future for stakeholders if the GRI Taxonomy is used widely.
“Secondly, we felt that it provides an opportunity to link up our reports. In the GRI Reference Table of our traditional sustainability report, we reference other documents, such as the Annual Report. By using XBRL, we can include the actual data rather than just a reference. This means stakeholders can be presented with all the information they need in one document – the XBRL instance file. For transparency reasons, this is a great way forward.
“Finally, if you look at the kind of information companies need to publish – taking into account the new integrated reporting developments – we should ideally be seeing high-level, short reports with solid data underpinning them. XBRL fits this picture.”
Whether mandated by government regulations or driven by shareholder reporting initiatives, the expansion of GRI is dependent on the acceptance of both the concept and the underlying technology that delivers the data. XBRL has proven to meet the needs of business reporting many times over. Reporting projects world-wide are using XBRL. (See Ten Countries with Open Data)
What is Generation 4 reporting or G4?
G4, the fourth generation of the Guidelines, was launched in May 2013. A sustainability report conveys disclosures on an organization’s most critical impacts – be they positive or negative – on the environment, society and the economy. By using the Guidelines, reporting organizations can generate reliable, relevant and standardized information with which to assess opportunities and risks, and enable more informed decision-making – both within the business and among its stakeholders.
According to Deloitte, “Under the G4 XBRL Reports Program, a company’s G4 XBRL report will be accessible on GRI’s website and GRI will promote the G4 XBRL reports by releasing an article summarizing the experiences of the participating organizations. The program offers participating companies a great opportunity to showcase their leadership in sustainability reporting. A number of companies have already signed up and the first XBRL reports are being prepared.” http://www2.deloitte.com/ky/en/pages/audit/articles/xbrl-g4-sustainability-launch.html
Recent Developments – Digital Reporting Alliance
19 May 2016, Amsterdam. Today, international sustainability standard setter GRI announced its newest technology initiative, the Digital Reporting Alliance, on the second day of the 5th GRI Global Conference. The Digital Reporting Alliance will address two key challenges in sustainability reporting: the lack of structured data and the lack of demand for digital reporting. The initiative will create the technical infrastructure for digital reporting by promoting an XBRL taxonomy and a platform for filing digital reports. The founding of the alliance coincides with the release of the first set of exposure drafts of GRI Sustainability Reporting Standards which are now available for public comment.
“Sustainability information from business and government represents a vast amount of data that is currently underutilized. For innovation to take place, this information needs to be liberated and provided in a way that can be analyzed and integrated,” said Michael Meehan, GRI’s Chief Executive. “There is overwhelming public and private sector demand for GRI to provide this data so that these organizations can develop innovative solutions. This was the number one recommendation from the GRI Technology Consortium and the Digital Reporting Alliance will put this recommendation into practice.”
GRI recognizes that collaboration in this space is critical and has also announced a number of other new partnerships with leading technology and innovation organizations: Climate-KIC, RobecoSAM, TCS, WikiRate, and Workiva. These partnerships, in addition to the Digital Reporting Alliance, will help organizations and stakeholders to lead for the next era of corporate disclosure, which will be digital, responsible and interactive. https://www.globalreporting.org/information/news-and-press-center/Pages/GRI-launches-Digital-Reporting-Alliance.aspx
Interested parties can also review the first set of exposure drafts of the GRI Sustainability Reporting Standards.
GRI reporting has seen tremendous growth over the last twenty years and the momentum continues today. As corporations are asked to disclose more about non-accounting developments, regulators and stakeholders have struggled to obtain consistency and transparency in disclosures. The Business Reporting Language XBRL is well positioned to help on all matters requiring uniform disclosure reporting. Keep one step ahead by watching for new developments GRI reporting developments on this and future blogs.