Mark A. Cohen Senior Associate Dean Justin Potter Professor of American Competitive Business Owen Graduate School of Management Vanderbilt University Sustainability Reporting and the Global Reporting Initiative

2 Outline of Talk… History of Sustainability Reporting History of Sustainability Reporting Important drivers of reporting Important drivers of reporting GRI’s Mission GRI’s Mission History & Organizational Structure of GRI History & Organizational Structure of GRI “Products” available on GRI website “Products” available on GRI website Growing acceptance of GRI Growing acceptance of GRI Value to Librarians… Value to Librarians… Questions? Questions?

3 Origins of Sustainability Reporting… Toxic Release Inventory (TRI)Toxic Release Inventory (TRI) Effect of TRI on Stock Price of Firms Effect of TRI on Stock Price of Firms Responsible Care/Chemical IndustryResponsible Care/Chemical Industry Coalition for Environmentally Responsible Economies (CERES)Coalition for Environmentally Responsible Economies (CERES) Investor Responsibility Research Center (IRRC)Investor Responsibility Research Center (IRRC) Emissions Efficiency Index (S&P 500) Emissions Efficiency Index (S&P 500) Collected Government Penalty Data, etc. Collected Government Penalty Data, etc.

4 Growth in reporting… 1988 first US report (Polaroid) 1988 first US report (Polaroid) By 1994 => over 100 in USBy 1994 => over 100 in US By 2004 => hundreds…around worldBy 2004 => hundreds…around world

5 Growth in demand… Growth in demand Growth in demand NGOsNGOs GovernmentGovernment Financial Community (esp. SRI)Financial Community (esp. SRI)

6 Need for standardization… Financial Data Financial Data GAAP Accounting standardsGAAP Accounting standards Securities and Exchange CommissionSecurities and Exchange Commission Sustainability Data Sustainability Data Difficult if not impossible for average investor to decipher & compare.Difficult if not impossible for average investor to decipher & compare. Difficult for companies & NGOs to benchmarkDifficult for companies & NGOs to benchmark

7 Investor demand for CSR data… Dow Sustainability Index Dow Sustainability Index Calvert Group Calvert Group Innovest Investment Advisors Innovest Investment Advisors Sustainable Asset Management Sustainable Asset Management

8 Carbon Disclosure Project… 95 Institutional investors (> $10 trillion in assets) 95 Institutional investors (> $10 trillion in assets) Info Request to FT500 Global Index Info Request to FT500 Global Index Risks & Opportunities from Climate ChangeRisks & Opportunities from Climate Change

9 GRI’s mission a generally accepted global framework for sustainability reporting

10  Elevate economic, environmental and social reporting to routine practice, at the highest standards of rigour and comparability.  Design and continually improve reporting guidelines reflecting the three dimensions of sustainability: economic, environmental, and social. GRI mission

11 the GRI way: approach triple bottom line triple bottom line global global multi- stakeholder multi- stakeholderprocess multi- stakeholder consultation multi- stakeholder consultation learning forum learning forum continuous improvement continuous improvementproducts core guidelines core guidelines protocols protocols sector supplements sector supplements resource documents resource documents

12 GRI brief history: conceived 1997 : CERES & UNEP conceived 1997 : CERES & UNEP 1 st draft Guidelines released st draft Guidelines released 1999 formally launched 2002 formally launched 2002 Official recognition at WSSD (Article 18 and 45) Official recognition at WSSD (Article 18 and 45) Amsterdam-based permanent Secretariat (Sept. 2002) Amsterdam-based permanent Secretariat (Sept. 2002)

13 GRI governance

14 stakeholder council composition 60 sc members: 22 Business 16 Mediating Institutions 16 Civil Society/Advocacy 6 Labor a cross 5 regions: Africa Asia/Pacific West Asia Europe/North America Latin America/Caribbean

15 global uptake: GRI reporters (per country)

16 May 2003 GRI products GRI sector supplement s- Tour operators -FS-social -Telecom -Automotive GRI sector supplement s- Tour operators -FS-social -Telecom -Automotive GRI 2002 reporting guidelines GRI 2002 reporting guidelines GRI technical protocols: -Energy use -Water use GRI technical protocols: -Energy use -Water use GRI resource documents: -HIV/AIDS GRI resource documents: -HIV/AIDS if preferred if available all organisations

17 Economic Performance indicators Total sales by market Total sales by market Goods, services purchased by country Goods, services purchased by country Total payroll & benefits by country Total payroll & benefits by country Taxes paid by country Taxes paid by country Infrastructure spending (e.g. schools, roads) Infrastructure spending (e.g. schools, roads)

18 Examples of Environmental Performance indicators Material usage Material usage Waste by type and destination Waste by type and destination Energy consumption Energy consumption Renewable energy sources used Renewable energy sources used Water usage Water usage Biodiversity indicators Biodiversity indicators Greenhouse gas emissions Greenhouse gas emissions Discharges to water Discharges to water Significant spills of chemical, oil Significant spills of chemical, oil Penalties paid Penalties paid

19 Examples of Social Performance indicators Workforce by country, type of employment Workforce by country, type of employment Employment creation & turnover Employment creation & turnover Percent union representation Percent union representation Layoff notification policies Layoff notification policies Health & Safety record Health & Safety record Hours training & education for employees Hours training & education for employees EEO policies EEO policies Child labor practices Child labor practices Policies to evaluate suppliers/contractors Policies to evaluate suppliers/contractors Political contributions Political contributions Customer safety & health Customer safety & health

20 business recognition business recognition “… the GRI and AA1000 are your best bets, not only for reporting, but for building structured models for transparency-driven stakeholder engagement.” Don Tapscott and David Ticoll, The Naked Corporation – How the Age of Transparency Will Revolutionize Business, (2003)

21 official recognition by government “The European Parliament … highlights the importance, as stressed by the Commission, of building trust and consensus and support for internationally accepted principles such as the OECD Guidelines for Multinational Enterprises and the Global Reporting Initiative (GRI).” “The European Parliament … highlights the importance, as stressed by the Commission, of building trust and consensus and support for internationally accepted principles such as the OECD Guidelines for Multinational Enterprises and the Global Reporting Initiative (GRI).” European Parliament Report on Corporate Social Responsibility (Final A5-0133/2003), April 2003 European Parliament Report on Corporate Social Responsibility (Final A5-0133/2003), April 2003

22 “ Investors cannot make judgments about the way business is managing sustainability and corporate responsibility issues unless companies disclose relevant information. … “ Investors cannot make judgments about the way business is managing sustainability and corporate responsibility issues unless companies disclose relevant information. … Overall, we view the GRI as setting the global benchmark for disclosure and encourage companies to produce reports which are in accordance with the GRI guidelines.” Overall, we view the GRI as setting the global benchmark for disclosure and encourage companies to produce reports which are in accordance with the GRI guidelines.” SRI Annual Report, Henderson Global Investors, May 2003 SRI Annual Report, Henderson Global Investors, May 2003 market recognition

23 Increase GRI reporting Target 600+ As of 6 January 2004: 380 reporters from 33 countries

24 “In Accordance With…” Reporters who use GRI Guidelines Reporters who use GRI Guidelines Reporters who are “In Accordance With GRI Guidelines” Reporters who are “In Accordance With GRI Guidelines” Approx 80Approx 80 Must report or “explain” all key indicatorsMust report or “explain” all key indicators

25 global : GRI reporters (per sector)

26 GRI non-business reporters OrganisationCategoryCountry Australia Commonwealth Department of Family & Community Services (FaCS)GovernmentAustralia International Institute for Sustainable DevelopmentGeneralCanada Landcare AustraliaEnvironmentAustralia Manaaki Whenua Landcare ResearchGovernmentNew Zealand New Zealand's Ministry for the EnvironmentGovernmentNew Zealand NHS Purchasing and Supply AgencyGovernmentU.K. Reckitt BenckiserAcademic U.K. University of FloridaAcademicUnited States

27 GRI sector supplements Tour operators Tour operators Financial services Financial services Telecommunications Telecommunications Automotive (draft) Automotive (draft) Others in various stages Others in various stages

28 Value to Librarians Corporate Corporate Benchmarking of competitionBenchmarking of competition Design of corporate reportsDesign of corporate reports Screening of suppliersScreening of suppliers Business School Business School Classes in marketing, corporate social responsibility, regulation/lawClasses in marketing, corporate social responsibility, regulation/law Other ? Other ?

29 Questions?