CARROTS AND STICKS – PROMOTING ... - Global Reporting Initiative

16 Carrots and Sticks - Promoting Transparency and Sustainability
states that “governments can
support and strengthen market
pressures on companies to respect
rights. Sustainability reporting can
enable stakeholders to compare
rights-related performance.” The
UN Global Compact, Realizing
Rights: The Ethical Globalization
Initiative and GRI assembled a
multi-stakeholder expert Working
Group to shape greater consensus
on what constitutes good human
rights practice and measurement
and include recent developments in
the field like John Ruggie’s “Protect,
Respect and Remedy” framework in
the existing reporting guidance. 12 In
the future, water 13 and biodiversityrelated
standards will arise.
The review of legislation, standards,
codes and guidelines has revealed a
particular increase in climate changerelated
standards (at the national and
international level). This has built on
research and business initiatives to
improve life cycle, footprinting and
other methodologies for measuring
and interpreting climate related data.
At the national level, one prominent
example is the United States
Securities and Exchange Commission
(SEC) which after a year of pressure
applied by many civil society
organisations shifted its policies
on companies’ public disclosure
requirements, particularly with regard
to the incorporation of ESG concerns.
In January 2010 the SEC approved
a new interpretive guidance – the
‘Commission Guidance Regarding
Disclosure Related to Climate
Change’ – which clarifies what
publicly traded companies must
disclose to investors about climaterelated
‘material’ effects on business
operations.
At the international level, the Carbon
Disclosure Project is becoming one
of the most prominent instruments
in the field of climate change
reporting. The CDP is a private
global initiative promoting carbon
reporting. Thousands of organisations
12 www.globalreporting.org/humanrights. Further information can
be found at http://www.business-humanrights.org/ToolsGuidance-
Portal/Reporting/Introductorymaterial (last visited 31 March 2010)
13 See for example the 2010 Ceres Report “Murky Waters:
Corporate Reporting on Water Risk” which evaluates and ranks the
water disclosure practices.
from across the world measure
and disclose their greenhouse gas
emissions and climate change
strategies through CDP. The CDP
puts this information at the heart of
financial and policy decision-making.
The CDP’s questionnaire invites
reporting on non-financial matters.
As part of their commitment to
enhancing coherence between their
guidance documents, CDP and GRI
are currently developing a linkage
document which includes the GRI
G3 Performance Indicators regarding
GHG emissions and CDP questions
from the 2010 questionnaire (CDP
and GRI, 2010 forthcoming).
A recent report reviewed a range of
initiatives related to GHG accounting
and reporting (ACCA and GRI, 2009).
The subject of review was not only
the most prominent standards and
guidelines addressing the technical
requirements of accounting and
reporting, but also selected initiatives
designed to compel or require
accounting, reporting, and assurance.
Examples include the voluntary GHG
Protocol developed by the WRI and
WBCSD since 1998, which was
followed by ISO 14064 with its three
standards that detail specifications
and guidance for the organisational
and project levels, and for validation
and verification of GHG accounting
and verification.
The ACCA/GRI report concluded
that “in a context in which much
accounting, reporting and verifying of
GHG data is still voluntary, in most
cases there is still no compelling
argument to standardize” (ACCA and
GRI, 2009). It concluded that a large
variation in practice cannot be helpful
to markets and policymakers facing
increasing exposure to carbon and
climate change risk. Consequently,
it raises the question how the
existing initiatives can contribute to
more standardised, coherent and
comparable future measurement,
reporting and verification (MRV).
All in all, the study calls for credible
and comparable measurement,
reporting, and verification standards.
It emphasises the need for standard-
setters to engage at a higher level
and to “move away from the
proliferation of localised voluntary
schemes that undermine the ability
to develop the national accounts that
the market and policymakers need
to support better decision making”
(ACCA and GRI, 2009).
On the one hand, the diversity of
international standards, codes and
guidelines directly or indirectly
addressing sustainability reporting
is a sign of an increasingly mature
global framework. On the other
hand, it is this diversity or ongoing
proliferation of standards that
also presents a challenge: how to
effectively deal with the continuous
complexity of evolving global
standards to avoid a decline in
popularity for sustainability reporting.
However, it is promising to see that
in the past few years, at least some
efforts have been made by leading
international sustainability reporting
initiatives themselves to leverage
synergies and to promote coherence
and convergence.
Assurance trends
Assurance is an important means
to enhance the credibility of
sustainability reports and an
increasing number of companies
are seeking external assurance for
their sustainability reports. The latest
(2008) survey by KPMG found that
56% of the reports of the G250
companies have some form of
third party commentary, while 40%
utilised formal assurance statements
by independent professional
assurance providers. Including formal
assurance is seen as a general trend
as reporting practices become more
mature (KPMG, 2008). However, the
number of assured reports varies
considerably from country to country.
Currently ISAE 3000 and AA1000AS
are the main international standards
used for assurance on sustainability
reports. In addition, more national