Abstract
<p>The stated goal of the Global Reporting Initiative (GRI) reporting framework is two-fold: to make it easier for organizations to communicate their sustainability performance to stakeholders, and to drive companies to become <em>more</em> sustainable. Our aim in this paper is to assess if GRI-reporting has any direct and positive impact on sustainability performance, and more specifically on CO<sub>2</sub> emissions of the reporting companies. This study is the first that attempts to answer this question in a quantitative and systematic manner. We analyze the CO<sub>2</sub> emissions data from 40 A-level GRI-reporting companies, over a period of six years and across five industry sectors, comparing them with a control group of 24 non-reporting companies, to assess any direct impact of reporting on emissions. We perform an industry-specific analysis of the CO<sub>2</sub> emissions of both reporting and non-reporting companies for each industry sector. We find that amongst all reporting companies and industries, only the Utilities industry exhibits a dramatic decrease in emission intensity between 2007-2012, while the others show only minimal reductions, while the overall absolute emissions levels have grown significantly for both sets of companies. On the more qualitative side, we also note, based on our own experience in undertaking this study, that the GRI reports are not conducive to providing stakeholders with a coherent, user-friendly or transparent structure of a company’s sustainability performance in general, or improvement thereof, concluding that neither of the GRI stated goals are currently attained. Finally, we provide constructive recommendations on how the GRI reporting process could better achieve its stated purpose. Academics, investors and analysts alike might find the review, the analysis as well as the recommendations of this paper useful, as they directly address the core objectives of the GRI reporting process and how it could be improved to have the desirable impact.</p>
Highlights
In 1997, a Boston, Massachusetts coalition of over 50 investor, environmental, religious, labor and public interest groups called the Coalition for Environmentally Responsible Economies (CERES) noted its dissatisfaction with three emerging phenomena (Global Reporting Initiative) (Willis, 2003); namely that (i) companies were increasingly receiving multiple diverse, incompatible and time consuming requests for information about their environmental and social performance; (ii) reporting by companies to stakeholders and analysts about these aspects of performance was varied in content, inconsistent, incomplete, lacked comparability between companies and reporting periods, and even irregular in frequency, and (iii) there were signs of increasing numbers of reporting guidelines and frameworks being introduced in various countries and sectors and from various sources
The solution that occurred to the leaders at CERES and endorsed by the United Nations Environmental Programme (UNEP) was to develop a global standardization of format and content for corporate reporting on environmental and social performance
Another study by Chen et al explored the correlation between the Environmental Management Practices (EMP), as reflected by their Global Reporting Initiative (GRI) reporting, and the financial performance of manufacturing companies in Sweden, China and India (Chen, Tang, & Feldmann, 2014)
Summary
In 1997, a Boston, Massachusetts coalition of over 50 investor, environmental, religious, labor and public interest groups called the Coalition for Environmentally Responsible Economies (CERES) noted its dissatisfaction with three emerging phenomena (Global Reporting Initiative) (Willis, 2003); namely that (i) companies were increasingly receiving multiple diverse, incompatible and time consuming requests for information about their environmental and social performance; (ii) reporting by companies to stakeholders and analysts about these aspects of performance was varied in content, inconsistent, incomplete, lacked comparability between companies and reporting periods, and even irregular in frequency, and (iii) there were signs of increasing numbers of reporting guidelines and frameworks being introduced in various countries and sectors and from various sources.The solution that occurred to the leaders at CERES and endorsed by the United Nations Environmental Programme (UNEP) was to develop a global standardization of format and content for corporate reporting on environmental and social performance. Adams & Frost acknowledged that it was not the purpose of [their] study to review performance to determine the extent to which it had changed, but rather to examine how social and environmental information is used in decision-making and performance management. They suggested that further research was required to explore the link between the measured indicators and the impact on performance. Another study by Chen et al explored the correlation between the Environmental Management Practices (EMP), as reflected by their GRI reporting, and the financial performance of manufacturing companies in Sweden, China and India (Chen, Tang, & Feldmann, 2014). Their study did not look at correlation between EMP and the actual environmental or social performance
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