Corporate Reporting Grows and Gets Better(A)
In 1990, about a year after CERES went public with the Valdez Principles and its call for environmental reporting, I flew to Japan for a meeting with business people who wanted to know about CERES. Although they understood the concept of the principles, there was no corporate tradition of reporting anything to the general public in Japan. I was faced with very blank (although always scrupulously polite) faces when I talked about the concept of an environmental report. But they listened and asked questions for three hours.
Fast-forward to 1998, when I stood in the back of a huge, packed auditorium in London as the Global Reporting Initiative was launched, opening a new era in corporate transparency. For the first time, big transnational companies were collaborating with CERES, the U.N. and other stakeholders on the format of reports to the public about their citizenship.
Just over five years after the launch, corporate environmental and social reporting is spreading quickly around the world with over 400 organizations around the world using the GRI Guidelines. Japan is in the lead with an astounding 79 corporate reporters compared to 51 from the United States, 54 from the United Kingdom, 19 from Germany and 15 from the host country, the Netherlands. The GRI is translated into six languages. The quality of the reports is improving as companies compete for awards. For many of the reporting companies, the process of gathering information and constructing the reports has been useful as a management tool. What gets measured really does get managed! The GRI is a living document, as it evolves with more industry-specific guidelines, more sophisticated metrics around “soft” human rights and other issues, and more knowledge about actual environmental impact. Companies and their stakeholders are taking hard looks at their environmental and social impacts, discussing those impacts with stakeholders and publishing the results. There are many, many companies that have not taken this step, but the momentum we’ve gained is incredible for fifteen short years.
There’s a benefit to reporting companies that might often be overlooked, although it is potentially very significant. That benefit is increased trust. What people don’t know they often imagine. Although there are plenty of historical reasons why people do not trust corporations, in my experience there also exist myths that, were the truth known, could dissolve. In addition, few people truly understand what goes on in a steel company day to day, for instance, or the tension between safety, economy and environmental impact. I have been able to watch actual crash tests on the dummies (and will never go without a seat belt again!) but how many people have been able to do that? Transparency, painful as it can be, is usually a good policy, and companies are beginning to understand that.
Trillium Asset Management is posting its third CERES report on our web site. We use the short form of the CERES Report rather than the GRI guidelines. As with most companies, we find that we learn something every time we go through the exercise of collecting the data. Please check it out and feel free to comment. And if you’re interested in corporate reporting, come to the CERES conference in Boston in mid-April for the second annual GRI Sustainability Reporting Awards.