I’ve Taken the Pledge to Stop Saying “Non-Financial”: 4 Learnings from the GRI Reporters’ Summit
Companies that want to be successful in the long term must get comfortable with the uncomfortable. That was a key theme in FleishmanHillard’s recent Navigating Zero Gravity report. And it was reinforced throughout the Global Reporting Initiative (GRI) Reporters’ Summit North America on February 25, where sustainability-minded professionals converged on Tempe, Ariz., to get updates on the use of the GRI Standards, hear and see best practices and discuss emerging trends. Ready or not, here are my top four takeaways:
1. Investors are watching: 82% are looking at environmental, social and governance (ESG).
Investors expect your company to demonstrate its commitment to ESG. Globally, the managers of more than $22.9 trillion corporate assets now consider ESG principles in their evaluations of the companies they invest in. Blackrock, Vanguard and State Street – funds who have taken a major stand on sustainability – own 18% of the S&P 500. And, 49% of shareholder proposals are related to ESG topics.
How can you help investors get the most out of your corporate social responsibility (CSR) or sustainability report? First, be consistent and accurate in your reporting. Investors want data – a lot of it – and they want to be able to make year-over-year comparisons. To make that easy for them, consider consolidating the data in your report in one spot. Or create a separate, downloadable scorecard.
And be proactive with emerging industry trends. Investors want to see that your company looking ahead to assess and manage risks, which brings us to my next learning.
2. Stop calling ESG-related reporting, “non-financial:” Sooner or later, it affects your bottom line.
Topics like diversity and inclusion and community engagement may not seem directly connected to your company’s profit margins, but they have the potential to negatively – and positively – impact your success. That’s why it’s critical to move toward fully integrating sustainability into your company’s business strategy.
A good place to start is by evaluating how your company handles GRI Standard 103, Management Approach. In your reporting, each of your material topics should be accompanied by a discussion of its management approach: 1) Why the topic is important to your business, 2) how your company manages it, and 3) how you evaluate progress.
Over the next few years, we expect to see more and more companies combining their annual and sustainability/CSR reports, or moving to an integrated report.
3. Your stakeholders want to know: Greater transparency puts you ahead … for now.
Being transparent now will win you points with investors, consumers and other stakeholders. Consumer demand combined with such technologies as blockchain and AI are all playing a role in increasing the need for transparency. Consider these tips to help ensure that your report meets that need:
- Bringing in your legal team at the beginning.
- Do a gap analysis every year to see where you can improve or expand the next year’s reporting.
- Benchmark your performance against your peers and competitors. Then strive to do more.
- Go beyond general support for the United Nations Sustainable Development Goals. Identify where your company can have an impact at the indicator level (there are 169 of them), and report your progress year over year.
4. No one has time to answer hundreds of surveys: Prioritize.
I saved the best news for last. While the first three learnings may push your companies’ comfort zone, this one should be a relief. There are hundreds of sustainability-related ratings and rankings out there (Sustainalytics, Corporate Knights, MSCI, ISS, DJSI, CDP, and on and on …). No one expects you to respond to all of them! Prioritize by asking two simple questions:
- How relevant is the survey to your company?
- How much influence does the survey have?
Worthy of note: I had the opportunity to hear from Corporate Knights during the Summit. They’re actually anti-survey, relying instead on publicly available information. They are currently revamping their methodology to emphasize what they call “clean revenue.” That means they’ll evaluate how your company makes money and whether you’re doing it in a way that contributes to making the world a better place. This concept will account for half of how Corporate Knights scores a given company.
No question, when it comes to addressing sustainability at your company, there’s a lot to soak in. At FleishmanHillard, we help you make sense of the current landscape and — no matter where you are on your journey — push your company forward.
