September marked the fifth anniversary of a public comment that I and 65 other members of the Sustainability Context Group submitted to the Global Reporting Initiative (GRI) in the run-up to G4. G4, of course, was the next generation of GRI’s Sustainability Reporting Guidelines at the time, which since then has been replaced by a new set of standards (no longer called Guidelines), known simply as the GRI Standards.
What my colleagues and I pleaded with GRI to do at the time was to include additional guidance that would make it possible for users of G4 to actually implement the Sustainability Context Principle (a longstanding element of GRI’s Guidelines that called for performance to be reported “in the context of the limits and demands placed on economic, environmental or social resources, at the sectoral, local, regional, or global level.” (GRI 101: Foundation)
To be clear, none of the prior versions of GRI’s Guidelines had provided sufficient instructions for how to actually take such contextual factors into account, and as a consequence it was — and still is — quite possibly the case that no GRI report ever produced has actually disclosed sustainability performance, per se. Not only did GRI not take our advice, the new Standards, too, are still lacking in this regard.
Thresholds and allocations
It is perhaps worth revisiting the importance of this omission, starting with the two key elements of Sustainability Context that must be attended to if reports — sustainability performance reports, that is – are to be meaningful and informative: thresholds and allocations.
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Thresholds is a term that refers to the carrying capacities of vital capitals, such as natural capital. Take water, for example. A threshold for water would be the amount of renewable water available in a watershed, the volume of which should not be exceeded if consumption is to be sustainable. If the rate of consumption exceeds the rate of supply, the activities associated with the rate of consumption can be said to be unsustainable.
Allocations, in turn, are fair, just and proportionate shares of the responsibilities to maintain the carrying capacities (thresholds) of vital capitals. So, in the case of water, each consumer of water in a watershed can at least notionally be assigned a fair share of the available supplies, against which actual consumption can be measured and assessed. Consumption that is no more than the allocation can be seen as sustainable, consumption that exceeds it is not.
To meaningfully abide by the Sustainability Context Principle, then, a reporting organization must make reference to both thresholds and allocations in their reports — otherwise, why bother? How else is anyone supposed to know whether or not an organization’s own activities are sustainable without them?
The absence of procedures in GRI’s Guidelines for how to calculate allocations has always struck me and others as a fatal omission. After all, sustainability calls for living within our ecological means and ensuring the social and economic means to live, and yet when it comes to reporting performance against the thresholds and allocations involved, GRI has consistently opted to remain silent on the subject.
Sustainability versus "contributions"
This not only calls into question whether GRI’s Guidelines and now Standards are, or ever have been, about sustainability reporting at all (an old argument), but whether or not they were ever supposed to be in the first instance (a new argument). Is it possible, then, that GRI’s so-called Sustainability Reporting Guidelines and now Standards were and still are all about the measurement of impacts in incremental terms (more of this, less of that) and not about sustainability performance at all? Notwithstanding GRI’s use of the word “sustainability” in its branding for so many years, I now honestly believe this to be the case. How so?
First, if it was GRI’s intent to develop and promulgate Guidelines or Standards for authentic sustainability reporting, it would have known that thresholds alone would not be sufficient — allocations, too, are needed. Indeed, I and others have made this point to them repeatedly over the years and at no time have they claimed to not understand us.
More important, a careful review of the successive editions of GRIs Guidelines over the years, including its Standards today, clearly indicates that what GRI has been talking about all this time is incrementalism — measuring and reporting the incremental impacts of organizations of vital resources (more of this, less of that, etc.) and not the sustainability of their activities. The key word here is “contributions”: Listen to how GRI explained the purpose of its G2 Guidelines upon their release in 2002:
“The aim of the Guidelines is to assist reporting organizations and their stakeholders in articulating and understanding contributions of the reporting organizations to sustainable development.” (G2, p. 1)
Note here that if an organization reduces its water consumption, its greenhouse gas emissions and its solid wastes, it can be said to be making “contributions” to sustainable development, even in cases where its water consumption, greenhouse gas emissions and levels of solid waste are unsustainable. There is a huge difference between making incremental progress and making progress that is enough to be called sustainable! “Less bad” is not always sufficiently good, even when less bad amounts to progressively better.
Speeding ahead fifteen years to the new GRI Standards in place today, let’s see how things are worded there. Here’s what we find:
“Sustainability reporting, as promoted by the GRI Standards, is an organization’s practice of reporting publicly on its economic, environmental, and/or social impacts, and hence its contributions – positive or negative – towards the goal of sustainable development.” (emphasis in original)
GRI goes on to define “impact” as “the effect an organization has on the economy, the environment, and/or society, which in turn can indicate its contribution (positive or negative) to sustainable development.”
As hard as I’ve looked, nowhere can I find in any of GRI’s Guidelines or Standards a claim or statement to the effect that the purpose of their content is to provide instructions or guidance for how organizations should report their “sustainability performance.” It’s no wonder, then, that the issue of allocations is so conspicuously missing. In incrementalist reporting, there’s no need for it. One can only conclude that GRI has never really been about sustainability reporting at all – a truly stunning realization given so many outward indications to the contrary over the years.
Progress beyond GRI
In light of the above, it now appears that, strictly speaking, there are no international standards extant for measuring and reporting corporate sustainability performance — none! In order to qualify as such, a standard would have to address both thresholds and allocations, and there simply aren’t any that do. What, then, is being done about allocations?
Other than my own organization’s work in Context-Based Sustainability, which has aggressively pursued the development and application of allocation methods in reporting such as in the MultiCapital Scorecard for years now, the Reporting 3.0 initiative — with which I am also affiliated — has been a strong mover on this topic. The Blueprints they are currently developing and their recently proposed Global Thresholds & Allocations Council are both bright lights on an otherwise barren landscape.
Other bright lights include the Science-Based Targets initiative and the more recent and still-emerging Context-Based Water Metric initiative, both of which are being led by WRI, WWF and others, and with which I am also involved.
Finally, let us not forget the leadership shown by the UN (UNEP) two years ago in a report released under the title of Raising the Bar — Advancing Environmental Disclosure in Sustainability Reporting, in which the authors wrote:
“All companies should apply a context-based approach to sustainability reporting, allocating their fair-share impacts on common capital resources within the thresholds of their carrying capacities.”
If GRI ever decides to get into the sustainability reporting game in earnest, it might want to take this advice to heart.