2009-05-11 - Using The Global Reporting Initiative (gri) Sustainability Reporting Guidelines With Iso 26000

Draft Linkage Document Using the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines with the ISO 26000 ‘Guidance on Social Responsibility’ Standard ISO and Reporting ISO’s first ever Guidance Standard on Social Responsibility – ISO 26000 – is on track for public launch in 2010. While, as its Annex shows, ISO 26000 is not the first or only international instrument to provide guidance on the social responsibilities of business and other organizations, it represents an important new level of international attention to the issue. In considering how to use the new Standard, readers will probably have many questions. Among them; How can I communicate my use of the standard to my stakeholders? What should I communicate? How can I optimize the value of my reporting? As the Standard recognizes (see below), part of being socially responsible involves reporting on social responsibility performance to stakeholders, whether these are internal parties (e.g. employees) or external (e.g. local communities, investors, regulators, customers).

‘An organization should … report about its performance on social responsibility to affected stakeholders. A growing number of organizations report to their stakeholders on a periodic basis about their performance on social responsibility.’ ISO 26000 Committee Draft (CD), Communication on social responsibility, Box 14

Led by the corporate sector, an increasing number of organizations are issuing ‘sustainability’ or ‘corporate social responsibility’ reports in addition to-- or as part of- their annual financial reports. A 2008 survey by the company KPMG found that 80% of the Fortune Global 250 companies now issue a separate report on non-financial aspects of their performance. CorporateRegister.Com, a UK company which specializes in tracking such reports, has a data base of over twenty thousand CSR reports across more than five thousand companies. Some countries, including Denmark and Sweden, have even mandated CSR reporting in some respect. The main reasons leading companies are communicating their social responsibility performance are identified in the ISO Standard. They include: 1. Demonstrating accountability and transparency (openness) 2. Addressing legal and other requirements

1

3. Showing how the organization is meeting its social responsibility commitments thereby enhancing its reputation for responsible action 4. Raising awareness on its strategies, objectives and performance, and the impacts of its operations and activities 5. Engaging and motivating employees to support the organization’s social responsibility 6. Helping engage stakeholders 7. Facilitating the benchmarking of performance among peer organizations Other reasons often cited by reporting organisations include: 1. Driving constructive change in the management of economic, social and environmental issues (performance reporting is critical part of a management systems process) 2. Aligning the organization internally on areas of needed improvement 3. Identifying problems for resolution before they magnify ISO and GRI: Complementary Tools ISO 26000 addresses the implementation of social responsibility by organizations, including public reporting on it. But while the ISO standard is often general in its guidance on reporting, GRI is specific. Where ISO 26000 is silent, GRI provides helpful detail. For example, ISO’s concept of social responsibility does not address an organization’s economic performance, an important element of sustainability covered by GRI. In short, GRI provides the practical help for those charged with actually preparing a report of the type the ISO Standard promotes, while addressing other stakeholder concerns as well. Like ISO 26000, the GRI Sustainability Reporting Guidelines were developed and refined in an international, multi-stakeholder process involving thousands of participants, including those from the business, labour, NGO and intergovernmental organization sectors. Since its launch in 1997, the GRI reporting framework has been developed and refined several times to respond to evolving experience and needs. Recognized by the United Nations and the UN Global Compact, and referenced in many national CSR policies and investor initiatives (such as the UN Principles for Responsible Investment), the GRI is a freely available voluntary tool for all organizations to use in preparing their social responsibility reports. More information on GRI is available at: www.globalreporting.org The most widely recognized and used international sustainability reporting framework, the GRI has participated actively in the ISO 26000 process since its inception. Based on the current ISO Committee Draft, GRI offers the following observations on how ISO 26000 users might employ the GRI framework to prepare a report on their implementation of the ISO standard. These observations focus on the three main challenges reporting organizations face: (1) selecting the issues to be covered; (2) identifying what aspects performance related to those issues to report (performance indicators, etc.); and (3) ensuring the quality of reported information.

2

Determining What Issues to Report ISO 26000 recognizes that social responsibility reports should not only be responsive to stakeholder concerns, but to be most credible, should address the “relevant and significant issues of the organization” (Clauses 7.5.2 and 7.6.3). The document also provides some general guidance on this. GRI, expanding upon a term used in financial reporting, captures a similar approach under the reporting principle of “materiality.” Under GRI, issues are material if they pose significant economic, environmental or social impacts, or would substantially influence the assessments and decisions of stakeholders about the organization. The GRI Guidelines provide useful tests that can help a reporter decide whether an issue is material. In addition, the guidelines offer tips on stakeholder involvement in the reporting process under a principle on “stakeholder inclusiveness.” The ISO standard also says that social responsibility reports should “present the organization’s operational performance … in a broader sustainability context,” (Clause 7.5, Box 14). Further explanation of this is presented under GRI’s principle on “sustainability context”. GRI also recommends more specific types of contextual information be reported under its guidelines provisions on Disclosure on Management Approach (DMA). Likewise, ISO calls for reports to present a “complete picture of the organization’s social responsibility performance” (Clause 7.5, Box 14; Clause 7.6.3) and GRI’s principle of “completeness” provides meaning for that. Taken together, GRI’s reporting principles of materiality, stakeholder inclusiveness, sustainability context, and completeness, along with its Reporting Boundary Protocol, present an approach that can help a reporter identify and prioritize its economic, social and environmental issues for reporting. This also makes it convenient to fulfill the ISO provision calling for reports to explain how the issues were selected (Clause 4.5, Box 14). Identifying Performance Indicators and Other Specific Disclosures ISO 26000 acknowledges that to be most credible, a social responsibility report must cover the organization’s social responsibility objectives and performance, and says that one of the most common methods of measuring performance is with indicators (Clause 7.5, Box 14, Clause 7.7.2). Indicators are specific qualitative or quantitative information about performance results or outcomes associated with the organization that are generally comparable and demonstrate change over time. Again, ISO does not provide guidance on specific indicators, nor any other framework for comparing performance either year-on-year or with other comparable organizations. In contrast, GRI offers several widely used specific indicators dealing with a range of economic, social and environmental topics. The Table below identifies how the specific GRI indicators and other disclosures offered in its G3 Reporting Guidelines can capture the performance on specific social responsibility subjects and other provisions listed in ISO 26000.

3

Recognizing the limitation of generic guidance, GRI also offers more customized indicators and other disclosure guidance under specific sector supplements. These cover sectors such as apparel & footwear, automotive, electric utilities, financial services, food processing, logistics & transportation, mining & metals, public agencies, and telecommunications. Several others, including for construction & real estate, oil &gas and NGOs are under development. In addition, GRI is developing national annexes to provide specific guidance to reporters in certain countries.

Besides reporting on performance, the ISO standard also calls for communication on social responsibility objectives, achievements and shortfalls (Clause 7.5, Box 14). This is consistent with GRI’s Disclosure on Management Approach under its reporting guidelines, which asks for information on goals and performance, successes and shortcomings and other contextual information. Ensuring the Quality of Reported Information ISO 26000 briefly explains that social responsibility reports and other communications should be understandable, accurate, balanced, and timely (Clause 7.5.2), while GRI goes further in providing more specific guidance on the principles of clarity, accuracy, balance, and timeliness, as well as the principles of comparability and reliability. These principles all go to helping assure the quality of reported information. ISO also notes that the credibility of reports and other communications about social responsibility can be enhanced through third party verification or assurance, but doesn’t provide the type or extent of guidance on that like GRI does in its guidelines. The Future of Reporting The rise of ‘sustainability’, ‘corporate responsibility’ or ‘non-financial’ reporting reflects trends that seem set to grow further. Its drivers include: • The desire of organizations to use information better to improve performance • The interest of regulators, employees, the media and the public in what an organization is doing to contribute to global sustainable development challenges such as climate change and human rights; • The need of managers, investors or donors to assess how well an organization is managing risks and exploiting opportunities to advance its goals; and • The rising interest of governments in encouraging all organizations to play their part in implementing public policy. The ISO 26000 Standard can be expected to bring both a heightened level of awareness about social responsibility, but also a new breadth and depth of understanding of the issues. In turn, it seems likely to encourage wider attention to what the policies and practices of organizations are, and to the issue of reporting. By using the GRI framework in tandem with the new ISO Standard, users will have a practical set of tools to measure and report on their social responsibility policies and practices.

4

The GRI secretariat has prepared this paper to assist potential users of the ISO 26000 Standard. For reasons of length, it does not seek to cover or represent all elements covered by either the draft ISO Standard or the GRI Guidelines. Readers are encouraged to examine those documents for authoritative text. As the ISO draft further evolves, GRI intends to further refine its guidance on the complementary features of the two instruments. Any comments or suggestions for improvement on this Draft Linkage Document should be sent to Sean Gilbert, Technical Director, GRI ([email protected]).

5

Table. Comparison of GRI G3 Reporting Guidelines with ISO 26000 CD Social Responsibility Subject

ISO 26000 Clause

GRI G3 Guidelines Disclosure No. (DMA=Disclosure on Mgmt Approach)

Organizational governance

6.2

Human Rights -Due diligence -Human rights risk situations -Avoidance of complicity -Resolving grievances -Discrimination and vulnerable groups -Civil and political rights -Economic, social and cultural rights -Fundamental rights at work Labour Practices -Employment and employment relationships -Conditions of work and social protection -Social dialogue -Health and safety at work -Human development & training in the workplace The Environment -Prevention of pollution -Sustainable resource use -Climate change mitigation and action -Protection & restoration of the natural environment Fair Operating Practices -Anti-corruption -Responsible political involvement -Fair competition -Promoting social responsibility in the sphere of influence

6.3 6.3.3 6.3.4 6.3.5 6.3.6 6.3.7 6.3.8 6.3.9 6.3.10 6.4 6.4.3 6.4.4 6.4.5 6.4.6 6.4.7

1.1, 1.2, 2.3, 4.14.14; All DMAs HR1-9; HR DMA HR1,2,5,6,7 HR5-7 HR1-3, 5-8 HR4,9* HR4,6,7,9; LA13-14 HR5,9 PR1,2; SO1; EC9 HR4-7 LA1-14; LA DMA HR4,5; LA1-5,13,14 LA3-5,14; EC5 HR4,5; LA4,5 LA6-9 LA10-12

6.5 6.5.3 6.5.4 6.5.5 6.5.6

EN1-30; EN DMA EN19-24 EN1-10; EN16-8,26,27 EC2; EN16-18 EN11-15,25

6.6 6.6.3 6.6.4 6.6.5 6.6.6

6.6.7 6.7 6.7.3

SO2-8; SO DMA SO2-4 SO5-6 SO7 EC6,9; HR1,2,8 PR1,2; EN 26,29; Guidance on Boundary Setting EC9; SO8* PR1-8; PR DMA PR6,7

6.7.4 6.7.5 6.7.6

PR1-5 PR1-5; EN26,27 PR3-7,9*

-Respect for property rights Consumer Issues -Fair marketing, factual and unbiased information and fair contractual practices -Protecting consumers’ health & safety -Sustainable consumption -Consumer service support and dispute resolution

6

-Consumer data protection and privacy -Access to essential services -Education and awareness Community involvement and development

6.7.7 6.7.8 6.7.9 6.8

-Community involvement

6.8.3

-Education and culture -Employment creation and skills development -Technology development and access -Wealth and income creation -Health -Social investment

6.8.4 6.8.5 6.8.6 6.8.7 6.8.8 6.8.9

* Indirectly relevant

7

PR8 PR1,5; EC9* PR5-7 SO1; SO DMA, EC1,5-9 EC1,8; SO2-6; LA8, Stakeholder inclusiveness principle EC8*h SO1; EC1,6,8,9 EC7* EC1,6-8 LA8 EC1,8

SUMMARY LIST OF GRI INDICATOR TOPICS (1) Environment Conserving Materials EN 1: material usage EN2: use of recycled materials Reducing Impacts on Energy Resources EN3, 4: energy consumption EN5: energy conservation EN6, 7: energy-efficiency and renewable-energy initiatives Reducing Impacts on Water Supplies EN8: water usage EN9: effects on water sources EN10: water recycling and reuse Protecting Biodiversity EN11: areas of high biodiversity EN12: effects of activities, products and services on areas of high biodiversity EN13: habitats protected or restored EN14: managing biodiversity impacts EN15: threatened species in areas affected by operations Reducing and Controlling Emissions, Effluents and Waste EN16, 17: greenhouse gas (GHG) emissions EN18: GHG emission reduction EN19: emissions of ozone-depleting substances EN20: emissions of other air pollutants EN21: wastewater discharges EN22: waste generated and disposed of EN23: significant environmental spills EN24: hazardous waste managed EN25: effects on biodiversity from impact on water bodies Reducing environmental impacts of products and services EN26: reducing environmental impacts of products and services EN27: reclaiming products sold Achieving and Maintaining Compliance EN28: fines and other penalties for environmental violations Reducing Environmental Impacts from Transport EN29: environmental impacts of transporting products, materials and people Assuring Appropriate Resources Devoted to Protecting the Environment EN30: expenditures on environmental protection (2) Human Rights Furthering Human Rights through Investment and Procurement Practices HR1: screening investments for human rights concerns HR2: screening suppliers and contractors for human rights concerns HR3: training employees on human rights Preventing Discrimination HR4: actions taken to address incidents of discrimination 8

Protecting Freedom of Association HR5: actions to support freedom of association in areas where it may be in significant threats to this freedom Preventing Child Labor HR6: actions to prevent child labor in areas where there is a significant risk of it occurring Preventing Forced and Compulsory Labor HR7: actions to prevent forced and compulsory labor in areas where there is a significant risk of it occurring Assuring Security Practices Respect Human Rights HR8: security people trained on human rights Protecting the Rights of Indigenous People HR9: actions taken to address violations of the rights of indigenous people (3) Labour Practices Providing Good, Non-discriminatory Employment LA1: number of employees by type and region LA2: employee turnover LA3: employee benefits denied to temporary and part-time workers Assuring good labour-management relations LA4: percentage of unionized workers LA5: minimum period of notice to employees about significant changes affecting them Protecting the health and safety of workers LA6: workers represented in safety and health committees LA7: statistics on injuries, occupational diseases, absenteeism LA8: employee, family and community programs to address serious disease LA9: health and safety topics covered in collective bargaining agreements Developing employees through training and education LA10: amount of employee training LA11: programs to assist employees at career end (retraining, retirement, etc.) LA12: percentage of employees receiving regular performance and development reviews Fostering diversity and equal opportunity among employees and within the organization’s governance bodies LA13: diversity of organization’s governance body LA14: ratio of men’s to women’s salaries for workers and for management (4) Organizational Governance 4.1: governance structure within organization 4.2, 4.3: independence of oversight governing body (board of directors, etc) from management personnel 4.4: mechanisms for providing stakeholder (employees, investors) feedback to the governing body 4.5: linkage between executive compensation and performance 4.6: processes within the governing body for avoiding conflicts of interest 4.7: process for securing necessary expertise within the governing body on social, environmental and economic matters

9

4.8: the organization’s mission, values, code of conduct and principles related to social, environmental and economic matters 4.9: approach by the highest governing body for overseeing the organization’s identification and management of social, environmental, and economic matters 4.10: processes for evaluating the performance of the governing body relative to social environmental, and economic matters 4.11: organization’s approach to the precautionary principle 4.12: external codes, standards, charters, guidelines, etc. adopted by the organization 4.13: associations in which the organization is a member Disclosure on Management Approach for each category: (covers strategies, goals and performance, policies, responsibilities, training, monitoring, and management systems for that category) (5) Fair Business Practices Corruption SO2: business units analyzed for corruption risk SO3: employees trained in anti-corruption policies SO4: actions taken in response to incidents of corruption Responsible advocacy of public policy SO5: participation in development of public policy; positions taken on issues SO6: political contributions Avoidance of anti-competitive behavior SO7: outcomes of lawsuits concerning anti-competitive behavior Complying with law SO8: fines paid and other sanctions for violations of law (6) Community Involvement/ Society Development Assessing and managing impacts on communities SO1: programs to assess and manage the impacts of operations on communities EC9: indirect economic impacts on community Contributing to the economic well-being of the community EC1: wages, taxes, donations and other financial contributions to the community EC5: ratio of standard wage to local legal minimum wage EC6: spending on locally based suppliers EC7: hiring locally based managers EC8: commercial, in-kind and pro-bono contributions to community services and infrastructure (7) Consumer Issues Protecting customer health & safety PR1: percentage of products and services subject to life-cycle evaluations for health and safety impacts PR2: compliance with laws and voluntary codes concerning the health and safety impacts of products and services Satisfying customer needs, including needs for product and service information PR3: product and service information provided 10

PR4: compliance with laws and voluntary codes concerning product and service labelling and information PR5: customer satisfaction survey results Responsible marketing PR6, 7: compliance with laws and voluntary codes concerning marketing communications Respecting customer privacy PR8: complaints regarding breaches of customer privacy and losses of customer data Assuring products and services conform to law PR9: fines for violations of laws concerning products and services (8) Economic Performance EC2: Financial implications of climate change EC3: Coverage of the defined benefits retirement program EC4: Significant government financial assistance received

11