CSR reporting is evolving rapidly, and companies should understand the frameworks and their points of integration and difference to find the best path forward.
Each of the three reporting frameworks has different audiences, geographic tendencies, and approaches to reporting, which are amplified by the differences in materiality definitions and reporting standards.
Companies should use these new reporting frameworks to drive conversations and buy-in internally to motivate broader work on sustainability and further legitimize the integration of CSR and business.
“The key benefit of integrated reporting is not the report; it is the internal integrated thinking process that enables improved dialogue across departments and business units for new thinking and decision-making.” —Ricky Cronin, International Integrated Reporting Council
“Information will become more integrated, assurance more common, and new technology will evolve to enable companies to report on key issues much more quickly.” —Mike Wallace, Global Reporting Initiative
“For us, it feels like these three frameworks create synergy through one consistent process. Internal communication between teams can be challenging, so there is a lot of scope for integration behind the scenes.” —Dunstan Allison-Hope, BSR
Allison-Hope kicked off the session with an audience poll showing that the majority of participants are responsible for reporting, with the greatest amount saying that they plan to report to the Global Reporting Initiative (GRI), the longest-standing reporting standard. Participants noted that they will choose whether to report to all three—GRI, Sustainability Accounting Standards Board (SASB), and the International Integrated Reporting Council (IIRC)—or a mixture of the reporting standards, depending on the situation. In response to Allison-Hope’s question as to why each organization exists separately, Schmitz Eulitt shared SASB’s role as a method for providing investors comparable data sets within financial disclosures. Wallace framed the GRI’s evolution as an opportunity to provide information to multiple stakeholders (including society) and to encourage continuous improvement in corporate performance. Cronin shared that, as the IIRC develops, its intention is to provide concise communication on integrated financial, environmental, and social value primarily for investors and secondarily for broader stakeholders.
Given that each organization defines materiality differently, the panelists shared the geographic relevance, intended audience, and general approach that shapes their reporting framework’s definition. SASB’s materiality definition is bounded by U.S. law, not complemented by narrative, giving it a smaller and regulated scope for investors. IIRC’s definition is currently being refined to focus on value creation on a global scale with the information being provided to investors. GRI’s fourth-generation (G4) guidelines are framed by a broad group of stakeholders on a global scale that may include mainstream investors and religious institutions.
Allison-Hope prodded the panelists to share how they would approach the three competing standards if they were responsible for CSR reporting within a company. Schmitz Eulitt recommended that companies sit down with their in-house counsel and define what will impact their business—both risks and opportunities—and how to manage these impacts to create shareholder value. She also recommended that companies work directly with those who control how the organization spends money. Wallace said that building internal rationale with key stakeholders on the competitive case for ESG reporting and action will help build trust and access to capital to dig into the underlying work for meaningful CSR programs. Cronin responded that companies may choose to start at different points depending on how far along they are on their journey. He recommended that companies “don’t put this off, don’t be afraid to get started.” Cronin continued, “Take baby steps and think about how this can improve your internal alignment and communication as a discussion tool.”
During the question-and-answer session, the question arose about balancing the trade-offs in cost, issue coverage, internal readiness, and applicability of the three frameworks. Several participants questioned the increased costs and resources that companies would devote to reporting on the various standards, including the potential to be audited on a wider range of issues.
Panelists shared varied perspectives on cost attribution. For IIRC, Cronin said that assurance is not currently required outside of South Africa, but further review is underway on how to manage this in the future. For SASB, Schmitz Eulitt provided the perspective that investments made in sustainability reporting can be significant compared to potential 10k costs, and explained that SASB is putting together a cost-benefit analysis for standards. She explained that SASB first harvests the best existing key performance indicators (KPIs) and creates new ones where they do not yet exist to help align reporting requirements. Wallace recommended that companies use the GRI as a content index and informative tool for how to lay out the report, and to leverage existing documents in place of investing in a lengthy report. Wallace also said that a key aspect of reporting should be credibility, which includes transparent stakeholder groups and whether they are changing over the years to instigate challenging discussion and new learning.
The session concluded with an audience question about where the panelists think reporting will be in the next five years. Wallace pointed out that there will be an evolution toward the integration of information and assurance. He identified the adoption and adaptation of new technology as a key tool to do this quickly within an organization so that data pulls and reporting become more seamless. Schmitz Eulitt added, “There is a yearning as humans to get it figured out and move on. Things are changing, and this is not a finite conversation. It is like painting the Golden Gate Bridge: You finish painting, and you go back to the other end and start again.” Cronin built on this insight by highlighting that this is a journey, and it is one that can become more informed as stakeholders reach out to all three organizations and share their comments and ideas on the process. Allison-Hope closed the session with the humorous thought that in five years the CEO of SASBGRIIIRC (one combined entity) will be delivering a plenary address at the BSR Conference.