2003 j burg oecd

Improving Transparency and
Communication of Corporate
Sustainable Development
Practices
The Roles of the OECD MNE and GRI
Sustainability Reporting Guidelines

Paul HOHNEN, Director, Strategic Development
Johannesburg, 19 November 2003

GRI is a collaborating centre of the United Nations Environment Programme www.globalreporting.org

outline
why improve transparency
& communication?
what is GRI?

how the OECD MNE and
GRI guidelines can help.

2

transparency … an old concept

"It is wise to disclose what
cannot be concealed."

Friedrich von Schiller (1759-1805),
German
Dramatist

3

…with new relevance

“ Transparency is on the rise, not just
for legal or purely ethical reasons but
increasingly because it makes
economic sense. Firms that exhibit
openness and candour have discovered
that can better compete and profit”.

Tapscott and Ticoll, Wall Street Journal, 14 Oct 2003

4

Increased demands

 governments

 institutional investors

 shareholders

 civil society organisations (CSOs)

 employees & unions

5

Johannesburg 2002
“ We agree that there is a need for private
sector corporations to enforce corporate
accountability, which should take place within a
transparent and stable regulatory environment”
(WSSD Declaration)

Governments agree to “encourage industry to
improve social and environmental performance
through voluntary initiatives … including public
reporting on environmental and social issues …”.
(WSSD Plan of Implementation)

6

Johannesburg 2003
‘Transparency is both an integral part of
effective public governance and a core
feature of international investment policy
rules.’
‘Participants recognise the key role of
governments to :
 promote transparency
 enhance … accountability’
Draft Co-Chairs’ Statement, OECD Global Forum on
International Investment, 18 November 2003
7

market
 Investors demanding more non-financial information

“ Investors cannot make judgments about the way
business is managing sustainability and corporate
responsibility issues unless companies disclose relevant
information”. – Henderson’s Global Investors, 2003

 Governance codes

Australian Standard 8000, King Commission, etc.

 Stock exchanges

 U.K. expanding the definition of “materiality” for financial
reporting

 Johannesburg Stock Exchange

8

investors

Share
Share
value
Licence to value
operate
Human
capital intangible
Reputation assets
Brand
Tangible
assets financial reporting

9

the naked corporation
Tapscott & Ticoll, 2003
Level of information

vanguard trust

‘mushroom’ danger

level of activism

10

benefits?
 “The amount of information companies
provide in their annual reports is correlated to
market risk and valuations.”
 “Companies that distinguish themselves by
disclosing more information lower their
market risk and therefore lower their cost of
capital.”
 “Non-financial disclosure in annual reports
needs improvement.”

“Transparency and Disclosure” study by Standard & Poor’s

11

corporate governance

 “…companies no longer act independently
from the societies and the environment in
which they operate”.

 “… social, ethical and environmental issues …
can no longer be regarded as secondary to
more conventional business imperatives
South Africa : King 2 Report on Corporate
Governance, 2002

12

outline
& communication?
what is GRI?


13

sustainability dilemmas

 what does ‘sustainable development’
mean in practice?
 what should I communicate on?

 who am I communicating with?

 how do I know it is useful information?

 what system do I use (industry, sector,
national, international?)

14

GRI’s mission

a generally accepted
global framework
for sustainability
reporting

15

mission

 to make sustainability reporting as
routine & valuable as financial reporting

 used by all organisations

 based on a multi-stakeholder process
for producing generally-accepted
guidelines for voluntary use

16

what does it offer?

products process

 Guidelines  multi-stakeholder
framework
 Sector
Supplements  learning forum

 Protocols  continuous
improvement
 Resource
documents

17

what does it offer ?

consistency credibility comparability
 one framework,  developed by  analysts
worldwide stakeholders
 investors
 links local,  market leader
national, global  employees
 widely used and
 links to supported by  tax-payers
international business,
goals: MDGs,  suppliers
government and
A21, etc. stakeholders  CSOs
 potential for
common
software, etc.

18

GRI reporter uptake
700 2005 Target
600+

600

500

400
330+
300

200

100

0
1999 2000 2001 2002 2003 2004 2005

19

Global : GRI reporters (by country)
Portugal 1 Belgium,
Ireland 2 Austria ,
Japan 60 Denmark, Italy
3
United States
of America 40 Finland 9

Australia 20 Netherlands,
Sweden 13

Now 18! South Africa 11 Germany 16

Canada 8 France 18
Switzerland 5
Spain 18
Brazil,
New Zealand 4 United
Costa Rica, Kingdom 41
Thailand 3 Chile, China, Argentina,
India, Hungary, Malaysia,
Norway 2 Mauritius 1

20

official recognition

governments agree to “encourage
industry to improve social and
environmental performance through
voluntary initiatives … taking into
account such initiatives as … the
Global Reporting Initiative
Guidelines on sustainability
reporting…”.

UN WSSD Plan of Implementation, Sept. 2002

21

business recognition
“… the GRI and AA1000 are your
best bets, not only for reporting,
but for building structured models
for transparency-driven
stakeholder engagement.”

Don Tapscott and David Ticoll, The Naked Corporation – How
the Age of Transparency Will Revolutionize Business, (2003)

22

market recognition
“ Investors cannot make judgments about the way
business is managing sustainability and corporate
responsibility issues unless companies disclose
relevant information. …

Overall, we view the GRI as setting the global
benchmark for disclosure and encourage
companies to produce reports which are in
accordance with the GRI guidelines.”

SRI Annual Report, Henderson Global Investors, May 2003

23

outline
& communication?
what is GRI?


24

GRI & OECD Guidelines : The Synergies

“The European Parliament … highlights the
importance, as stressed by the
Commission, of building trust and
consensus and support for internationally
accepted principles such as the OECD
Guidelines for Multinational Enterprises
and the Global Reporting Initiative (GRI).”

European Parliament Report on Corporate Social
Responsibility (Final A5-0133/2003), April 2003
25

respective roles
OECD
reporting framework MNEs
Guidelines
• guidance on
code of conduct
what and how
to report •guidance on
what to do
•all organisations
•for corporations

•government-
endorsed •government
approved

GRI
Guidelines
26

common characteristics
OECD
MNEs
• voluntary Guidelines

• global

• economic, social and
environmental

• multi-stakeholder

• relevant to
companies of all
sizes
GRI
Guidelines
27

common issue focus
OECD
MNEs
economic Guidelines
management consumers
systems employment

reporting environment
principles
human rights science &
performance technology
bribery
indicators
stakeholder governance
engagement competition
GRI taxation
Guidelines
28

GRI/OECD MNE ‘User Guide’

 developed by GRI as a contribution to
highlighting & advancing the shared goals of
OECD MNE and GRI Guidelines

 to help organisations assess and, if they wish,
communicate their use of the OECD
Guidelines

 a draft comparative table for free public use

 designed to be improved through use and
feedback

29

CSR : the road map
Sustainable development

ILO Core UN Summits
Conventions Treaties on
human (e.g. 2002 Johannesburg,
OECD Anti- rights, Rio 1992)
Bribery climate,
Convention biodiversity, UN Millennium
POPs, etc. Development Goals

unsustainable development

30

CSR ‘initiative proliferation’
 around 300 separate CSR codes, principles,
performance standards, management
standards, etc.
 covering one or more of environmental, human
rights, or labour sectors
 national, regional, international scope

 by company, by sector

 developed by individual governments, industry
associations, academics, etc.

31

CSR “initiative proliferation”

Benefits Burdens

 encourages creativity  ‘white noise’

 no ‘one size’ solution  market confusion

 multi-level engagement  reduces use

 underlines interest  limits learning

 increases cost

32

a global CSR management toolkit
high value features :

 global

 voluntary

 triple-bottom line

 multi-stakeholder

 flexible

33

Global CSR Management :
Chaos and Confusion?

Codes,
Management standards
Standards

Performance
standards Corp. governance
standards

Assurance
Performance
reporting
Standards

34

… or an Emerging Global CSR
Management Framework?
AccountAbility

GRI OECD OECD,
Uptake SAI,etc ISO
= Manag’t Corp. UN GC
Reporting Codes
Perform. Standards Framework Gov’t
Take-off Principles
standards

AA 1000
AS

35

conclusions
 transparency a key element of sustainability

 existing initiatives provide guidance on what to do

 in ways that promote learning, partnerships

 GRI invites you to :

a) use its Guidelines and provide feedback

b) propose and fund development of new tools

c) consider how it can be used to advance your goals.

36

2003 j burg oecd

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