Sustainability Reporting on a Budget

As the 2015 sustainability reporting cycle begins, Pro Bono Australia spoke with Paul Davies, Chief Operating Officer at sustainability firm Banarra, to hear his advice on getting a head start in the reporting process for 2015  – particularly in resource-constrained environments.

Australia is the fourth fastest climber internationally in terms of corporate reporting.

The Global Reporting Initiative (GRI), a Collaborating Centre of the United Nations Environment Programme (UNEP), produces a comprehensive Sustainability Reporting Framework that is widely used around the world.

The KPMG Survey of Corporate Responsibility Reporting 2013 showed that GRI guidelines were the dominant reporting framework used in Australia, employed by more than 83 per cent of companies in their reporting. The Australian Council of Superannuation Investors has cited GRI’s Guidelines as the framework of choice amongst the ASX100, with 80 percent of reporting companies using the framework.

In May 2013, the Global Reporting Initiative (GRI) launched the fourth generation of its Sustainability Reporting Framework: The G4 Guidelines. G4 is different to previous iterations of GRI Guidelines, focusing on materiality and encouraging companies to report on the issues that are critical to achieving their strategic goals.

After December 2015 all reports will be published in accordance with GRI G4 guidelines – so companies must begin the transition. In Australia in 2014, six companies reported in accordance with G4.

GRI recently engaged Australia’s Early Adopters of G4 to capture their experiences and advice working with G4. Paul Davies, Chief Operating Officer at sustainability firm Banarra, was among them.

Pro Bono Australia News spoke with Davies for his tips on where companies should aim to be in the coming months and how they can maximise the resources available to them.

Prioritise Materiality

Material topics for a reporting organisation include those topics that have a direct or indirect impact on an organisation’s ability to create, preserve or destroy economic, environmental and social value for itself, its stakeholders and society at large.

Davies says that at this point, organisations can put themselves in the best position by focusing their resources on narrowing down down the issues that are material to them.

“If I was going to focus my time now on getting my business ready for the transition to G4, the first place I would be looking between now and writing the report is getting a handful of those key material issues to focus on.”

“The number one thing is to get their materiality process truly disciplined and under control. If they’ve got a weak materiality process, they won’t have any luck with G4 if their materiality is not robust enough to whittle down all the things they could talk about to just a handful of issues.”

Feel No Fear

Unfounded trepidation around the materiality process has the potential to hold companies back, Davies says.

“A clear head and appropriate strategy, used as a means to an end, will prove effective.

“Some people feel a bit overwhelmed by materiality – they feel, if I’m going to do it, I’m going to have to hire a new staff member and spend six months engaging external stakeholders. I’m going to have to do fifty other things and only then will I have a materiality outcome that I can trust.”

“It’s the [issue[ they’re afraid of the most. They overly complicate it a lot of the time – they get so caught up in the process. It’s like the process is more important than the outcome. I think organisations with a bit of thought could apply any number of processes to quickly whittle down some sustainability topics that gives their report some legitimacy.

“There’s sort of this aura around materiality where organisations think, ‘I’m going to do this, and I hope to god I get it right! And if I don’t get it right, my whole report is going to be completely undermined.’

“There’s that fear factor, and unfortunately consultants play on that a lot. I think a lot of the time organisations can cut themselves a break and do some solid internal engagement to tease out five of six key issues that they can then use as the basis for going forward with G4.”

Embrace Shortcuts

Davies says some shortcuts may be necessary where time and money is tight – and that solid outcomes may still be achieved.

“With materiality, you don’t really need to take it to the nth degree to get some outcomes that are meaningful in focusing your report on some key issues.[Having it] at any level is better than not doing it at all. It’s a bit of a sliding scale. You don’t have to always do it brilliantly to industry best practice.

“G4 doesn’t set a minimum standard for materiality, so there’s some leeway there. As long as a company is prepared to say what they did, they don’t have to convince GRI or anyone else their materiality process is the best in the world, they need to be able to say we’re going to talk about these issues in our report, and this is the way we decided what they were and the the reader can decide if in fact those issues are legitimate or not.”

Stakeholder engagement in the materiality mapping process is one of the most resource-demanding aspects of the process – and also one that can be done smartly and strategically to save time, he says.

“You can’t run a materiality process and ignore your stakeholders. That’s not going to work. You can canvass stakeholders directly, which is the tradition – for example, face-to-face engagement or supplier surveys – but that’s very resource intensive and very intensive. Some organisations prefer that, and like to do that every three to five years for that extra confidence.

“But on the other hand, maybe for two out of those three years, they can do some indirect canvassing of stakeholder views – research into what’s in the media, talk to key stakeholder relationship manager within business, they can talk to their procurement guy and say, ‘what are the issues your suppliers have brought to you in the past twelve months?’.

“You could use the embedded knowledge in the head of the HR manager, the procurement manager, the risk manager. Have some confidence in these people working with these people on a daily basis.

“Your heads of department will give you those insights into what are some key material issues for the business and its stakeholders without having to engage 20 different external stakeholders and spend all that time and money. The results are still robust enough to say ‘I may not have got all the issues, but I’ve got a bunch of issues that clearly resonate with the business and its stakeholders and they’re the ones we’re going to report on’.”

Read reflections from all of G4’s early adopters here.