13 October 2010

Congratulations to the GRI - now in NYC

Congratulations to the GRI (Global Reporting Initiative) on the opening of their NewYork office. The United States remains the largest economy in the world, yet also lags behind in CSR / Sustainability reporting. Certainly there are pockets, and certainlly the very largest companies all produce reports, many following the GRI guidelines.

But as long as the GRI was viewed as "something European" there was going to be push-back. The lack of a national standard for sustainability reporting in the US, and the lack of a clearly defined mandate from the SEC (for listed companies) has also allowed business to avoid CSR and Sustainability reporting as "just another overhead, another reporting burden".

That of course is changing, as companies understand the financial benefits of both being sustainable, and of communicating that sustainability progress to their stakeholders.

It is also interesting to note the Big-4 are all helping.

"Each of the ‘Big Four’ accounting and professional services firms in the United States – Deloitte, Ernst & Young LLP, KPMG and PwC U.S. – has agreed to provide donations to sponsor GRI’s new Focal Point USA for the first two years."

Some time ago I reported that the GRI was making the rounds to the Big-4 asking for $200,000 each. Subsequently I received confirmation that the GRI was probalby going to get support. It looks like they got it, or some other support in kind.

Ignoring the Big-4 connections for a moment, the news of the GRI opening their NYC office is very good news. Located in New York, the GRI will have far greater access to business. And while New York is not Washington, a presence in the United States cannot but help the GRI's efforts to have the standard mandated by the SEC.

While the GRI has, either directly or through proxies, lobbies the SEC to mandate the G3 standard, their efforts to date have had limited effect. The SEC's "interpretive release" at the beginning of the year (2010) only reinforced company's responsibility to report issues where the company considers them to be material - or potentially material. This is a long way from a mandated standard. The SEC pointed out that companies already have a requirement to report on a wider range of issues, and in the CSR / Sustainability area the SEC highlighted:

  • Impact of Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material. In certain circumstances, a company should also evaluate the potential impact of pending legislation and regulation related to this topic.
  • Impact of International Accords: A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.
  • Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends.
  • Physical Impacts of Climate Change: Companies should also evaluate for disclosure purposes the actual and potential material impacts of environmental matters on their business.

So the GRI's presence in New York will help further establish the standard in the US, and provide a platform for communicating with the SEC and other regulators.

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