Sreelatha Menon, Business Standard, October 5, 2008
A new initiative to determine how companies fulfil their social obligations may be presenting too rosy a picture, thanks to the absence of suitable vetting criteria.
Can a company be coaxed into listing out its ills, say, for a prize? That is probably unthinkable. But companies are now seizing the opportunity to list the good they do to society, environment, their own work force and so on.
So if Posco, Coke and Dow Chemicals have their share of controversies ranging from land disputes to contamination of water and air, they also share credit for having bothered to report to the Global Reporting Initiative (GRI) on how their businesses helped society, the environment and the economy.
GRI, a non-profit body and formerly a project of the United Nations Environment Programme, is the de facto global standard for reporting on a company’s sustainability. It provides 69 most exhaustive indicators on economic, environmental, labour practices, human rights, social and product responsibility factors. (These are called EC, EN, LA, HR, SO and PR in short.)
As of today, about 435 companies have reported to GRI, of which just seven are from India. The ones named above don’t report on their India operations.
The Indian companies that have listed their good deeds to GRI are ITC, ABN Amro India, Jubilant Organysos Limited , MSPL LImited, Reliance Industries, Shree Cement and Tata Consultancy Services.
GRI allows companies to rank their applications from levels A to C. All the companies mentioned above rank themselves A-plus or A. The rub is that the genuineness of these rankings is not authenticated by anyone, not even GRI.
ITC which has been proactively pursuing sustainability is probably the only company to have submitted a report for 2008. And ITC has boldly graded itself a robust A-plus. The plus indicates that the report has been examined by an external body, in this case Ernst and Young.
ITC, with its status of being water-positive, waste-positive and energy-positive (which means recharging more water than it spends, recycling all waste and saving more energy than it uses), can afford to speak out about its non-financial assets. For a company to grade itself as A or above, it needs to provide information on all the 69 indicators under GRI, whereas in ranking itself a B or C, a company need not provide all.
So, Coca Cola has graded itself C, Posco is silent on its ranking, while Dow has ranked itself A-plus.
There are other global sustainability reporting initiatives like the Dow Jones Sustainability Index and the FTSE 4good (pronounced “footsie4good”). There is also the Pacific Sustainability Index or PSI which goes into specifics like corporal punishment of workers, working hours and even an employee satisfaction survey.
The question that these feel-good report cards raise is whether trumpeting only one’s achievements is a good enough way of self-appraisal.
GRI itself raised this question recently when a survey of 72 of its sustainability reports revealed that “the majority of reports emphasise positive community impacts without mentioning any negative ones.”
While the topics most frequently reported are training and philanthropy, the companies focused only on their performance rather than on the changes they brought about, the reports said.
Most reports were also found to be weak in fulfilling Disclosure on Management Approach (DMA) requirements under the six broad divisions mentioned above. Besides, the companies were mostly silent on the Social1 (SO1) indicator, which measures the impact of companies’ operations on local communities. Just 11 per cent companies reported on this indicator. That is hardly good news.