GRI and SASB are collaborating. Is that good story for firms? Joel Makower Sun, 07/12/ 2020 – 17:56
For times, corporate reporters — those inside companies responsible for creating sustainability reports and financial reporting environmental, social and governance data to various other organizations — have been frustrated by what many referred back to as an alphabet soup of standards and frameworks: CDP, GRI, IIRC, PRI, SASB, TCFD, UNGC and more.
And while they growled at how those various organizations’ askings weren’t matched, they dutifully be adhered to their requests and mandates.
Finally, assistance may be on the way.
Today, two of those organizations — GRI, formerly the Global Reporting Initiative, and the Sustainability Accounting Standards Board, better known as SASB — are announcing a collaborative effort to help ease that confusion and , not insignificantly, stance their standards as the most consequential.
“Our basic SASB 101 pitching that we give to everyone we speak to talks about SASB and GRI as being complementary, but we never could break through into the public sphere with that content, ” SASB CEO Janine Guillot told me. “It was always this conflict narrative, which was extremely frustrating.”
The “conflict narrative” wasn’t without foundation. For years, the two organizations participated for attending and preeminence among corporate reporters, NGOs and the mainstream investor community. Sometimes it get contentious. For pattern, at a sustainability reporting forum in Singapore last fall, the CEOs of GRI and SASB “traded barbs over whose was the superior standard, “ are consistent with news reports — a “showdown, “ as sustainability reporting expert Elaine Cohen called it.
For times, the two organizations played for attention and dominance. Sometimes it went contentious.
At the event, SASB’s then-CEO Madelyn Antoncic announced GRI too difficult for investors to understand and for companies to compare their performance with peers. GRI CEO Tim Mohin pointed out that its standard exploited by 75 percent of the world’s largest firms. “With those multitudes, I don’t see how what SASB is saying can be true, ” he said.
But that was so last year. SASB has a new CEO — Guillot — who joined SASB five years ago after a decade on the investing side with Barclays and CalPERS, and who comes down to her CEO job with a strong working relationship with Mohin. Now, the two are in lockstep — newborn paces for now — to help the customers of sustainability data “understand the similarities and differences in the information procreated from these standards, ” according to a seam brief document.
The time may be ripe for such a collaboration, for various concludes. One is the growing focus on sustainability and environmental, social and governance( ESG) metrics by the mainstream investment community, creating a greater need for a launch of dominant standards to surface. If there was any question about current trends, BlackRock CEO Larry Fink cast away all suspenses in his annual shareholder letter, which referenced SASB and TCFD, the reporting framework created by the Task Force on Climate-related Financial Disclosures.
Such harmonized metrics are needed even within companies, where sustainability departments are communicating with far more stakeholders.
“You’ve got a much broader base of people who are interested in talking about these topics, arriving from a much broader array of methods, ” said Mohin, including “an investor relations being, a corporate secretary, a general counsel, a financial controller, a marketing communications party and an HR person. All of a sudden, you’ve got to bring together these multidisciplinary units within both companies and investors. And that goes all the way up to the board, since councils of directors are now interested in these topics.”
Of course, outside the corporation is another small-scale horde of interested groups — customers, hires, regulators, etc. — attempting easily understood and equivalent data about companies’ sustainability performance.
And then there’s COVID.
“If the COVID-1 9 pandemic has showed us anything, it’s that nonfinancial exposure is very meaningful from a global financial position, and that the concept of what is financially material and what is considered not financially substance is a very dynamic thing, ” Mohin clarified. “We started from the issues that are important in a pandemic being sort of down the listing to being front and middle overnight. And now we have the issues of ethnic justice and inequality front and midst. We’ve seen how the events of the world can change that definition for a company terribly, very quickly, which I think is one of the very important sends now of why GRI and SASB need to work together.”
The pandemic has put into sharper focus a number of aspects of corporate operation, including business contributions to biodiversity loss and the resulting increased potential for disease outbreaks; and the is necessary that more pliable supplying chains, especially for indispensable goods such as food and remedy, as Guillot pointed out recently on GreenBiz.
Harmony and collaboration
For now, the two organizations’ work together will focus on going into the marketplace with harmonized, complementary themes. One objective, Mohin said, is to “understand how the different standards are used by companies. And then take the next step, which is to show in practice business that are using both standards.”
Another goal is to “demonstrate with real live companies who are reporting to both sets of standards how the companies are doing it, why they’re doing it and what type of information each provides for stakeholders, ” Guillot said. She likewise hinted the possibility of doing some “mock disclosures, ” pulling together best practices from across multiple companies.
For now, the two organizations’ work together will focus on going into the marketplace with harmonized, complementary letters.
Beyond that is a world of other collaboration potentials, about which neither Mohin nor Guillot would speculate.
Can the GRI-SASB hookup change the game? Mike Wallace thinks so. Wallace — who loped GRI’s North America operation from 2009 to 2014, and who remains laser focused on reporting standards and ESG ratings approaches in his role as a partner at the consultancy ERM — believes that greater collaboration could especially cure those just the start the reporting “journey.”
“It is a confusing space for brand-new entrants when one considers the various options, solicits and suggestions for how to address the growing demand for ESG information, ” he was just telling me, quoting “at least a half-dozen disclosure options.”
“We are regularly integrating a range of the frameworks, guidelines and standards together for clients, ” Wallace added. “For those companies that are just getting started, the GRI and SASB collaboration will be greatly appreciated.”
True, we’ve seen this movie before. The two organizations have long discussed the opportunities for collaboration. Two year ago, we reported on a Bloomberg-funded effort to bring the GRI and SASB standards “in line with each other wherever possible.”
And then there’s the proposed reporting framework announced in January at the World Economic Forum’s annual powwow in Davos. Created by WEF’s International Business Council in collaboration with the Big Four accounting firms and endorsed by the CEOs of 140 big companionships, it recommends a planned of core metrics and exposures “to be reflected in the mainstream annual reports of firms on a consistent basis across industry sectors and countries.”
But it doesn’t accurately understand doing away with SASB, GRI and their kin. As reported by the Financial Times, the WEF framework “takes insight from existing exposure frameworks such as SASB, the Global Reporting Initiative and the TCFD and will also include the EU’s new taxonomy that specifies dark-green instruments.”
Confusing? It seems harmonization and simplification of corporate sustainability reporting is likely to be has become a ways off.
Still, the SASB-GRI announcement is promising. Both formations believe that opennes — and particularly conduct metrics and similar intelligence — lead to improved societal outcomes.
Said SASB’s Guillot: “If financial and nonfinancial stakeholders have access to information and can liken busines conduct on issues, then our conjecture of change is that companies will compete to improve performance and that at the end of the day leads to improved sustainability outcomes.”
Which is, after all, the point.
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Pull Quote
For years, the two organizations emulated for courtesy and predominance. Sometimes it went contentious.
For now, the two organizations’ work together will focus on going into the marketplace with harmonized, complementary letters.
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