The problems and opportunities of US non-financial reporting

The GRI has been playing catch-up in the US ever since its launch and expansion in other parts of the world. That could be about to change, however, according to the organisation’s US representative, Mike Wallace, who talks to Mike Scott

Despite the name and the fact that it was started in the US, there has been a perception that the Global Reporting Initiative (GRI) is essentially a European scheme to encourage companies to report on their environmental, social and governance issues.

Mike Wallace, director, Focal Point USA at the GRI, is working to change that perception, and with some success. Preliminary figures suggest that the number of companies reporting under GRI guidelines rose by 35% from 2010 to 2011. This has come about even though, according to Wallace, “there is a lot of misinformation about GRI in this country”.

One of these is the aforementioned idea that it is a European construct that the GRI is trying to impose in American companies. “Now that we are here,” Wallace says (he moved back to the US from the GRI’s Amsterdam headquarters in 2010), “we are in a better position to explain that this has been tried and tested by companies around the world and that it was created by companies.”

One way Wallace has taken his message to companies is to target industry associations and business groups, such as the National Association of Corporate Directors (NACD).
“A lot of businesses that think GRI is not appropriate for their business see that a lot of their competitors or suppliers are members and it makes them think,” he says.

He cites the example of a talk to the NACD by Intel, where the company “explained that they had been doing this for more than a decade and how it had helped them to cut costs and manage risks”.

However, the perception gap goes in both directions, with many outside the US believing that its companies are not interested in sustainability issues – something that Wallace says is not true. “Sustainability has reached a point of maturity,” he asserts, “and that is driving growth and increasing interest among US companies.”

However, there are some differences between the US and Europe, the hotbed of GRI reporting. “The economic situation here makes US companies much more sensitive to costs and, particularly, the idea of adding new costs to the business. There is also a very strong anti-regulation psyche.”

And while this attitude may be an initial barrier to GRI adoption, once companies realise that the initiative could be a way to avoid regulation, they look at it much more pro-actively, he adds.

Wallace describes the initiative as a “15-year brainstorm on what companies need to report”, adding that “after almost 15 years’ worth of international effort, GRI and all its stakeholders can proudly state the following: GRI is being written into national regulation, implemented by state-owned companies, integrated into stock exchange listing rules and being increasingly woven into the procurement policies of large, influential institutions”.

One of the key themes in coming years will be supply chains, with both Apple and Microsoft recently announcing that they have adopted GRI guidelines in their procurement policies. Wallace has also briefed the US General Services Administration, the procurement arm of the US government, about the scheme.

Wallace says: “We will see much more of GRI in supply chain procurement in future and that will help to drive a more standardised and consistent reporting approach across a massive range of companies.”

And he adds: “Having more information that is more standardised will allow better comparison between companies and will drive behaviour change.”