Triple Bottom Line and

Global Reporting
Initiative
Sustainability Accounting

Reporting Tools
 Sustainability
“We do not inherit the earth from our
ancestors. We borrow it from our
children.”

- David Brower
 Sustainability
“We desperately need to recognize that we are the
guests not the masters of nature and adopt a new
paradigm for development, based on the costs and
benefits to all people, and bound by the limits of nature
herself rather than the limits of technology and
consumerism."

- Mikhail Gorbachev
- President of Green Cross International
 Is sustainability compatible with maximizing
long-run financial performance?

“By the 1980s, Nike already had a glowing

reputation and spectacular earnings. Far from
being a cause for embarrassment, its strategy of
outsourcing production to cheap Asian labor was
praised as an innovative way to drive down costs,
beat the competition, and create shareholder
value.”
- Lynn Sharp Paine, 2000
Harvard Business School
 Is sustainability compatible with maximizing
long-run financial performance?

“Prior to the 1990’s, when workers and

consumers in industrialized countries awakened
to the conditions of workers overseas, it would
have been difficult to cite even minimal
reputational benefits from such a stance.”
Motivation for Adopting Sustainable
Practices
PwC 2002 Survey

Source: PriceWaterhouseCoopers,2002 Sustainability Report. August 2002.

 Importance of Reporting
• To build trust
• To demonstrate clear purpose, vision and mission
• To enhance business reputation
• To provide information to interested stakeholders
• To demonstrate commitment to operate business in a
responsible ways
• Drive forward change and stimulate dialogue
• Reward employee volunteering
• To create awareness
 The Triple Bottom Line
• Disclosure (reporting) is a key part of doing
sustainable business.
• Sustainability reporting is broader in scope
than traditional financial reporting.
• The Triple Bottom Line (TBL) is one way to
report on sustainable business activity.
• TBL defines sustainability in terms of three
separate elements: economic,
environmental, and social perspectives of
operations.
 Three Elements of the
Triple Bottom Line
Economy – reflects activities related to shaping
demand for products and services, employee
compensation, community contributions, local
procurement policies, and other monetary issues
related to company activities.
 Three Elements of the
Triple Bottom Line
Society - reflects activities in shaping local,
national and international public policy,
equality, treatment of minorities, employee
issues and public concern. That is,
organizational citizenship.
 Three Elements of the
Triple Bottom Line
Environment – reflects the impact made
through processes, products or services that
affect the environment. These may include air,
water, land, natural resources, flora, fauna and
human health.
 Example of a
Triple Bottom Line Report

• The following TBL report is excerpted from

Noranda’s 2002 sustainability report.
• The company is a one of the world’s largest
producer of zinc, nickel, and other mineral
products. Total assets were $8.2 billion in
2003.
• Noranda is a Canadian company whose shares
are listed on the Toronto and New York Stock
Exchanges (NYSE:NRD).
 Example of
Triple Bottom Line Report
Economy

Source: Noranda sustainability report, 2002

 Example of
Triple Bottom Line Report
Society

Source: Noranda sustainability report, 2002

 Example of
Triple Bottom Line Report
Environment

Source: Noranda sustainability report, 2002

 Reporting on Sustainability
• Reporting on sustainability is not synonymous
with engaging in activities that promote
sustainability.
– Neither is reporting on profitability synonymous with
being profitable.
• No “GAAP” for reporting on sustainability.
• Guidelines have been issued by governmental
entities and other groups.
– The Environmental Protection Agency (EPA)
– The Global Reporting Initiative (GRI)
– ISO 14000
• Independent reporting agencies have emerged.
 Global Reporting Initiative
• The Global Reporting Initiative (GRI) has
emerged as a prominent source of guidance for
reporting under the Triple Bottom Line.
• The GRI is a collaborating center of the United
Nations Environment Program.
• The GRI incorporates participation of
representatives from business, accountancy,
investment, environmental, human rights,
research and labor organizations from around
the world.
“The GRI is a unique, multi-
stakeholder organization founded on
the conviction consistent, regular
and comparable reporting, provides
transparency and can be a powerful
catalyst to improve performance."

Judy Henderson,
Immediate past-Chair, Board of
Directors
 About GRI ..
• The Global Reporting Initiative’s (GRI)
vision is that reporting on economic,
environmental, and social performance by
all organizations becomes as routine and
comparable as financial reporting.
• GRI accomplishes this vision by
developing, continually improving, and
building capacity around the use of
its Sustainability Reporting Framework
• An international network of
thousands from business, civil
society, labor, and professional
institutions create the content of the
Reporting Framework in a
consensus-seeking process
 What it does ?
• Transparency, accountability, reporting and sustainable
development. The GRI is a meeting place to converge
and accelerate these issues.
• The GRI network accomplishes this vision by developing,
continuously improving and building capacity around the
use of a Sustainability Reporting Framework
• To ensure the highest degree of technical quality,
credibility, and relevance, the GRI Reporting Framework
is developed and continuously improved through
intensive multi stakeholder engagement, who together
develop and review content for the Reporting
Framework.
• To-date, nearly 1000 organizations in over 60 countries
have declared their use of the GRI Reporting Framework.
The need for GRI…
→ To elevate the quality and quantity of sustainability reporting
(triple bottom line reporting)

→ To provide a common and credible framework for

sustainability reports (like the GAAP for financial reports)

→ To create a framework like the GAAP

→ Issues like corporate governance, citizenship, etc. have moved

to the forefront of management policy

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 The GRI Guidelines..
• present reporting principles and specific content to guide
the preparation of sustainability reports
• Assist in presenting a balanced and reasonable picture
of economic, environmental, and social performance;
• promote comparability of sustainability reports,
• support benchmarking and assessment of sustainability
performance with respect to codes, performance
standards, and voluntary initiatives; and
• serve as an instrument to facilitate stakeholder
engagement.
 Guidelines are NOT…
• a code or set of principles of conduct;
• a performance standard (e.g., emissions
target for a specific pollutant); or
• a management system.
 Guidelines DO NOT..
• provide instruction for designing an
organisation’s internal data management
and reporting systems
• offer methodologies for preparing reports,
or for performing monitoring and
verification of such reports
Reporting Principles (Part B)
Content of a report… (Part C)
1. Vision and Strategy

2. Profile

3. Governance structure and Management System

4. GRI Content Index

5. Performance Indicators

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“In Accordance” Conditions
Organisations that wish to identify their report as prepared in accordance with
the 2002 GRI Guidelines must meet five conditions:
1. Report on the numbered elements in Sections 1 to 3 of Part C.
2. Include a GRI Content Index as specified in Section 4 of Part C.
3. Respond to each core indicator in Section 5 of Part C by either (a) reporting
on the indicator or (b) explaining the reason for the omission of each
indicator.
4. Ensure that the report is consistent with the principles in Part B of the
Guidelines.
5. Include the following statement signed by the board or CEO: “This report has
been prepared in accordance with the 2002 GRI Guidelines. It represents a
balanced and reasonable presentation of our organisation’s economic,
environmental, and social performance.”
 Performance indicators

economic environmental social

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Economic Indicators
→Customer

→Supplier

→Employers

→Suppliers Of Capital

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Environmental Indicators

• Water
• Biodiversity
• Materials
• Energy
• Effluents, waste and emissions
• Compliance
• Transports….Etc

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Social Indicators

• Human Rights

• Society

• Product Responsibility

• Labour Practises

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Benefits of GRI…
→ Most comprehensive framework

→ Clearer picture of long term prospects

→ Comparability and consistency benchmark

→ A proactive approach  anticipates performance

→ Strengthening relationship with stakeholders

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35
Benefits of GRI (Contd)…
→ Linking various organisational functions

→ Warnings against potentially damaging situations

→ Provides framework for employees

→ Reducing volatility and uncertainty to achieve financial

stability

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Some criticisms of GRI…

→ Measurement and calculation of indicators unclear

→ Some of the indicators are ambiguous

→ GRI organisation is mainly financed by business

→ Standards for reporting and not for performance

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Dilemmas faced by companies…

→ Cost incurred is significant

→ Misinterpretation of information

→ Pressure from peer companies

→ Bias towards reporting on familiar issues

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 Indian Scenerio
• Loads of report
• Only 2 companies as of 2006 “in accordance”
with GRI guidelines