Reasons for the Increasing Pressure for Companies to Produce Sustainability Information
The “Global Reporting Initiative (GRI)” refers to a non-profit association established in 1997. The association seeks to advance economic sustainability for organisations on the globe through the provision of guidelines, which help the respective organisations to generate model sustainability reports (Bannon & Collier 2003, p. 70). GRI produces the most customary global reports on organisational sustainability. In essence, it offers comprehensive information on issues affecting the economic, environmental, and performance of different organisations. A number of organisations in different countries around the globe appear to be using the GRI guidelines in the production of their sustainability reports. These guidelines are applied to a wide range of businesses. For instance, they can be adapted by the corporate or private businesses, small and large enterprises among others. The contributions, thus, made by the GRI have led to an increased demand for and pressure on companies to generate this type of information, which seemingly plays a vital role in the operations of respective organisations (Bannon & Collier 2003, p. 72). This paper seeks to identify and explain the reasons for the increasing demands on various companies to generate similar information, and the importance of this information on the major stakeholders of the respective organisation.
First, the GRI reports on sustainability seemingly help an organisation to control the effect on the development of sustainability. Organisations note the varied challenges accompanied the development of a sustainable economy. This has, thus, forced a number of companies to produce reports on their sustainable development to help them in managing the challenges that come along with the same. In essence, it is the duty and responsibility of an organisation to create a positive impact, which can be reflected on the global market’s economy, environmental as well as societal conditions (Bannon & Collier 2003, p. 80).
The need for companies to improve their sustainable development could be another reason for the pressure currently being exerted on the companies to produce the GRI reports. In essence, this enables the individual organisations to keep track of the performance relating to their operations. For an organisation to manage and control its issues effectively there is often a need to measure them first. Measuring the performance and level of operations provides a baseline for further developments and improvements. These measures usually help to identify the different sectors that need to be upgraded and, thus, the organisation can construct a sustainable development for itself. The ability to collect information on the operation of the organisation plays a vital role in the prevention of risks. This is because, while conducting of these operations, the organisation can go through its strategies and identify the major foreseeable risks that could affect the growth and development of the organisation. In eventuality, the desire to develop sustainable measures has led to the increasing demand by organisations to provide information on their sustainability according to the GRI (Cognizant 2011, p. 4).
Besides the need to manage and control the operations of the organisation, the GRI sustainable reporting has been noted to help in the encouraging of transparency and accountability within the organisation. It has resulted in the rise in demand for the provision of sustainable reports. Organisations nowadays require their shareholders and clients to be at equal levels with the functions of the organisation; thus, by reporting on the sustainability of the organisation, stakeholders, and the customers of the organisation are able to keep in toe with the operations of the organisation. This has helped to improve the transparency and accountability issues of the parties involved in the organisation. Additionally, it has helped to reduce negligence among the officials as they are under strict scrutiny of the public and the stakeholders (Cognizant 2011, p. 7).
The Usefulness to Shareholders of Information Provided under the Three Linked Elements Identified by the GRI
The GRI has identified three major categories that enable organisations to measure and report on their sustainability. These classifications are accepted globally and have been denoted to help organisations in the reporting and defining the sustainability. The economic performance of the organisation, the environmental aspects, and the social performances are among these categories. Essentially, a model report on sustainability has been noted to represent a number of things. Furthermore, this is a report from the CEO, which reveals the accountability of the organisation in producing the report. Other aspects include the profile of the organisation, policies involving sustainability, administration procedures, and the engagement of the stakeholders (Brown 2005, p. 92). The stakeholders of an organisation consist of the local population within which the organisation is operating, customers of the organisation, and prospective investors. Information provided in the sustainability report helps the different sets of stakeholders in various ways. For instance, the officials would want to know the risks, forecasted customers would want to know the environmental impacts whereas the potential investors would like to get a surety that they are not making a mistake by choosing to invest in a certain organisation. These reports are, thus, vital for the stakeholders in relation to the basic categories identified by the GRI. Organisations are now involving their stakeholders in the major decision making processes, which have essentially helped in the improvement of performance and accountability past the financial aspect (Willis 2003, par. 1).
First, the economic performance constitutes the impact that the individual organisation has made on the economic state of its stakeholders on the local, state, and universal ranks. The organisation’s financial standing is majorly a vital concern for the stakeholders. This is because of the investments they have made, which require them to evaluate the performance of the organisation as well as be in the knowhow of how their investments are performing. The information provided in the sustainability reports, thus, helps the stakeholders to participate and keep an eye on the operations of the organisation. In addition to this, these reports act as a fundamental structure of sourcing for feedback from the stakeholders. That is, when the reports are realized, the stakeholders can study and evaluate the contents and eventually trigger responses from them on the same information provided. For instance, organisations listed under the FTSE like the British American Tobacco, the BT Group among others, provide information for the stakeholders according to their variation in performance. These listings enable the stakeholders to evaluate the advancements being made by the organisation as well as the profit they are accruing form the operations of the organisation (Blackburn 2007, p. 374).
Environmental aspects incorporate the effects made by the organisation on the living and inorganic systems. Normally, it is the sole responsibility of any organisation to ensure that the environmental factors are observed. That is, organisations have the responsibility of ensuring that the environment they are operating within is sustained through the observation of conservative measures. For instance, the issues like pollution and environmental degradation should be observed. Other denotations have been identified that the environmental reporting of an organisation refers to the truthful communication of the organisation’s environmental relations to its stakeholders. Stakeholders play a vital role in this respect. They generally participate in the decision making process of matters concerning the environment (Brady 2000, p. 605). Stakeholders will overly react to the information provided in the sustainability reports, especially if the information given appears unrealistic. Brady in his book notes that no single organisation can be squeaky-clean (Brady 2000, p. 600). However, most organisations have apparently offered substantial information concerning their environment. Generally, these reports are expected to contain information on the organisation’s eco-balance and the identification of key environmental issues.
Social responsibility constitutes the impacts on the societal systems where the organisation carries out its operations. The social systems have been identified as the labour practices, human rights, society, and the product responsibility (Cognizant 2011, p. 8). An organisation operating in the field of electricity oil and mining like the BHP Billiton and BG Group identified as the largest organisations according to the FTSE appear to be highly ranked in their provision of the sustainability reports in respect to the social element (Blackburn 2007, p. 322). In essence, various theories try to evaluate the social reports of the GRI. These include the shareholders and stakeholder theories, which acclaim that the operations of an organisation result in an increased societal welfare. These theories have assumed that the existence of an organisation results in communal benefits (Cooper 2004, p. 28). That is, when the shareholders of the organisation appear to benefit from the business, then the society around also benefits. Thus, reports on the social aspect of the GRI help the stakeholders to analyse the extent to which the organisation is contributing to the society around.
Overly, the reports provided in the GRI help organisations as well as the stakeholders in various ways. For instance, it enables an organisation to manage its operations and improve its performances where appropriate. On the other hand, it helps the stakeholder to analyse the progress and operations of the organisation. Additionally, it acts as a base for the provision of feedback by the stakeholders to the organisations. These reports can thus be said to help in the operations and the advancements of organisations in general. It is, thus, vital for respective
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