Business has been presented with a series of sustainability accounting systems, and seems inexplicably keen to welcome the dubious offerings

Beware of Acronyms bearing gifts. Much as the Trojans were tricked by the Greeks and their wooden horse, business is being bewitched by those presenting them with seductive structures – in this case, structures to help business report and account for sustainability.

Meet the Acronyms: the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), the Sustainability Accounting Standards Board (SASB) and the CDP (the artist formerly known as the Carbon Disclosure Project). The Acronyms all have their own versions of the Trojan horse and have left them at the gates of big business or will soon do so.

Offerings from the CDP and the GRI have already been dragged inside those gates, and caused some havoc. Companies producing a GRI G4 report to Core proficiency or attempting Comprehensive have been battling valiantly.

Meanwhile the IIRC and SASB offerings are in the final stages of sculpting.

Of course the Acronyms have the best possible intentions. Unlike the ‘gift’ left at the gates of Troy by the Greeks, there is no malicious intent here. But it should be remembered that the Acronyms all have self-serving agendas, which are not necessarily about making business better for you.

The GRI, CDP, SASB and IIRC are campaigning organisations. Their acolytes are the big accountants who want to make money by helping business decipher the complexity that they themselves have helped create. The IIRC is trying to change the way business people think.

All the Acronyms have clear objectives to change the way business operates. Their agendas are couched in the soothing terminology of transparency and making capitalism more inclusive.

My concern is not a knee-jerk reaction against the transparency movement, but a call for some honesty about what the Acronyms are trying to achieve and the potential threat they pose by making business more complicated.

Take the CDP. It has led the attack and been highly successful in getting business to fill in very long forms and to compete with each other to get on various rankings. One of the little white lies that the CDP uses to encourage participation is that investors are desperate for information about carbon, water usage, supply chains and the like.

The CDP is backed by a long list of investors with an impressive balance sheet. In 2013 their assets amounted to $57tn. That sounds really striking, until you realise it’s a mere pittance compared with the funds sloshing around the system – management consultancy Bain & Co estimates the total amount of global investment capital to be $600tn.

The GRI claims it is representing the multifarious stakeholders whose whims business must cater for. These people come in many shapes and sizes and there is no way of knowing how significant they are or why they need to know so much about your business.

While stakeholder views are indeed important (it’s market intelligence), the GRI has no way of differentiating the business importance of one interest from another. That’s why its reporting guidelines ask for absolutely everything, making GRI reporting (if done honestly) such a daunting undertaking.

Thought police

But it is the agenda of the IIRC that is the most subversive. Business likes the idea of integrated reporting because most people think it is about combining all reporting into a single document and in so doing, reducing the hassle. This is plain wrong.

The IIRC is trying to change the way business people think. Like alternative therapists, the IIRC wants business to take a holistic view about how value is created and who gets hurt along the way. Integrated reporting is but a by-product of integrated thinking and the IIRC should really be called the integrated thinking council.

The IIRC’s idea is a good one and business would certainly benefit from being less blinkered in its view of value creation. But this has very little to do with reporting.

The Acronyms all have something to offer, despite their devious dressing up of the potential benefits to business. Perhaps business should be more sceptical of their ornate offerings.

Peter Knight is chairman of the Context Group

 

 

csr reporting  sustainable acronyms  GRI  SASB