The Amsterdam-based Global Reporting Initiative (GRI) has initiated a drive to get more US-based companies to use their reporting guidelines when publishing sustainability reports. This drive was initiated on February 1st and is dubbed, “Focal Point USA.” Of the Standards & Poor (S&P) 500 companies, 230 filed sustainability or other non-financial reports in 2010. Only 97 of these reports used the GRI “G3” reporting guidelines.
GRI offers 79 suggested results for companies to report on. Some are called “core” results and others are “additional” (suggested). All of these results are lagging indicators – the moment they are measured the results are in the past.
Many companies are beginning to see the need to look at “leading indicators.” These indicators are used to drive performance of the sustainability program itself into the future. Leading indicators come from a number of performance frameworks used around the world. The most widely used performance frameworks are EFQM (Europe), and Baldrige (US). Australia, India, China, Japan, and Brazil also have similar frameworks. CAPACCIO has posted a white paper on leading indicators to provide you with more information.
Companies really need to use both leading and lagging indicators to have a sustainability that will be around for the long term. It is interesting that many US firms use leading indicators in corporate business performance assessments but do not mention them in their sustainability reports. The sustainability/corporate responsibility professionals are getting interested in leading indicators to associate their programs with other corporate performance programs.
Performance programs refer to the lagging indicators (results) as “merely the outcome of performance.” Good performance, as measured by the leading indicators, should lead to better results in the future.
Now that ISO 26000 (social responsibility standard) recognizes the EFQM performance standard, GRI will need to reconsider its insistence on sticking with the lagging indicator-only stance. Maybe they will hear this message in the Focal Point USA effort.
Related Papers: “Using Leading Indicators to Drive Sustainability Performance” http://www.capaccio.com/sustainability