GRI and Sustainability in the Supply Chain

I don't know about you, but I've been seeing a lot about the Global Reporting Initiative (GRI) over the last few months. This is partly because the GRI recently released its third iteration (G3) of their reporting standard on issues of sustainability and corporate social responsibility, but it's also been receiving high praise from business leaders. What is so special about the GRI? 

By all appearances, it is the most widely used of sustainable reporting standards, boasting 69% of companies on the Dow Jones Sustainability Index and 60% of the S&P 100. According to Social Funds, nearly 50% of sustainability reports, including social responsibility reports, released in 2005 were reported using the GRI standards. As a further boost to the universality of the GRI, last week the GRI and the United Nations Global Compact announced that the GRI could be used by member companies when preparing the Communication on Progress for the 10 principles of the UNGC.

Yet despite its wide appeal to reporting companies, what impact does it have on the supply chains of those companies? Can this reporting standard help drive sustainability and social responsibility in the supply chain? This was the question posed to a panel at the recent Reporting Sustainability conference in Amsterdam, held in conjunction with the G3 launch. As I listened to this panel discussion, I was interested in some ideas that emerged from Petrobras, Brazil's largest industrial company, a member of the UNGC, and a veteran of the GRI.

According to Ana Paula Grather, Petrobras' Social and Environmental Report Coordinator, the company uses its sustainability report as a platform for dialogue with suppliers. It requests suppliers to complete a voluntary self-assessment on labor standards, safety, environmental performance, and other issues. In 2005, 1,400 Petrobras suppliers participated.  Petrobras uses the results of these surveys, which will eventually become mandatory, to draw a "map of vulnerabilities" and identify areas of improvement.  Petrobras also offers support to its small and medium-sized suppliers, or potential suppliers, to help them develop and exercise corporate social responsibility.

According to Ms. Grather, culture remains the biggest challenge for Petrobras in driving CSR in the supply chain.  Many suppliers continue to see the costs of CSR as a barrier to implementation.  Petrobras aims to work together with suppliers to show them the business case for social responsibility as well as the self-development and improvements that result.

I think the experience of Petrobras would apply to most companies seeking to promote better practices throughout their supply chain. A special note for apparel and footwear companies: the GRI is about to release a special reporting supplement for this sector. Having reviewed this supplement during the public comment period, I can tell you to be on the lookout for specific reporting requirements for the supply chain. More on that when the supplement is released!