The link between sustainability reporting and social performance

Companies committed to sustainability goals are more likely to score higher in certain social indicators, new research shows.

A new report from the Global Reporting Initiative (GRI) and World Benchmarking Alliance (WBA) found that companies using GRI standards have a stronger corporate social performance.

The report explores the link between the use of the GRI standards and companies’ social performance, as measured by WBA’s core social indicators (CSIs), the release said.

The CSIs evaluate companies in three areas: respect for human rights, the provision and promotion of decent work, and ethical conduct.

Companies that include a GRI content index in their sustainability reports achieve better results, scoring at least 47% higher in CSIs than other companies in WBA’s Social Benchmark.

“Companies with the highest CSI scores correlate with those that follow the GRI standards for reporting,” a news release said. “Organisations that report in accordance with the GRI standards consistently outperform those that only [act] with reference to the standards.”

Not meeting sustainability targets could have financial repercussions for companies. Deloitte released a report earlier this year that found that companies with poor sustainability performance will face greater resistance from buyers in merger-and-acquisition deals.

The cyclical nature of sustainability reporting benchmarks provides companies with strong incentive to improve, the GRI and WBA report said. “Sustainability reporting helps companies identify and manage their outward impacts on the economy, environment, and people, allowing them to meet their responsibilities towards stakeholders and to improve internal processes.”

— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.

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