Bob Massie is executive director of the Coalition for Environmentally Responsible Economies (CERES).

Monday, 18 Sep 2000

OVER THE ATLANTIC

It is Monday morning and I am currently sitting on an airplane zooming eastward seven miles above the Atlantic Ocean. Over the next two weeks I will be attending meetings in Paris, London, Delhi, and Bombay, most of which will focus on the Global Reporting Initiative, an immense collaborative project convened by the Coalition for Environmentally Responsible Economies three years ago to develop harmonized disclosure guidelines for multinational corporations on their social and environmental performance.

I suppose I should begin this diary for Grist with the observation that this is certainly not a typical week for me. Though I travel a good deal, this week, as well as next, includes so many events of such variety that it stands in a class by itself.

For those who are not familiar with the work of CERES, I should back up. The coalition was founded in 1989 by Joan Bavaria, the visionary president of Trillium Asset Management, a social investment firm based in Boston. Joan’s idea was that if large institutional investors — investment firms, religious endowments, pension funds, and others — could build an alliance with major international groups, their combined expertise, interests, and clout could be used to move companies toward greater environmental responsibility. Joan drew together an impressive alliance of organizations, including the Natural Resources Defense Council, Friends of the Earth, the National Wildlife Federation, the New York City Comptroller’s Office, the World Wildlife Fund, the Interfaith Center on Corporate Responsibility, the AFL-CIO, and many others.

A key component was the creation of a set of principles to encourage companies to change the manner in which they view their environmental impacts. The original board of CERES, which included Earth Day Network Chair Denis Hayes, crafted a set of affirmative statements of corporate responsibility known first as the Valdez Principles (after the Exxon disaster, which happened while CERES was being formed) and then later the CERES Principles. The text of the principles — and a great deal of other information about CERES, past, present, and future — is available on our website.

What distinguished CERES from the other codes of conduct that were starting to pop up was a commitment to accountability. Corporations were expected not just to sign the principles but to act on them, and to report on their results annually. Surveying the world today, when environmental reporting is standard practice for the leading companies of the world, backed up by an impressive array of books, articles, organizations, and award ceremonies, it is hard to remember what a radical idea this was 12 years ago. When CERES first proposed the notion in 1989, it was embraced by a small number of visionary companies and rejected by almost everyone else.

Since then the ranks of those who are concerned about the link between business and the environment has grown enormously. Organizations have popped up around the world to contribute to the debate. Driven by the concerns of citizens about the rapid pace of ecological degradation and climate change, by actions of the governments and the United Nations, by activist organizations and investors, and by business associations, the relationship between environment and business has shifted from the periphery to the center of what it means to operate in our global economy. Some major companies — such as Sunoco, General Motors, Bank of America, ITT, Ford, and others — have endorsed the CERES Principles. CERES has gradually evolved from a controversial experiment into a recognized leader in stakeholder dialogue and standardized reporting. The coalition has developed into a national and international network in which the concerns of the environmental and activist shareholder community can be communicated effectively to the senior management of big companies.

The change has been exciting for everyone, though, like all change, it has brought new challenges. With the growth of the Internet, the power of activist organizations has risen dramatically. The idea that companies should release information not just about their environmental performance but also their understanding of and contributions to sustainability has taken hold in many parts of the world. Ironically, the very popularity of this idea created a danger for its realization, as differing ideas about disclosure developed rapidly and independently in different parts of the world. The centrifugal force of these competing efforts created a headache for everyone. Companies found it difficult to respond to the new queries of investors and activists; investors and activists doubted the value and credibility of the information they were receiving from companies. At the same time the enormous power of the Internet and the relentless progression of globalization continued to reinforce the need for the information.

In 1997, in an effort to address this problem, CERES launched an experiment. Though the title of the project — the Global Reporting Initiative (GRI) — was bold, the early idea was modest. Some of the large international companies that had endorsed the CERES Principles had been asking whether the CERES report form could gradually evolve into a more globally applicable form. The members of the CERES coalition generally supported the idea. The first few meetings, in late 1997, brought together key American partners, such as the Investor Responsibility Research Center and the Council on Economic Priorities, to discuss ways in which to harmonize our respective approaches to the release of environmental information. Soon it became clear that a diverse and influential group of Canadian and European organizations also wanted to participate. Within the span of a few months we joined forces with the United Nations Environment Programme (UNEP), which had been providing leadership and publishing benchmark studies of reporting.

Over the next two years, the GRI expanded at an explosive rate, thanks to the intensity of interest and the amazing rate of learning and communication made possible by the Internet. Hundreds of organizations sent representatives to meetings and offered comment on the web. In March 1999, the GRI released an “exposure draft” of sustainability reporting guidelines for companies which had already moved past the confines of environmental reporting and started to lay out the contours of the social and economic dimensions of sustainability. In just 15 months, the GRI network was able to gather comment on the “beta version” in meetings around the world, develop a process of revision, and release a new set of guidelines in June of 2000.

Despite the enormous amount of work that went into them, the June guidelines still represent early thinking — a version 1.0 that itself needs to be considered, discussed, and revised. The challenge now is to design a process through which this will be done that draws in more voices and more participants than we have had in the past. Because the GRI emerged initially in the developed world, there is a special challenge to reach out to new participants — representatives of both business and nongovernmental organizations (NGOs) — from emerging economies (hence the trip to India and other meetings like it that are planned for the future).

Equally important is the task of building a permanent, balanced, multi-stakeholder institution that can s
erve as the steward of the guidelines in the future. Though CERES was the original convener, and though I still serve as the chair of the GRI steering committee, CERES has made clear from the beginning that our intention is to spin the GRI off into an independent organization by the end of 2001. In some sense we are building on successful models pioneered by organizations such as the Financial Accounting Standards Board in the U.S. and the International Accounting Standards Committee. But the GRI is also a strange new hybrid whose governance structure must allow for the balanced participation of many groups who are not naturally inclined to understand each other.

This brings me back to the meetings in Europe and the reason I am sitting on an airplane. Tomorrow I will be serving as the cohost (along with UNEP and the European Environment Agency) of a meeting of key European representatives from business, NGOs, accounting societies, the European Commission, the United Nations, and other critical parties to discuss the future institutionalization of the GRI. There will undoubtedly be many points of view, and part of my responsibility will be to help foster consensus. This is a special challenge since many European organizations believe that they have made much more far-reaching commitments to sustainability than their counterparts in the United States and they understandably have questions about an effort that seems to have started in the United States. At the same time, GRI is already well rooted in Europe and the logic in favor of continued cooperation is strong. How strong, we will see.