My Photo: Robert S. Donovan

There are systematic, widespread and significant discrepancies between what electricity companies claim they are reporting on and the information they actually provide in their sustainability reports. These discrepancies diminish the accuracy and credibility of the Global Reporting Initiative (GRI) and lead to whitewashing of business conduct.

In a report published today, the Centre for Research on Multinational Corporations (SOMO) and the European Federation of Public Service Unions (EPSU) present the findings of in-depth research into the sustainability reporting of 20 major European electricity companies.

Voluntary reporting

Most of the companies follow the GRI Sustainability Reporting Guidelines, which encourage companies to voluntarily disclose a large degree of information about the social and environmental impacts of their operations.

Despite the esteemed status of the GRI Guidelines, the widespread discrepancies and inaccuracies we found in sustainability reports reveal that the system in place to monitor and verify the usage of the GRI Framework is insufficient.”, said SOMO researcher Joseph Wilde-Ramsing

Audits have failed

To make matters worse, SOMO also found discrepancies in reports that had been externally ‘checked’ and ‘assured’ by a professional third-party auditor or the GRI itself.

The voluntary nature of the GRI has limits when companies can ‘game’ the system to get higher rankings and become more interesting for ethical investors. “The findings show disappointing behaviour of many of our employers and a complicit attitude of the accountancy industry we have seen before”, according to Jan Willem Goudriaan, EPSU energy spokesperson. “It shows the limits of a voluntary approach. Ultimately, disclosure of non-financial information requires a robust legal basis with sanctions for those employers that bring the industry in disrepute.”

Recommendations

SOMO and EPSU encourage electricity companies to use the GRI Framework, and therefore formulated a series of conclusions and recommendations for a range of stakeholders, including company management, European policy makers, investors, auditors, unions, and NGOs.

Wilde-Ramsing: “Frameworks such as the GRI can be greatly improved by making the terms for reporting very clear and leaving no room for interpretation. Companies should not be able to state that they are ‘fully’ reporting on their sustainability policies and practices when in fact they do not provide all the requested information.”