First 100 Days in Office

Alphabetsoup2

A CR leader under fire and the alphabet soup of standards organizations

By the Editors

He’s the new chief executive and his 100-day anniversary was fast approaching.

Many miles from the familiar trappings of his hometown, he has uprooted his family and inherited all the successes—as well as the baggage—of preceding administrations. Yet despite having more power and influence than other world leaders, critics abound.

No, this is not a story about the occupant of 1600 Pennsylvania Avenue.

Rather, the man experiencing a tumultuous honeymoon as CEO of the Global Reporting Initiative (GRI) is Tim Mohin.

Hired by the GRI’s board late last year, the longtime corporate responsibility practitioner and his wife moved from Austin, Texas, to the independent standards organization’s headquarters in Amsterdam in January.

Comparisons to the Donald Trump election have been coming ever since.

“I have yet to sign any executive orders,” Mohin chuckled during an interview at the annual conference of Ceres, the NGO that launched GRI in 1997.

What Mohin has done is listen. From London and San Paolo to Phoenix and New York, the former Apple and Advanced Micro Devices corporate responsibility executive has emphasized his 22 years as a practitioner while asking for unfiltered feedback on GRI—both from corporate reporters and those who read sustainability reports.

It turns out the CR community had plenty to share; not all of it flattering.

“If disclosure is a transaction, you have issuers and the receivers—asset managers and investors,” says Mohin. “If both are unhappy, you have an inflection point.”

Reflecting on his seven years at AMD, Mohin says preparing the corporate responsibility report tied up his staff for six months. At many companies, reports take as long as 18 months to compete and bloat to 150 pages, he says.

“This is 2017, people. Is that actionable information? When reporting is getting in the way of progress, we’ve lost our way,” says Mohin in a plea for harmonization of reporting methodologies and less drama about disruptors versus incumbents.

With 72 percent of companies reporting sustainability information doing so using GRI standards, Mohin is acutely aware there is much to lose if the process does not become less onerous.

Yet he and SASB chief Jean Rogers agree it does nothing to advance the cause of corporate responsibility to pit one standard against another.

In a joint op-ed post published by Greenbiz in late March, the two wrote, “This is often framed as a competition; a choice between rivals. We’re writing to set the record straight: This is a false choice. At a time when we are confronted with existential threats such as climate change, as well as egregious issues such as human trafficking, we don’t have the time or resources to waste on such false distinctions.”

 Veena Ramani, Ceres' director for capital market systems, introduced Tim Mohin and SASB’s Janine Guillot while describing the “alphabet soup” during a session.

Veena Ramani, Ceres’ director for capital market systems, right, spoke with Tim Mohin and SASB’s Janine Guillot and described the “alphabet soup” during a session.

At a standing room only session during the San Francisco Ceres conference, Veena Ramani, the organization’s director for capital market systems, introduced Mohin and SASB’s Janine Guillot while describing an “alphabet soup” of reporting frameworks from the Carbon Disclosure Project (CDP) and Task Force on Climate-related Financial Disclosures (TCFD) to GRI and SASB

“We’re focused on one single audience and that audience is the investor,” says Guillot, director of capital markets and outreach for the 6-year-old organization. “When SASB talks about materiality we’re talking about ESG factors that could affect financial performance.”

Like GRI, SASB is a nonprofit with strong roots. Chaired by billionaire former New York City mayor, entrepreneur and philanthropist Michael Bloomberg, the San Francisco-based organization has developed reporting metrics for 79 industry sectors, with approximately five sustainability indicators per sector judged as material.

Unlike voluminous GRI reports, Guillot maintains the comparatively scant SASB indicators are well suited for inclusion in the management discussion and analysis section of Form 10K disclosures filed with the U.S. Securities and Exchange Commission, or Form 20F for firms headquartered outside the United States.

“Anything in the 10K is going to be subjected to a really good system of internal control … strong governance, CFO oversight and board oversight,” Guillot says.

One high-profile company that had previously produced a sustainability report using GRI’s G4 framework, JetBlue Airways, announced on a 3BL Media webinar that it would no longer produce a GRI report. Instead, the company plans to use the SASB framework to provide material information to investors while continuing a steady stream of blogs, videos and other forms of storytelling for employees and customers.

“We want Wall Street to take us seriously,” says Sophia Mendelsohn, head of sustainability for JetBlue. “We want the investor community to really know that we’re listening to them. What they’re concerned about when they’re evaluating a stock is part of our assessment for sustainability, and ultimately this is all about a return on equity.”

At Ceres, Mohin maintained that most companies won’t cease GRI reporting as they explore additional ESG disclosure.

“Smart companies would do both,” Mohin says, pointing to the much broader set of “pre-material” information captured during the GRI reporting process.

The détente Mohin seeks with other reporting standards bodies is showing signs of success beyond one op-ed piece. With pro bono help from four accountants on loan from PricewaterhouseCoopers, GRI is partnering with United Nations Global Compact to build a system for measuring a company’s progress against the U.N. Sustainable Development Goals.

“We are defining what it is for business to be accountable for the SDGs,” he saya, adding, “It’s a big deal.”

 

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Corporate Reporting Experts Warn of Survey Danger

Survey fatigue is a chronic ailment suffered by many CR practitioners.

Symptoms include long hours, deferring other projects, ignoring family and self-doubt about whether the data being furnished even matters.

Victims usually recover after a long weekend, preferably one that involves a visit to the spa.

But kidding aside, what if answering the seemingly endless barrage of questionnaires can create legal issues for a company?

Janine Guillot, SASB’s director of capital markets and outreach, cautioned practitioners that answering certain questions could constitute selective disclosure, a serious violation of federal securities laws.

Consultation with the investor relations department and legal is prudent before answering survey questions that could be construed as material or market-moving.

Tim Mohin, GRI’s CEO and a former corporate responsibility practitioner, says his former employer decided not to continue answering the annual questionnaire from Dow Jones Sustainability Index (DJSI) owner RobecoSAM. There was no impact, says Mohin, adding that AMD maintained its place on the coveted DJSI even after taking a hiatus from responding to the survey.

“The goal should be report once and use many times,” says Mohin. “It takes a certain amount of courage to say no.”

Mohin also questioned whether for-profit companies collecting survey information may be assembling proprietary databases that can be mined only by those who pay for access, providing a market advantage and an uneven playing field for investors.

 

Posted June 8, 2017 in Reporting