INTERVIEW with Tim Mohin, GRI Chief Executive. For further expert opinions please use the question-level hyperlink.
| Many jurisdictions currently work on ESG-related standards aiming at leadership in the field. What impact do you expect from the competing standards, and what will it mean for asset owners in terms of ESG investing efficiency?
We are seeing a welcome trend around the world of countries, economies and regions raising requirements and expectations for ESG disclosure. What this reinforces is the need for global standards, to provide comparable data that organizations and their stakeholders, in particularly investors, can use for multiple purposes. This is where the GRI Standards, as the most widely used standards for sustainability reporting around the world, come to the fore.
Instead of creating new standards, jurisdictions can build on the best of what’s already available. Mandating ESG reporting using existing standards, which are already widely used by companies, gives governments and other regulatory bodies a global reach and avoids the burden and delays in creating new standards. The review of the EU’s Non-Financial Reporting Directive, which we welcome, is a good example here.
There are some misconceptions about competition between standards. The reality is that the only comprehensive ESG reporting standards are those provided by GRI and SASB. These two sets of standards fulfil different purposes and can be used by organizations accordingly to meet the information needs of specific stakeholders.
| Do you expect the pandemic to have a tailwind or rather a headwind effect on the low-carbon transition pace, taking into account the concerns expressed by some market participants in regard to possible funding cuts and the risk of unsustainable recovery measures?
We certainly need to be very mindful of what the impacts may be as a result of the global economic slowdown we have seen in 2020, following COVID-19. I believe though there are many signs to be optimistic that the reassessment of priorities and risks due to the pandemic can be a boost for sustainable business practices, including carbon reduction.
This is borne out by a range of commentary and analysis. As Aviva Investors put it,“COVID-19 has thrown new light on the interdependencies in human and natural ecosystems, and the vulnerabilities of a closely networked world”. JP Morgan, meanwhile, is suggesting that “COVID-19 could prove to be a major turning point for ESG investing”. When you also factor in research from MCSI suggesting companies with a strong ESG focus outperform their counterparts, as well as a Morningstar report showing ESG investing hit a record high in Q2 2020, we can be optimistic that the transition to a more sustainable economy will continue.
| What is the pandemic teaching us about the need for greater corporate transparency and accountability?
A great deal! In sustainability reporting circles we talk a lot about materiality; what are the impacts that are most relevant, both to the company’s financial bottom line and their impacts on the wider world. The pandemic has meant that many organizations are reassessing their material topics. For example, the importance of employee health and wellbeing, social equality issues, community engagement – to name just a few. These are themes that many stakeholders shared with us as part of a recent GRI webinar series on the transition to a ‘new normal’.
What this demonstrates is that expectations on companies to take accountability for their impacts have grown substantially in recent months. How do they disclose these impacts and how do they manage the associated risks? These are questions that many stakeholders – governments, investors, customers, civil society – are raising. Transparency through sustainability reporting is therefore increasingly important.
| Taking into account the current ESG standard-related developments, how do you see the future of ESG reporting, and why do global standards matter to investors, above all as part of a resilient recovery?
Reporting though global standards, such as GRI’s, matters to investors because they enable the comparable and comprehensive ESG data required to make informed investment decisions.
By the same token, incorporating ESG information into business strategy helps the company in many ways – from identifying efficiencies and improving how they operate, to strengthening relationships and trust with their stakeholders.
We expect that the number of companies undertaking ESG reporting will continue to grow as they respond to increasing investor demand and regulatory pressure, and for the same reasons, that the quality of reporting will also improve. On both counts, uptake and quality, GRI is working closely with a range of partners and reporting companies to drive further progress.
| How do you see the role of reporting in the transition to a circular economy, and how does GRI support asset owners’ and managers’ efforts in this regard?
The wide-ranging breadth and scope of the GRI Standards – covering organizational impacts on economic, environmental and social issues – is a key strength, particularly when it comes to helping companies understand and articulate progress towards overarching issues like a circular economy. As such, the way in which organizations disclose their approach to production and consumption, and whether their practices are responsible and sustainable, is a thread throughout the GRI Standards.
In addition, the new GRI Waste Standard helps organizations report a complete picture of waste impacts in their value chain, encouraging them to prevent waste at source and unlock circularity opportunities. This Standard sets a benchmark for effective disclosure on waste, which will be valuable for investors that are seeking to assess corporate practices and business model evolutions in support of the circular economy.
| brief bio
Tim Mohin has been Chief Executive of Global Reporting Initiative (GRI) since 2016. A veteran in the field of sustainability reporting, Tim has held senior roes leading on corporate responsibility and supplier management, with AMD, Apple and Intel. He started his career with the US government, including positions with the Environmental Protection Agency and the Senate Environment Committee. Tim holds a Bachelor’s degree in Biology from the State University of New York at Cortland, and a Master’s in Environmental Management from Duke University.
The Global Reporting Initiative (GRI) is the independent international organization that helps businesses, governments and other organizations understand and communicate their impacts. The GRI Standards are the world’s most widely used for sustainability reporting.