BA 850
Sustainability Driven Innovation

Mining GRI Reports


Using GRI's Uniformity to Reveal Differences in Strategy

As we have seen through our examinations of GRI-filed aspects thus far, it offers a diverse and somewhat exhaustive view of a company's sustainability initiatives and performance. While GRI aspects are most commonly captured and noted within a company's CSR and not separated out into a stand-alone filing, examining the differences between GRI aspects can be interesting to help us find spaces of potential opportunity and unearth the strategies of others.

What we should also consider is that GRI aspects are not dictated to be stated in one form or another, so organizations can cite drastically different figures and indicators for the same GRI aspect. While this can make superficial analysis a bit more difficult, it tends to be very illuminating for deeper analysis, as it can show some level of an organization's engagement and intent in one aspect or another. GRI-compliant CSRs are certainly more uniform and more easily comparable than unstructured CSRs, but there is still significant variation.

There are many potential analyses we could perform on GRI filings, below are a sample of the types of analysis you can perform with GRI filings, as well as the strengths and limitations of those analyses. My hope in providing these is that we may begin to see the wide range of insights we can glean from just one type of filing, and how these insights may help us to establish the wireframe for innovation (our next Lesson).

Four Types of GRI Analysis and Their Roles

Omission Analyses: Searching for Missing Details Omission Analyses: The Forensic Accountant

Omission analyses can be extremely effective in unearthing "bare threads" and generating leads for further research. As a group, these analyses tend to be a bit more difficult than other types of analysis simply because you will be examining gaps in data and not the data itself, per se. Where you could create grids and calculations of what data is present in filings and use it as a framework for comparison, in examining omission, you will be closely considering what is NOT in the filing.

These analyses tend to be especially valuable when considering if a company is trying to hide something or bury signs of an emerging strategy; they will most likely ignore it and hope it goes unnoticed.

Types of Omission Analysis
Name Analysis considers Chronology Summary Example (fictional)
Omission analysis across peers Two or more peer organizations Single filing period This analysis can be especially effective in revealing a single organization's strategy, or problems it is attempting to hide. Examining John Deere, Caterpillar, and Komatsu and noticing only two are emphasizing fuel efficiency in their equipment.
Omission analysis across industries Two or more industries comprised of several organizations each Single filing period If a given industry has typically poor performance in an area or there have been industry groups working toward a shared goal/set of measures, it will typically be manifested when comparing industries. Examining the commercial resort industry and the more conventional hotel industry and finding that the resorts omit most discussion of fair compensation.
Omission analysis across world regions Two or more global operations of the same organization filing separate GRI Single filing period This analysis can be especially revealing when examining the global business units or affiliates of an organization. It may be indicative of separate standards driven by regulations, but it may also be evidence of units holding different strategies. In analyzing the five GRI reports of the units of a global company, you notice that India has a very different set of People aspects and is the only unit not formally reporting to GRI LA6 in regard to injury rates.
Omission analysis over time Single organization Multiple filing periods This tends to be among the more straightforward of the omission analyses, but can also be among the most revealing of an organization's strategy shifts over time. Compiling and analyzing the last five years of GRI filings to see what aspects were reported on and finding that Scope 2 emissions were reported in depth only in years 1, 2, and 4.
Omission analysis across filings Single organization, multiple filing types (i.e., GRI, 10K) Single filing period A personal favorite. This tends to be an exceptional filter of what is an organizational strategy and what may be greenwashing or PR.

This can also be interesting in examining materiality, as a company could list a topic as highly material and a significant risk in the CSR, and then not have it as a Risk Factor in the 10-K. This would be a flag.
A company headlines their CSR with the company's Mission, but it is different from the Mission stated in all other documents (this is more common than you might think). Similarly, the company could spend the CSR discussing management's deep commitment to topic X but not a word about it in any of the other management or strategy documents.
Indicator Analyses: A close eye on definition and meaning Indicator Analyses: The Lawyer

In GRI reports, a given aspect may share the same name, but the indicators an organization elects to use in measuring the aspect can be wildly different. In indicator analyses, consider that "peers" may be organizations with similar offerings, of similar revenue, or even of similar stature across industries. Where omission analysis relies on more direct, almost forensic peer comparisons, indicator analyses can be especially valuable when considering those more liberal interpretations of "peers" because they can help illustrate how outright leadership or true innovation manifests itself.

Types of Goal Analysis
Name Analysis considers Chronology Summary Example (fictional)
Goal analysis across peers Two or more organizations Single filing period In creating goals or Key Performance Indicators (KPI), an organization's performance on a relative basis may look stellar. Sometimes this is because the goal itself was set exceptionally low. Bringing peers into the analysis can help reveal if one organization is suppressing absolute target goals to be able to boast what appears to be stronger relative performance. In a group of five peers, the company in question shows a staggering 90% progress toward its solid waste goal in the first year. Upon further review and looking at absolute tonnage in an Appendix, the goal that company set for itself is about 75% less than its peers.
Goal analysis over time Single organization Multiple filing periods This analysis can act as an excellent bellwether for either innovation or poor performance elsewhere by looking at how the organization responds to progress made on a single aspect/indicator over time. Here's why: the tendency for aggressive, highly strategic companies is to continue to move goals as they progress toward, and eventually surpass a goal. One might consider this a natural progression in our daily lives: that when we meet a goal, we continue the positive momentum and set a new goal. In performing this analysis and examining an organization's goals over time, you could see that they began by setting a low ten-year sustainability goal, met that goal in year two, and then spent the remaining eight years touting that it has 'already met its goal.' If you think of the strategy at play, it is maximum superficial performance at minimal expenditure of effort.

If you sense a tinge of disdain in my writing, you would not be mistaken. In my personal view, organizations that do this are in an advanced phase of greenwashing, and are likely treating sustainability efforts as PR.
Certification analysis across peers Two or more organizations Single filing period As in our earlier discussions of third-party certifications and standards, some are far more stringent than others. In considering the certifications a group of peers organizations elects to pursue, it may illuminate how engaged those organizations are in improving performance in a given topic. Examining a group of lumber and forest product manufacturers and finding that the vast majority cite FSC certifications while a relative handful use SFI. This could merit additional investigation.
Index basis analysis Single organization Single filing period Any time an indexed baseline of any type is used, it merits consideration of the index itself. Many companies prefer to choose a baseline performance year, many times the first year of their sustainability program, from which to index all performance. While it allows organizations to publicly state performance without absolute statistics, it can inflate performance. Examining the absolute performance of the 2006 baseline from which all years after are indexed and finding that it was the highest year of unit production in the last 40 years for the company. This would then function to likely inflate absolute waste, energy consumption, GHG emissions, and injury numbers in the index year.
Analysis of intensity vs absolute indicators Single organization Single filing period It can be interesting to consider if and when an organization changes from stating indicators on an intensity basis (i.e., "10 kilograms solid waste per unit produced") versus an absolute basis (ie "2 million kilograms solid waste produced in 2015"). In some cases, using intensities versus absolutes can be warranted, but it warrants analysis in some cases.

There are even some cases where the intensity is stated relative to revenue dollars (ie "kg GHG per $1000 revenue"), which could further cloud analysis if the company is improving financial performance without improving sustainability performance.
Finding that a company decided to index its solid waste generation to a year where production was at an all-time high, and also elected to state the indicator in absolute terms. This index could have been made more valuable, and perhaps valid, by using an intensity.
Analysis of measurement bias Single organization Single filing period This analysis examines what is actually being considered in measuring a given indicator, and may require interaction with the company's Investor Relations or Sustainability staff. A company may generate 30 million tons of fly ash from its powerplant operations, but not include it in waste generation reporting because it considers it a "byproduct." Unless footnoted or asked specifically, a sustainability report would not necessarily capture this fact.
Analysis of relationship bias Single organization Single filing period This can be an especially valuable analysis in supplier and employee surveys which are sometime used and reported in sustainability reporting. For example, employee surveys are the cornerstone of how many companies report their internal People aspects.

In this analysis, we look at any mitigating factors which could function to bias these reports, down to the survey wording and submission mechanisms.
A company uses employee surveys heavily in its sustainability reporting, but asks the questions in biasing or unclear ways, sends the survey along with the employee's bonus check, and requires employee name and signature on the survey itself.
Narrative Analyses: Attentive to Voice and Tone Narrative Analyses: The Detective

These tend to be more qualitative analyses, centered around how well the organization explains its actions or how it may state an indicator in one way or another. These can be interesting in that seeing narratives with qualifiers or which seem to be opaque can signal areas of further exploration.

Types of Aspect Commentary Analysis
Name Analysis considers Chronology Summary Example (fictional)
Aspect commentary analysis Single organization Single filing period This is a less formal analysis, but can be valuable to find areas warranting further exploration. When a company lists and indexes the GRI aspects addressed in the CSR, it will many times accompany the aspect with a narrative statement of why it took that approach. Furthermore, if a company elects to not address a GRI aspect, it will offer a narrative statement on why it did not address that aspect.

In either case, these narratives can be interesting... is the statement explanatory and illuminating, or is it legalistic and worded in a way which seems more concerned with avoiding transparency?
In addressing why it does not address important People aspects in an otherwise complete CSR, an organization states that, "We are not required by the laws in any country to disclose the information requested by GRI, and we therefore decline."
Aspect commentary analysis over time Single organization Multiple filing periods This is a little more formal qualitative analysis than the single filing equivalent, but the intent here is to see if there have been shifts in tone or content in the narratives that could signal a change in strategy or other underlying issues. For five years, an organization was transparent and cited examples in explaining why it chose to not report on an aspect due to proprietary information. In year six, it reverted to a highly legalistic narrative in explaining why it chose to not report an aspect, and removed indicators for three more related aspects using the same legalistic narrative.
Substantiation analysis Single organization Single filing period This analysis examines the overall approach an organization's lead sustainability claims take in the CSR, and would examine if it chooses to lead the reporting with "splashy" claims that are otherwise poorly substantiated. If it chooses to use with a high number of relative performance claims, it may warrant deeper analysis. In the headlines of every section of the CSR, the organization makes claims which do not cite indicators, or perhaps which are significantly overstated.
Polish or "Fluff" analysis Single organization Single filing period This is a favorite, especially when considering implications for innovation. This analysis looks at the overall design and feel of the report in comparison to the actual content of the sustainability efforts. You could also think of this as the "Ad agency analysis," as some reports are exceptionally well-designed and read beautifully because they were created by an outside creative agency, but are significantly lacking in actual substance.

This is similarly manifested in top level (headline) copy, where the organization may make beautiful, emotionally evocative statements which are in no way connected to their actual sustainability efforts or performance.
While a report is highly polished, visually interesting, and captures interesting graphs, the underlying data is significantly lacking.
Definition analysis Single organization Single filing period This can be an especially difficult analysis, but can unearth logical problems in reports which would otherwise appear to be well-structured and substantiated.

In essence, the researcher needs to understand how the organization uses and defines a given term (even seemingly simple terms). For example, even definitions of "waste" can vary significantly, and would have bearing on the sustainability program.
A common finding of definition analysis is one that tends to open many eyes outside the profession: that organizations claiming "Zero Waste" may have wildly different definitions of the term. Some definitions exclude hazardous wastes, some simply claim "Zero Waste" or "Zero Waste to Landfill" by sending all of their waste to a Waste to Energy plant for incineration.

So, an organization could create 5000 tons of waste material, pay a surcharge to have it shipped to a Waste to Energy incinerator, and make the claim they are "Zero Waste." Furthermore, some of that waste could be a material like concrete, which provides absolutely no energy value when incinerated.

If you want for a lively dinner or conference conversation, ask the sustainability manager of a company claiming "Zero Waste" what their functional definition of "Zero Waste" is.
Commission Analyses: What has the program done lately? Commission Analyses: The Boss

The polar opposite of Omission Analyses, these seek to understand exactly what actions the organization has actually taken and what commitments they have executed.

Types of Commission Analyses
Name Analysis considers Chronology Summary Example
Action analysis Single organization Single filing period This is exactly as it sounds: an analysis specifically looking at the actions the organization took in a filing period. This can be interesting in that it can reveal how much an organization is doing... or not doing. Think of this as another forensic-type analysis that examines if the inputs and actions match the outputs and claims.

For the purposes of innovation and further exploration, this analysis can also show evidence of an organization "black boxing" part of its sustainability program... either because it is doing something strategic and proprietary, or perhaps because it has unsubstantiated claims. Metaphorically, think of this as the "hidden room test"... that if you measure the exterior length of a building and it does not match the sum of the lengths of interior rooms, there is a hidden room.
Upon the examination of the actions taken by the organization, it becomes evident there is a low probability they are accomplishing what they state with the inputs and initiatives they describe.

This becomes fertile ground for further research and exploration as to the cause for this disconnect, as there may be a significant strategy or innovation at play.
Outlay analysis over time Single organization Multiple filing periods Another straightforward analysis in concept, this analysis seeks to understand the infrastructure, headcount, equipment, and external resource outlays an organization made for its sustainability program in a given reporting cycle. An organization states all of their 110 manufacturing facilities are now LEED compliant, but yet there is no evidence of the undertaking financially or any other evidence of a project or effort.
Analysis of proactivity vs reactivity Single organization Multiple filing periods The most common manifestation of this analysis is examining the actions an organization took which were elective and proactive as opposed to those which were reactive or required. Conceptually, we would probably have far more to learn about strategy and innovation from an organization adopting a sustainability strategy or taking an initiative proactively vs another organization taking the same action as a reaction to pressure from regulations or NGOs. In some cases, you can see an organization touting claims in a GRI-compliant report which are actually required by Federal regulations.

Much as in law, motive is important.
An outdoor apparel company begins a "responsible goose down" sourcing project in 1996, completely by its own proactive efforts and significant outlays.

In 2014, another outdoor apparel company begins a similar sourcing effort after its plants had been picketed for two years by NGOs, and the company received significantly negative mass and social media attention.
Five word summary - Foundational analyses to find opportunity