US Lags In Environmental Reporting Assurance

by | May 11, 2011

The proportion of sustainability reports undergoing external assurance in the U.S. is 66 percent lower than the global average, according to figures published by the Global Reporting Initiative (GRI) today.

Data for 2010 (pdf) shows that about half of GRI-based sustainability reports are being assured worldwide, compared to just 16 percent in the U.S. – despite the country producing more reports than any other.

“Assurance” refers to validation of a report’s contents. It is a separate process from the “level check”, carried out by companies, the GRI or third parties, to establish a report’s adherence to the GRI reporting framework. Level checking results in reports being graded either A, B, C or Undeclared, while passing external assurance allows companies to add a “+” to that letter grade.

Mike Wallace, Director of the Global Reporting Initiative’s Focal Point USA, said: “These figures reflect a general reticence in US companies to set precedent in the area of voluntary reporting. The number of organizations disclosing sustainability performance in some form is rapidly increasing, but the willingness to cite the GRI Guidelines or have the data checked by a third party is lagging behind most other countries.”

From 2009 to 2010 the number of GRI-based reports worldwide rose by 22 percent, the lowest rate of increase since 2003. There were about 1800 reports last year.

The U.S. contributed the biggest share of reports at ten percent, followed by Spain at nine percent and Brazil at seven percent. In 2010 the number of U.S. reports identified as using GRI guidelines rose by 28 percent, from 140 to 180. But the U.S. did poorly considering that 28 percent of the Global 500 are headquartered there. Japan, Germany and the U.K. similarly rank “below average”, GRI said.

And as a function of GDP, the U.S. ranked only tenth for its number of reports. Sweden came top for the second year in a row, with Spain second and the Netherlands third.

Compared to 2009, GRI said Brazil saw an “exceptional increase” in its reporting. China and India both saw small increases, and Australia saw a small decrease.

The top five most-reporting sectors – not counting the catch-all “other sectors” category – were all industries for which the GRI has developed specialized guidance called sector supplements. They were financial services, with over 250 reports, and energy, energy utilities, food and beverage, and mining, all with under 150 reports apiece.

As in 2009, last year the most-awarded application level was A/A+, followed by B/B+. C/C+ and “undeclared” are now neck and neck. Reports with application level A are more likely to be external assured, GRI said.

“As sustainability data is increasingly in demand – from investors, regulators and customers – organizations will increasingly realize the importance of verifying their statements,” Wallace said. “We expect to see an increase in the number of reports assured in next year’s statistics, especially given the increasing interest in these issues from large corporate customers, institutional investors and government agencies.”

Today GRI also published its Year in Review report, available here.

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