Seven Indian companies join a global initiative to report on their environmental and social performance. Their aim: Gaining wider legitimacy.
"We are disclosing details about our supply chain in an effort to jump-start disclosure and collaboration throughout the industry," Phil Knight, founder and chairman, Nike, says in his corporate responsibility report.
The report is part of the Global Reporting Initiative, which seeks to ensure that regular reporting on economic, environmental and social performance by all organisations becomes as routine and comparable as financial reporting. It is a worldwide, multi-stakeholder network, which more and more companies are joining.
For example, Gap's 40-page social responsibility report says that only 82 of its 240 factories in China have achieved satisfactory compliance. The report evaluates the company's involvement in environmental issues such as energy consumption and waste reduction.
Nike and Gap are just two of the 1,000 corporates which have decided to be transparent about their operations, working conditions, and other details impinging on society, economy and environment.
The firms, including nine from India, get help in their 'bare-all' act from the global NGO, Global Reporting Initiative, which has framed guidelines for reporting on 79 indicators relating to social, economic and environmental sustainability.
In many cases, the enthusiasm of top corporates to come out with reports on the exact number and addresses of their factories, wages paid to workers and such details is often triggered by law suits challenging illegal practices in their units.
"Better bare it than be caught red-handed," says GRI Chief Executive Ernst Ligteringen, adding that Nike learnt it following a disastrous legal suit. Coke, whose sustainability image has got a severe battering in recent years, has joined the club. "Coke and Pepsi joined us recently," says Ligteringen.
The NGO, with members from ten nations and a secretariat in Amsterdam, issues guidelines and tries to popularise the concept among companies.
"We help organisations determine what they should report and how," Ligteringen says.
Out of 79 indicators on which the GRI requires reporting, corporate social responsibility is just one. Ligteringen says the broad framework has been provided by Global Compact, a UN initiative.
Since the GRI started with a pilot supported by the UN, most signatories to the GC norms adopt its reporting framework. It recently came out with its third edition of reporting guidelines.
After an MoU with the Confederation of Indian Industry this year, nine companies from India have adopted the framework.
Dr Reddy's, ITC Ltd, Jubilant Organosys, Reliance Industries and Tata Motors are some of the latest sustainability converts.
The new converts are persuaded by the thinking that companies don't have a permanent licence to operate.
Says Ligteringen.: "The legitimacy that allows them to function can be revoked by society any day. Reporting on sustainability helps them renew their commitment to society."
In India, the GRI plans to launch a pilot on small and medium enterprises which are going to be part of the supply chain of big companies like DaimlerChrysler.
SMEs linked to Spanish giant Telephonica in Chile and German company Auto's suppliers in China would also be targeted.
"We will mentor SMEs on the how to carry out sustainability reporting by providing them the framework, besides giving them a window to best practices around the world," Ligteringen says.
Next item on the GRI agenda: guidelines for governments and NGOs.