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To cite this article: James Guthrie & Federica Farneti (2008) GRI Sustainability Reporting by
Australian Public Sector Organizations, Public Money & Management, 28:6, 361-366
Download by: [Durham University Library] Date: 11 October 2016, At: 18:35
361
Grubnic, 2007, p. 258). Also, ‘the GRI claims to and employer in various economies; meet
provide the basis of worldwide standardized, disclosure expectations and make information
comparable, reporting on the sustainability of available to facilitate dialogue and effective
(particularly business) organization’ (Ball et al., engagement with stakeholders.
2006, p. 268), giving the framework a practical
appeal for organizations seeking accounting Our study looked at the pattern of
innovation. sustainability reporting in a group of Australian
public sector ‘better sustainability reporting
The Study’s Research Methods practice’ organizations. We used content
Several important themes from the analysis (Krippendorff, 2004; Guthrie et al.,
sustainability reporting literature are 2008) to determine the extent of disclosures
considered relevant to the present study. These and patterns in disclosure. A coding instrument
include the importance of sustainability was developed to analyse the disclosures against
accountability, disclosure practices in GRI G3 Guidelines, including the Sector
corporations, and the near absence of social Supplement for Public Agencies.
and environmental reporting regulation for The seven organizations we studied
public sector organizations. represented the different levels of Australian
There is a significant literature on social, government organizations, including one
ethical and environmental reporting (for federal department, one state department,
example Frost and Seamer, 2002; Guthrie et three local government organizations, and two
al., 2006; Gray, 2006; Gray and Guthrie, 2007; state public organizations. The organizations
Yongvanich and Guthrie, 2006) and also a were located in four different states (see Farneti
growing concern about organizations’ and Guthrie, 2007). The sample group of
sustainability accountability. For example, the organizations used the G3 Guidelines (2006)
United Nations stated that ‘Sustainable and Sector Supplement for Public Agencies (2005).
development can only become a reality if Content analysis was used to examine social
corporate responsibility becomes a mainstream and environmental disclosures in the annual
concern for individual companies and the reports and sustainability reporting of the
business community as a whole’ (UNEP, 2007, selected organizations.
p. 1). Sustainability has to be taken into account The G3 Guidelines use indicators built on
as traditional financial accounting and reporting several principles. The standard disclosure of
frameworks do not provide a full account of an the G3 Guidelines is articulated in three main
organization’s social and environmental parts:
activities (Gray et al., 1995; GRI, 2005; Gore,
2006). •Strategy and profile.
Many studies have identified social and •Management approach.
environmental disclosure practices by private •Performance indicators.
sector bodies in Australia and internationally.
However, there has been little analysis of The indicators are categorized into three
sustainability reporting practices in public areas: economic, environmental and social
sector organizations (Ball and Grubnic, (divided into human rights, labour, product
2007). A study by Farneti and Guthrie (2007) responsibility and society). In these three
examined the reasons for sustainability categories, there were 92 indicators in the
reporting in public sector organizations by G2 Guidelines, with the number of indicators
focusing on the views of preparers of these decreasing in the G3 Guidelines (GRI, 2006).
reports. They found that the reasons for The Sector Supplement for Public Agencies adds
reporting were mixed and that organizational another set of core indicators to these (core
sustainability information was produced for indicators are those indicators identified by
mainly internal stakeholders. the GRI as of interest to most stakeholders).
The GRI Sector Supplement for Public Agencies In constructing the categories, both the G3
(2005, p. 8) gives the following reasons for the Guidelines (2006) and the Sector Supplement
need for sustainability reporting. These are: for Public Agencies Pilot version 1.0 were
used.
Promote transparency and accountability; The disclosure instrument was applied to
reinforce organizational commitments and annual reports and sustainability reports of the
demonstrate progress; serve as a role model for group of selected organizations for the financial
private sector; improve their internal governance; year 2005/06. The disclosure instrument was
highlight the significance of its role as a consumer framed via six categories as shown in table 1.
2. Social—human rights (HR) Investment and procurement practices HR1 HR2 HR3
(HR) Aspect: non-discrimination HR4
Freedom of association and collective
bargaining HR5
Child labour HR6
Forced and compulsory labour HR7
Security practices HR8
Indigenous rights HR9
6. Public agencies—specific (PA) New disclosure elements for public PA2 PA3 PA4 PA5 PA6 PA7 PA11 PA12
agencies and new social indicators for PA13 PA14
public agencies
Administrative efficiency PA15
The content codes were further specified into Results and Findings
aspects (33) and elements (81)*. This enabled The analysis of the reports established the
the researchers to document sustainability following key sustainability reporting themes.
disclosures, analysing annual reports as well First, it identified what has been reported under
as stand-alone reports, checking if the range the label of ‘sustainability reporting’. As
of GRI disclosures has been followed. This illustrated in table 3, only 32% of the GRI’s
study only records the incidence of disclosure elements were used for reporting by the seven
and does not report the amount or quality of organizations. The highest disclosures were in
sustainability reporting disclosures. the labour practices category (54%) and the
Table 1 lists both the G3 Guidelines public agencies category was second with 43%
indicators and public agencies specific of possible disclosures. However, only 7% of
indicators; a total of 81 disclosure categories disclosures were in the human rights category
is used in the instrument. The specific public and only 18% of disclosures were for the society
agencies indicators are listed in table 2 category.
(missing codes were classified as non- We found that the application of GRI
sustainability indicators and, therefore, were indicators was fragmentary, even though all of
not used in this study). the organizations insisted that they had followed
them. The issue is one of cherry-picking
indicators and not providing all the indicators.
*Full details and the coding institutions are available from
the authors. Table 1 summarizes the main features of the One organization stated its reasons for using
disclosure instrument developed. GRI indicators as follows:
© 2008 THE AUTHORS
JOURNAL COMPILATION © 2008 CIPFA PUBLIC MONEY & MANAGEMENT DECEMBER 2008
364
PA2 State the definition of sustainable development used by the public agency, and identify any statements or
principles adopted to guide sustainable development polices.
PA3 Identify the aspects for which the organization has established sustainable development policies.
PA4 Identify the specific goals of the organization for the each aspects listed in PA3.
PA5 Describe the process by which the aspects and goals in both PA3 and PA4 were set.
PA6 For each goal, provide a description of the indicators.
PA7 Describe the role of and engagement with stakeholders with respect to the items disclosed in PA6.
PA11 Describe procurement policy of the public agency as relates to sustainable development.
PA12 Describe economic, environmental, and social criteria that apply to expenditures and financial commitments.
PA13 Describe linkages between the public agency’s procurement practices and its public policy priorities.
PA14 Percentage of the total value of goods purchased that were registered with voluntary environmental or social
labels and/or certification programmes, broken down by type.
PA15 Administrative efficiency.
Note: Table 3 shows the total number of observed reports as nine, which is all of the annual reports (for the seven
organizations) and stand-alone reports for two of the seven organizations.
2006, p. 5).
The Global Reporting Initiative’s internationally A second general observation was that when
recognized indicators make it easier for the results are reviewed in the context of core
stakeholders to compare our organization’s and additional elements for the total group of
performance with that of our peers and with any reports examined, the pattern of disclosure is
other organization. Transparency, accountability similar to that found with total disclosure. As
and accuracy are important factors in one may expect, however, the additional
sustainability reporting and the Global Reporting elements have a lower level of average disclosure
Initiative encourages all three. incidence compared to the core elements. All
GRI performance indicators are designated as
At the same time, this organization also indicated either ‘core’ or ‘additional’:
that:
•Core indicators are of interest to most
For our 2005–06 report, we have focused on stakeholders and are assumed to be material
organizational performance indicators. We have unless deemed otherwise on the basis of
included a limited number of public policy and applying the GRI reporting principles.
initiative indicators, complemented by ‘state of •Additional indicators represent emerging
environment’ indicators, to provide some practice, or address topics that may be
contextual information. material to some organizations but not
generally for a majority.
This provides further evidence that
organizations appear to be using GRI in a The distinction between core and sector specific
fragmented way. This is surprising given that indicators is useful to understanding the level
the GRI indicate that in order to be represented of disclosure. As indicated in table 4, of the 54
as following the GRI, organizations need to core elements from the GRI an average of 35%
report all the core indicators and specifically were used by the group. Of the 27 additional
that declaring an Application Level results in elements, only 25% were used by the group.
a clear communication about which elements Analysis of the individual categories indicates
of the GRI Reporting Framework have been similar patterns with labour practices and decent
applied in the preparation of a report (GRI, work being the highest and society and HR
© 2008 THE AUTHORS
PUBLIC MONEY & MANAGEMENT DECEMBER 2008 JOURNAL COMPILATION © 2008 CIPFA
365
…sustainability as the capacity to continue Our Sustainability Report 2005-06 is our first
operations indefinitely: it means that we must stand-alone report and external consultation
restore human and natural capital and add to will be conducted once the report is published.
the prosperity and well-being of current and The report will be published on our website and
future generations. Sustainability involves a on CD.
collective capacity to respond to local, national
and international pressures on workers, visitors Also, the research into Australian sustainability
and residents, in a way that improves rather than reporting revealed that there was an absence of
detracts from the social, ecological and economics sustainability reporting mandatory
systems on which we all depend. requirements for Australian public sector
organizations.
Another organization described sustainability
as supporting: Conclusion
This article has identified the type of
State government priorities to protect our information disclosed by a group of Australian
extraordinary and unique landscapes, safeguard public organizations using GRI indicators.
the quality of our air and water, and promote Application of GRI indicators was
sustainable practices in industry and government fragmentary—organizations cherry-picked the
to leave a healthy, functional environment for GRI indicators they wanted to disclose, and
generations to come. Leading by example [the usually integrated these into annual reports.
organization] has embarked on a robust program Disclosures were generally non-monetary and
of internal review and improvement. Our success narrative in nature. These findings suggest
in helping companies and local government meet that the G3 Guidelines and the Sector Supplement
new environmental standards mirrors our own for Public Agencies supplement are too generic
determination to sustainably manage water and for all public sector organizations, with just a
energy use, and minimize waste in our own
operations.
Table 5. Type of information disclosed.
Therefore, for these two public agencies, Quality Percentage
sustainability has different meanings. For one,
1 - Declarative 33.5%
it is about the capacity to continue operating 2 - Monetary 8.5%
and includes many social, environmental and 3 - Non-monetary 46.6%
economic aspects. For the other, it is only about 4 - Monetary and non-monetary 11.4%
environmental concerns and its management. Total 100.0%
A fifth general observation was that there