Public Money & Management

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GRI Sustainability Reporting by Australian Public

Sector Organizations

James Guthrie & Federica Farneti

To cite this article: James Guthrie & Federica Farneti (2008) GRI Sustainability Reporting by
Australian Public Sector Organizations, Public Money & Management, 28:6, 361-366

To link to this article: http://dx.doi.org/10.1111/j.1467-9302.2008.00670.x

Published online: 15 Mar 2010.

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GRI Sustainability Reporting by
Australian Public Sector
Organizations
James Guthrie and Federica Farneti
This article analyses voluntary sustainability reporting practices in seven
Australian public sector organizations which use the Global Reporting Initiative
(GRI) guidelines. Reporting practices are diverse and the use of the GRI public
agency supplement fragmented, with the annual report being only one of several
media used by organizations for sustainability disclosures.
Internationally, there is growing concern about
the social and environmental impact of
organizational activities, including public sector
organizations. There has been an increase in
reporting on social and environmental issues
by major corporations (Gray, 2006). The terms
used for this form of reporting vary (see Adams
and Larrinaga-González, 2007), but in this
article we use the term ‘sustainability reporting’.
Organizations are seeking to report more
information than is included in traditional
financial accounting as there are ‘broader
techniques of sustainability accounting and
accountability [that] have the potential to be
powerful tools in the management, planning
control and accountability of organizations for
their social and environmental impacts’
(Unerman et al., 2007, p. 3). In addition,
organizations have identified a need for
‘extended qualitative information’ (Ball et al.,
2006, p. 266). This focus on sustainability means
that ‘public service organizations and
institutions are likely to come under increasing
pressure to revisit their concept of sustainability’
(Ball et al., 2007, p. 39).
Prior research into social and
environmental reporting has mostly explored
disclosures by corporations (Guthrie and
Abeysekera, 2006), and there has been relatively
little research into the reporting of these matters
by organizations in the public sector. Ball and
Grubnic (2007) have warned of this gap, stating
that ‘the agenda for research and practice in
sustainability accounting and accountability has
been played out in most exclusively for-profit,
corporate setting’ (2007, p. 243) and they have
called for researchers to ‘help in understanding
the nature of sustainable development
accounting and accountability in PSOs [Public
Sector Organizations] whose core tasks have to
do with social welfare and justice’ (2007, p.
© 2008 THE AUTHORS
JOURNAL COMPILATION © 2008 CIPFA
361
257). Their overall argument is twofold: James Guthrie is a
Professor at the
•The agenda for sustainability practices has University of Sydney.
been developed, mostly, with reference to
the corporate setting, while ‘internationally, Federica Farneti is
the public sector accounts for some 40% of an Assistant
all economic activity’ (Ball and Grubnic, Professor at the
2007, p. 243). University of
•Public sector organizations deliver public Bologna, Italy.
policies to ensure a range of services. For this
reason ‘local government has the potential
to take a central role in moving communities
towards a more sustainable future’ (Ball et
al., 2006, p. 260).
In addition, as the Global Reporting Initiative
(GRI) argues:
Public agencies have a civic responsibility to
properly manage public goods, resources and/or
facilities in a way that supports sustainable
development objectives and promotes the public
interest public agencies are expected to lead by
example in reporting publicly and transparently
on their activities to promote sustainability (GRI,
2005, pp. 7–8).
We analysed voluntary sustainability
reporting practices in public sector
organizations, focusing on patterns of
disclosure. We examined a group of Australian
public agencies chosen as examples of ‘better
sustainability reporting practice’—discussions
with leading Australian consultants and
academics helped us decide which agencies to
include in our group. All in the group were
using GRI guidelines in one form or another,
thus the study observed what has been reported
in light of GRI guidelines. The GRI was chosen
because it ‘presents a good attempt to overview
developments internationally’ (Ball and
PUBLIC MONEY & MANAGEMENT DECEMBER 2008
362
Grubnic, 2007, p. 258). Also, ‘the GRI claims to
provide the basis of worldwide standardized,
comparable, reporting on the sustainability of
(particularly business) organization’ (Ball et al.,
2006, p. 268), giving the framework a practical
appeal for organizations seeking accounting
innovation.
The Study’s Research Methods
Several important themes from the
sustainability reporting literature are
considered relevant to the present study. These
include the importance of sustainability
accountability, disclosure practices in
corporations, and the near absence of social
and environmental reporting regulation for
public sector organizations.
There is a significant literature on social,
ethical and environmental reporting (for
example Frost and Seamer, 2002; Guthrie et
al., 2006; Gray, 2006; Gray and Guthrie, 2007;
Yongvanich and Guthrie, 2006) and also a
growing concern about organizations’
sustainability accountability. For example, the
United Nations stated that ‘Sustainable
development can only become a reality if
corporate responsibility becomes a mainstream
concern for individual companies and the
business community as a whole’ (UNEP, 2007,
p. 1). Sustainability has to be taken into account
as traditional financial accounting and reporting
frameworks do not provide a full account of an
organization’s social and environmental
activities (Gray et al., 1995; GRI, 2005; Gore,
2006).
Many studies have identified social and
environmental disclosure practices by private
sector bodies in Australia and internationally.
However, there has been little analysis of
sustainability reporting practices in public
sector organizations (Ball and Grubnic,
2007). A study by Farneti and Guthrie (2007)
examined the reasons for sustainability
reporting in public sector organizations by
focusing on the views of preparers of these
reports. They found that the reasons for
reporting were mixed and that organizational
sustainability information was produced for
mainly internal stakeholders.
The GRI Sector Supplement for Public Agencies
(2005, p. 8) gives the following reasons for the
need for sustainability reporting. These are:
Promote transparency and accountability;
reinforce organizational commitments and
demonstrate progress; serve as a role model for
private sector; improve their internal governance;
highlight the significance of its role as a consumer
PUBLIC MONEY & MANAGEMENT DECEMBER 2008
and employer in various economies; meet
disclosure expectations and make information
available to facilitate dialogue and effective
engagement with stakeholders.
Our study looked at the pattern of
sustainability reporting in a group of Australian
public sector ‘better sustainability reporting
practice’ organizations. We used content
analysis (Krippendorff, 2004; Guthrie et al.,
2008) to determine the extent of disclosures
and patterns in disclosure. A coding instrument
was developed to analyse the disclosures against
GRI G3 Guidelines, including the Sector
Supplement for Public Agencies.
The seven organizations we studied
represented the different levels of Australian
government organizations, including one
federal department, one state department,
three local government organizations, and two
state public organizations. The organizations
were located in four different states (see Farneti
and Guthrie, 2007). The sample group of
organizations used the G3 Guidelines (2006)
and Sector Supplement for Public Agencies (2005).
Content analysis was used to examine social
and environmental disclosures in the annual
reports and sustainability reporting of the
selected organizations.
The G3 Guidelines use indicators built on
several principles. The standard disclosure of
the G3 Guidelines is articulated in three main
parts:
•Strategy and profile.
•Management approach.
•Performance indicators.
The indicators are categorized into three
areas: economic, environmental and social
(divided into human rights, labour, product
responsibility and society). In these three
categories, there were 92 indicators in the
G2 Guidelines, with the number of indicators
decreasing in the G3 Guidelines (GRI, 2006).
The Sector Supplement for Public Agencies adds
another set of core indicators to these (core
indicators are those indicators identified by
the GRI as of interest to most stakeholders).
In constructing the categories, both the G3
Guidelines (2006) and the Sector Supplement
for Public Agencies Pilot version 1.0 were
used.
The disclosure instrument was applied to
annual reports and sustainability reports of the
group of selected organizations for the financial
year 2005/06. The disclosure instrument was
framed via six categories as shown in table 1.
© 2008 THE AUTHORS
JOURNAL COMPILATION © 2008 CIPFA
 363

Table 1. The public sector sustainability reporting disclosure instrument.

Categories Aspects Elements

1. Environmental (EN) Materials EN1 EN2

Energy EN3 EN4 EN5 EN6 EN7
Water EN8 EN9 EN10
Biodiversity EN11 EN12 EN13 EN14 EN15
Emissions, effluents, and waste EN16 EN17 EN18 EN19 EN20 EN21
EN22 EN23 EN24 EN25
Products and services EN26 EN27
Compliance EN28
Transport EN29
Overall EN30

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

3. Social—labour practices Employment LA1 LA2 LA3

and decent work social Labour/management relations LA4 LA5
performance: labour Occupational health and safety LA6 LA7 LA8 LA9
practices and decent Training and education LA10 LA11 LA12
work (LP) Diversity and equal opportunity LA13 LA14

4. Social—product Customer health and safety PR1 PR2

responsibility (PR) Product and service labelling PR3 PR4 PR5
Marketing communications PR6 PR7
Customer privacy PR8
Compliance PR9

5. Social—society (SO) Community SO1

Corruption SO2 SO3 SO4
Public policy SO5 SO6
Anti-competitive behavior SO7
Compliance SO8

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
aspects (33) and elements (81)*. This enabled
the researchers to document sustainability
disclosures, analysing annual reports as well
as stand-alone reports, checking if the range
of GRI disclosures has been followed. This
study only records the incidence of disclosure
and does not report the amount or quality of
sustainability reporting disclosures.
Table 1 lists both the G3 Guidelines
indicators and public agencies specific
indicators; a total of 81 disclosure categories
is used in the instrument. The specific public
agencies indicators are listed in table 2
(missing codes were classified as non-
sustainability indicators and, therefore, were
not used in this study).
*Full details and the coding institutions are available from
the authors. Table 1 summarizes the main features of the
disclosure instrument developed.
© 2008 THE AUTHORS
JOURNAL COMPILATION © 2008 CIPFA
Results and Findings
The analysis of the reports established the
following key sustainability reporting themes.
First, it identified what has been reported under
the label of ‘sustainability reporting’. As
illustrated in table 3, only 32% of the GRI’s
elements were used for reporting by the seven
organizations. The highest disclosures were in
the labour practices category (54%) and the
public agencies category was second with 43%
of possible disclosures. However, only 7% of
disclosures were in the human rights category
and only 18% of disclosures were for the society
category.
We found that the application of GRI
indicators was fragmentary, even though all of
the organizations insisted that they had followed
them. The issue is one of cherry-picking
indicators and not providing all the indicators.
One organization stated its reasons for using
GRI indicators as follows:
PUBLIC MONEY & MANAGEMENT DECEMBER 2008
364

Table 2. Public agency indicators.

Code Indicator

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.

Table 3. Total sustainability reporting disclosures by all elements.

Category A= Number of B= Total observations Total possible Total index
core and additional from all reports observations (all) B/C
elements 9xA=C

Environmental 30 87 270 32.2%

Human rights 9 6 81 7.4%
Labour practices and decent work 14 68 126 54.0%
Product responsibility 9 19 81 23.5%
Society 8 13 72 18.1%
Public agencies 11 43 99 43.4%

Total 81 236 729 32.4%

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.

The Global Reporting Initiative’s internationally
recognized indicators make it easier for
stakeholders to compare our organization’s
performance with that of our peers and with any
other organization. Transparency, accountability
and accuracy are important factors in
sustainability reporting and the Global Reporting
Initiative encourages all three.
At the same time, this organization also indicated
that:
For our 2005–06 report, we have focused on
organizational performance indicators. We have
included a limited number of public policy and
initiative indicators, complemented by ‘state of
environment’ indicators, to provide some
contextual information.
This provides further evidence that
organizations appear to be using GRI in a
fragmented way. This is surprising given that
the GRI indicate that in order to be represented
as following the GRI, organizations need to
report all the core indicators and specifically
that declaring an Application Level results in
a clear communication about which elements
of the GRI Reporting Framework have been
applied in the preparation of a report (GRI,
PUBLIC MONEY & MANAGEMENT DECEMBER 2008
2006, p. 5).
A second general observation was that when
the results are reviewed in the context of core
and additional elements for the total group of
reports examined, the pattern of disclosure is
similar to that found with total disclosure. As
one may expect, however, the additional
elements have a lower level of average disclosure
incidence compared to the core elements. All
GRI performance indicators are designated as
either ‘core’ or ‘additional’:
•Core indicators are of interest to most
stakeholders and are assumed to be material
unless deemed otherwise on the basis of
applying the GRI reporting principles.
•Additional indicators represent emerging
practice, or address topics that may be
material to some organizations but not
generally for a majority.
The distinction between core and sector specific
indicators is useful to understanding the level
of disclosure. As indicated in table 4, of the 54
core elements from the GRI an average of 35%
were used by the group. Of the 27 additional
elements, only 25% were used by the group.
Analysis of the individual categories indicates
similar patterns with labour practices and decent
work being the highest and society and HR
© 2008 THE AUTHORS
JOURNAL COMPILATION © 2008 CIPFA
 365

being lowest. Table 4. Core and additional elements.

A third general observation concerns the
Category (number of core Total observations Total observations
type of information disclosed (i.e. declarative, elements and number of (core = 54) (additional = 27)
monetary, and non-monetary). As highlighted additional elements)
in table 5, only 8% of sustainability reporting
Environmental (18, 12) 32.7% 31.5%
disclosures were monetary in nature, 46% were Human rights (6, 3,) 7.4% 7.4%
non-monetary and 33% were declarative. This Labour practices and decent work (9, 5) 60.5% 42.2%
is consistent with the literature more broadly, Product responsibility (4, 5) 33.3% 15.6%
Society (6, 2) 24.1% 0.0%
which indicates little use of monetary values. Public agencies (11, 0) 43.4% N/A
Fourth, analysis of the specific category of
public agencies indicates that, of the 11 elements Total 35.8% 25.5%
in this category, 10 were reported by at least
one of the organizations whose reports were
analysed. This suggests that the public agencies was a range of other media used to communicate
indicators are relevant in general to the sector, sustainability information. Other media was
but that for any one public sector organization referred to several times in the annual reports,
all the indicators may not be equally relevant. for example, websites and CDs. The annual
Further, it was found that the term report was considered to be one of several
‘sustainability’ had multiple meanings for the media for reporting. The evidence also indicates
public sector organizations analysed. For that several organizations merely replicated
instance, one organization offered the following data in these other media. For instance, one
explanation: organization indicated that:

…sustainability as the capacity to continue
operations indefinitely: it means that we must
restore human and natural capital and add to
the prosperity and well-being of current and
future generations. Sustainability involves a
collective capacity to respond to local, national
and international pressures on workers, visitors
and residents, in a way that improves rather than
detracts from the social, ecological and economics
systems on which we all depend.
Another organization described sustainability
as supporting:
State government priorities to protect our
extraordinary and unique landscapes, safeguard
the quality of our air and water, and promote
sustainable practices in industry and government
to leave a healthy, functional environment for
generations to come. Leading by example [the
organization] has embarked on a robust program
of internal review and improvement. Our success
in helping companies and local government meet
new environmental standards mirrors our own
determination to sustainably manage water and
energy use, and minimize waste in our own
operations.
Therefore, for these two public agencies,
sustainability has different meanings. For one,
it is about the capacity to continue operating
and includes many social, environmental and
economic aspects. For the other, it is only about
environmental concerns and its management.
A fifth general observation was that there
Our Sustainability Report 2005-06 is our first
stand-alone report and external consultation
will be conducted once the report is published.
The report will be published on our website and
on CD.
Also, the research into Australian sustainability
reporting revealed that there was an absence of
sustainability reporting mandatory
requirements for Australian public sector
organizations.
Conclusion
This article has identified the type of
information disclosed by a group of Australian
public organizations using GRI indicators.
Application of GRI indicators was
fragmentary—organizations cherry-picked the
GRI indicators they wanted to disclose, and
usually integrated these into annual reports.
Disclosures were generally non-monetary and
narrative in nature. These findings suggest
that the G3 Guidelines and the Sector Supplement
for Public Agencies supplement are too generic
for all public sector organizations, with just a
Table 5. Type of information disclosed.
Quality Percentage
1 - Declarative 33.5%
2 - Monetary 8.5%
3 - Non-monetary 46.6%
4 - Monetary and non-monetary 11.4%
Total 100.0%

© 2008 THE AUTHORS

JOURNAL COMPILATION © 2008 CIPFA PUBLIC MONEY & MANAGEMENT DECEMBER 2008
366
few indicators being focused on each of the
reporters. Clearly sustainability reporting is
still in its infancy for public sector organizations
given the percentage of elements not disclosed.
This has implications for both policy and future
research. On the policy front, the election of a
Federal Labor government in Australia in
November 2007 has been focusing attention
on government organizations and sustainability.
Senator Stephens (2008) recently indicated
that the government was considering: ‘focusing
on sustainability reporting including mandatory
reporting for public sector agencies’. In
addition, there is much room for further
research into sustainability reporting and the
field would benefit from other national or
international studies on public sector GRI
indicator use. For instance, this could then be
used to provide evidence for debates about the
applicability of GRI indicators for mandatory
sustainability reporting by public sector
organizations. ■ content analysis as a research method to inquire
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