Reporting initiative targets small suppliers

The Global Reporting Initiative (GRI) and German development agency GTZ have launched a project to help small suppliers improve their sustainability reporting.

Established in 1997, the GRI was co-founded by US ethical investment body CERES and UNEP, to develop a uniform structure for sustainability reporting and has since become independent.

By encouraging supplier reporting and increasing supply chain transparency, the GRI believes multinationals can achieve far more environmentally and socially significant changes to products or production processes than they can in-house.

To test this approach, the project will help small firms develop sustainability reports. Many small and medium enterprises (SMEs) are starting to report because their buyers demand it or to add value to contract bidding, but for many, says the GRI, reporting is a new challenge.

"This will go beyond the current system of control and audits and questionnaires," said project manager Leontien Plugge. "Suppliers will be trained to understand sustainability challenges and explore ways to collaborate with their buyers."

The project could help the GRI extend its influence beyond multinationals (ENDS Report 381, p 10 ).

Joris Wiemer

of GRI’s SME team said the project aims to counterbalance existing top-down initiatives on supply chain engagement. "We wanted to empower the supply chain to speak for itself. The aim is to get suppliers to write their own reports… and engage and communicate in a more proactive way."

Four multinationals are involved - carmaker DaimlerChrysler, German retail and financial services company the Otto Group, Spanish telecoms operator Telefonica, and sports clothing and equipment company Puma - along with a dozen of their SME suppliers based in India, Turkey, China, Chile and South Africa.

An Otto Group spokesman said reporting was seen as a useful tool to improve suppliers’ sustainability. "It enhances awareness of the different facets of sustainability in general and makes suppliers understand the impact of their business on sustainability… This awareness in turn creates the foundation for setting goals for improvement and is also the key in motivating suppliers."

The project’s first phase is already under way with a series of supplier workshops in each country to explain sustainability terms and the business case for reporting, and to gauge stakeholders’ expectations.

Further workshops in July will examine the development of indicators, stakeholder engagement and work through the GRI’s reporting guidelines. By the third set of workshops in October, SMEs should have produced a draft sustainability report for review.

The GRI will then produce sectoral guidance for suppliers in the same value chain, taking into account the experience of both SMEs and multinationals.

It is unclear what form this might take. Already the GRI has identified "huge" variations in business culture between regions, so the approach is likely to vary. But it is likely to be based on the five-step reporting methodology - prepare, connect, define, monitor and report - outlined in the GRI’s SME handbook.

It is also uncertain how the four multinationals will use the reports. The usual practice of issuing detailed questionnaires to suppliers or encouraging them to use consolidated IT systems is designed to extract key pieces of information from thousands of suppliers to ensure information is comparable and relevant.

However, Ms Plugge said the suppliers’ reports would be comparable because they would use the same indicators.”

(The Ends Report, May 2007/ Issue 388, p 21-22)