Dr. Edward Tello, Monash Business School, Associate Professor James Hazelton, Macquarie University, and Dr. Shane Leong, Macquarie University, investigate the degree to which the Global Reporting Initiative (GRI) standards reflect material concerns of stakeholders in developing nations as a framework for sustainability reporting, with particular reference to Latin America.

Are Global Reporting Initiative Standards Relevant for the Global South? By CoBS Editor Michelle Diaz. Related research: Missing voices in GRI standards? Distinct material concerns of Latin American stakeholders revealed by COVID-19, James Hazelton, Shane Leong, Edward Tello; Accounting, Auditing & Accountability Journal, Vol. 36 No. 3, 2023, Emerald Insight.

A standardised framework for global reporting?

According to the United Nations, there are 193 nations across the globe, not including certain states that might also classify as nations like Taiwan or the Vatican. And amongst these are multiple ways of governance, from democracy to autocracy. Given all this diversity, it makes sense to say that the world would benefit from utilising common tool for measuring business and policy-related issues. 

The Global Reporting Initiative (GRI) is an example of such a standardised tool. Established in 1997, the GRI is a direct result of the Exxon Valdez Oil Spill, and underlines the notion that global guidelines and consistent reporting ought to be in place for social and environmental protection. It has since become the most commonly used framework for sustainability reporting across the globe.

Unfortunately, in the decades that followed the inception of the GRI standards, various limitations have been discovered. But by investigating the strengths and weaknesses of the current GRI standards, countries and companies are more able to work towards not only a more sustainable world, but also a more equitable one.

As such, research by Dr Edward Tello at Monash, together with Associate Professor James Hazelton and Dr Shane Leong of Macquarie University, examines the quality of the GRI standards. With a specific focus on Latin America (in particular, Chile, Mexico, and Peru), they explore whether the GRI standards might need to be adjusted to fully capture the reporting needs of developing world stakeholders.

South and North: Distinct issues, characteristics, needs

By analysing news coverage as their primary data source, the authors attempt to answer two distinct questions: to what extent does the concern of stakeholders differ between developed and developing countries, and to what extent are these concerns covered by the existing GRI standards.

In focusing on the distinction between developing and developed countries with regards to GRI standards, their findings follow in line with the suggestion that the economic, political, and social traits of developing countries mean that corporations operating in these environments have additional stakeholder obligations.

The bottom line is that existing GRI standards need to be adapted to meet the needs of the Global South. Indeed, the stakeholder concerns of Latin Americans are materially distinct: from labour, to social service provisions by corporations, and the detrimental effect of corruption.

On the ground this translated into issues like Peru having to deal with COVID-19, where a pressing issue was the lack of technical medical equipment. As opposed to developed nations, where the news coverage of COVID-19 focused more on issues such as government grants for businesses having convoluted application procedures.

Indeed, during the pandemic, employee concerns were significantly covered by the news channels both in the northern and southern hemispheres. But while the north tended to focus on unfair dismissal, lack of transparency over worker infection rates, and the unethical practices of businesses shying away from sick pay, the south – in this specific case South American countries – emphasised, for example, the harsher treatment employees received. This included being forced to sign resignation letters, salary reduction agreements and undertake clandestine work.

A further issue of injustice frequently cited was the differences in wages, benefits and working conditions between employees based in parent companies in developed countries, and those working in the subsidiaries of the latter in developing countries. Above all, it was worker safety that received most prime time airing.

Reporting for Duty: Going forwards

Dr Tello, Prof. Hazelton, and Dr Leong state that while many GRI standards are relevant for the global south, the perspective of developing countries needs to be considered more strongly given that their needs differ from the developed countries – especially in terms of labour conditions and companies’ poor provision of core social services.

These different needs mean that current GRI standards are insufficient for developing country stakeholders, with particular deficiencies in reporting for labour practices, and the quality of reporting for public and private sector interactions. GRI 401 Employment, 2016, for instance, demands few details to be given in relation to termination of employees, an area of high concern in developing countries.

Reviewing GRI submissions, evidence suggests that these deficiencies might be the consequence of a lack of developing country input into the standard-setting process – with developing countries accounting for only 31% of GRI submissions despite representing 88% of the world’s population.

Tello, Hazelton and Leong also explored studies conducted in Spanish by Latin American countries, revealing that findings are consistent with that of research published in English. More crucially, the translations revealed some novel findings that the existing research in English had yet to identify, such a strong presence of the issue of corruption. As such, this suggests that both parties have something to gain from working together.

Last, Dr Tello, Prof. Hazelton, and Dr Leong offer up recommendations for corporate action, transparency and disclosures for both developing and developed worlds in times of crises, such as the pandemic. These include:

• A duty for firms to explain and justify in situations of mass lay-offs
• Disclosure of the circumstances and reasons behind any reductions in wages or benefits
• A duty for firms to explain the negotiation process and how it is communicated when it is used for decisions negatively affecting employees
• Transparency regarding fair treatment of customers who paid for services that they were unable to use due to disruptions, and the identification and disclosure of customer safety risks.
• Disclosure of any announcements of support to the community and progress towards reaching those promises
• Communication of actions which significantly harm (or benefit) corporate suppliers.

And as the world seems to continue into its year of instability – with uncertainties over future pandemics, refugee crisis, war, and climate change, these issues are becoming ever more pertinent.

Encouragingly, in June 2024 the GRI launched a 12-month project to revise the GRI standards on employment practices and working conditions. This project aims to consult widely with representatives of the global south as well as the north, so it could be that a fully inclusive set of GRI standards is on the horizon. For full details see https://www.globalreporting.org/.  

Useful links:

• Link up with Edward Tello, James Hazelton, and Shane Leong on LinkedIn
• Read a related article: Social Accounting: Measuring sustainability
• Discover Monash Business School, Monash University
• Browse the Monash MBA portfolio and apply.

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