Tuesday, August 25, 2020

Developing the Lexicon of CSR-Responsible Business Conduct: GRI Exposure Draft of Universal Sustainability Standards Open for Public Comment Through 9 September

One of the greatest fundamental objectives of those who would transform the way that institutions and individuals engage in economic activity is to change the lexicon trough which those activities are understood and valued. The lexicon of responsible business conduct can be understood in its double sense. First lexicon can be understood in its traditional sense as the gathering (or collection) of words proper to a language. Second, one might understand the building of a lexicon in its modern sense of a "vocabulary proper to some sphere of activity" (Etymology Online, "lexicon").

It is that double sense that produces not just a consensus of words used in a particular activity, but more importantly, a consensus of the principles and values built into those words and their aggregation into sentences and more generally speech. The way one used words does not merely describe a thing but it also injects value (and the judgment of principle) into the words used. To control a lexicon is effectively to develop the palette of values around which an activity (e.g. economic activity in this case) is understood, managed, valued, evaluated, and those engaged in such activity may be brought to account.

It is with this in mind that the Global Reporting Initiative (GRI) 2020 exposure draft of the Universal Standards assumes some importance. GRI describes itself as "an independent international organization that has pioneered sustainability reporting since 1997." Its principal purpose is centered on the construction of a set of language-values for the conceptualization and communication of economic activity in ways that reflect the political-economic ideology which it reflects and which is reflected by it. In GRI's less abstract words:
GRI helps businesses and governments worldwide understand and communicate their impact on critical sustainability issues such as climate change, human rights, governance and social well-being. This enables real action to create social, environmental and economic benefits for everyone. The GRI Sustainability Reporting Standards are developed with true multi-stakeholder contributions and rooted in the public interest. 
Unlike many such public state based or international organs undertaking similar efforts, GRI tends to be more more transparent (something that ought not go unnoticed).  The Global Sustainability Standards Board (GSSB), the independent standard setting body of GRI, is circulating for public comment this exposure draft of GRI Universal Standards 101-103--and its critical vocabulary. They explain as follows:
The exposure draft is structured as follows: [1] GRI 101: Using the GRI Standards(lines 1 –830) [2GRI 102: About the Organization (lines 831–2205) [•GRI 103: Material Topics(lines 2206–2890) [4] Glossary(lines 2891–3184). The exposure draft is accompanied by the following three documents: [1] Explanatory memorandum sets out the objectives for the review of GRI’s Universal Standards, the significant proposals contained in the exposure draft, and a summary of the GSSB’s involvement and views on the development of the draft. [2] GRI Sector Program information sheet helps reviewers understand references to the GRI Sector Standards included in the exposure draft. [3 Mapping document provides an overview of the changes between the disclosures in GRI 102: General Disclosures 2016 and GRI 103: Management Approach 2016 and the exposure draft of the Universal Standards. This draft is published for comment only and may change based on public feedback before its official release.Any interested party can submit comments on the draft by 9 September 2020 using this survey
This provides an excellent opportunity for those with an interest in these matters to submit comments.  These comments might address not merely technical issues (e.g., are the provisions internally consistent, do they say what they mean, etc.), but also basic normative questions (do the Standards and the changes reflect appropriate values or attach appropriate methods to the vindication or advancement of those values, etc.).

The Comment Notice (with links) and my brief comments follow below.  The Exposure Draft (about 106 pages) may be downloaded HERE.

1. Convergence: The revisions more closely align the work of the GRI and its standards with the great public international instruments that are increasingly displacing others as the standards through which business activity (and its evaluation) are understood.  The principle instruments are the UN Guiding Principles for Business and Human Rights (2011) and the OECD's Guidelines for Multinational Enterprises (2011) and its Due Diligence Guidance for Responsible Business Conduct (2018). The later instrument, in turn, is meant to supplement the OECD Guidelines and draws on the UNGP  as well as the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy  (revised 2017). If one needed it, the GRI effort suggests that the initial post 2011 period of energetic exploration of the ramifications of the UNGP and its new vocabulary for framing state duty, corporate responsibility, and the compliance elements of both in the context of economic activity appears to be coming to an end.  What is likely to emerge in the next year or so is the outlines of a new orthodoxy at least of the lexicon of economic conduct applicable to individuals, entities, states and their organs.

2. The transformation of domestic corporate law. In the context of the management of global production (including the regulation and allocation of responsibility and risk) traditional corporate law and corporate law principles continue their slow and steady descent to marginal relevance. The battle over the control of the lexicon of global production organized through aggregations of capital was for corporate law to lose in 2006 (see my analysis then--"Multinational Corporations, Transnational Law: The United Nation's Norms on the Responsibilities of Transnational Corporations as Harbinger of Corporate Responsibility in International Law," Columbia Human Rights Law Review, Vol. 37, 2005). And over the last decade and a half lost they have  Corporate law is increasingly parochial, domestic, and inward looking.  The "action" in corporate law now comes from "outside" the core traditional obsession with "internal affairs" and the line between that and everything else worth regulating about corporations (and related business entities. This trend is most clearly exposed in the effective (and without much of a fight it seems given the fundamental importance of this concept in the construction of globalized market economies after 1970) transformation of the consensus about the answer to the question: "who does the corporation serve? Influential public and private bodies have decisively moved from an answer grounded in the  capital model (the shareholders and finance creditors) to an interest stakeholder model. The increasing divide between domestic law (especially corporate law) and its ordering principle of shareholder or entity welfare maximization, and the emerging principle of stakeholder welfare maximization coupled with stakeholder risk minimization will eventually produce a contradiction that the legal systems of states will no be able to avoid.

3. The reconstitution of remedy. To reconstitute suggests not merely to go back or to repeat, but also to do so in the process of forming something new.  In this sense remedy can be understood as repeating the development of something new. That repetition of ordering suggests a revamping in ways that represent a significant departure from its old bases of meaning. In this context, that return to the establishment of something new touches on the detachment of the concept of "remedy" from law. GRI draws on the UNGP Interpretive Guide ((2012) ("Remediation and remedy refer to both the processes of providing remedy for an adverse human rights impact and the substantive outcomes that can counteract, or make good, the adverse impact." Key Concepts)) (see exposure draft lines 3090-3097). The detachment arises from the embrace of the compliance framework for structuring economic activity.  That framework, in turn, moves one from the old legal basis for remediation (compensation, benefit of the bargain, etc., after injury; and equity (in common law jurisdictions and equity equivalents in civil law systems) to avoid injury) to one grounded in the fundamental action principle of prevent, mitigate, and account.
Actual impact requires remediation (see Guiding Principle 22). Potential impact—or human rights risk—requires action to prevent it from materializing, or at least to mitigate (reduce) as far as possible the extent to which it may do so (see Guiding Principles 17–21 on human rights due diligence). Where some residual impact on human rights is unavoidable, this in turn requires remediation. (UNGP Interpretive Guide Principle 13 Commentary Q. 10).
This is mirrored in the  Exposure Draft's equal emphasis on both remediation (post hoc) and on prevention.  The effect is likely to be a further movement of institutionalized business conduct from a markets output based model to a public administrative model.  By that one moves much more forcefully to a compliance and risk avoidance model that is likely to substantially affect the way that economic activity internalized and recognized risk, and the way business measures the consequences of risk against the gains of the activity.  Both ends of that balancing are now substantially revamped by effectively mandating not just a greater risk aversion (as a default position) at least in the human rights-labor-development-and sustainability aspects of economic activity, but also by internalizing the costs of harm over a greater scope of "impact."


9 September 2020 is the final day to submit your input on the exposure draft of the Universal Standards.
Your feedback is vital to us and to ensure that the Standards remain credible, usable, and inclusive. If you have not already done so, we kindly encourage you to take the time to review the exposure draft and to provide feedback on the proposed changes which include:

  • greater clarity on key concepts used in the GRI Standards, including ‘impact’, ‘material topic’, and ‘stakeholder’;  
  • revised ‘in accordance’ option that replaces the ‘Core’ and ‘Comprehensive’ options;
  • revised reporting principles to contribute to the discussion on the quality and proper presentation of reported information;
  • new disclosures on responsible business conduct, governance, due diligence and human rights;
  • new guidance and requirements for identifying and reporting on material topics;
  • new requirements for using GRI Sector Standards when reporting with the GRI Standards.
Access the online survey by 9 September. Supporting materials can be retrieved via the
Please contact us at universal@globalreporting.org if we can support you in any way.

Thank you very much for your participation!



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