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Key Changes in Global Reporting Initiative’s G4

ISOS Group
ISOS Group | Wednesday August 14th, 2013 | 1 Comment

 

G4 DevelopmentsPrevious iterations of the Global Reporting Initiative’s standards have been all-inclusive, encouraging reporters to report widely on their environmental, social and governance issues.  Some critics of the G3.1 and G3 standards complained that they rewarded breadth over depth by categorizing reports into three levels (A, B and C) – with the “best grade” given to the reports with the biggest scope. 

G4 represents a big shift in the standard – away from “put it all out there” to “less is more” – so long as what gets reported is material to the organization. The new standards ask reporters to use the sustainability report to document what really matters- a big shift away from reporting on everything the company monitors.

First things first. The G4 is split into two complementary documents: a manual consisting of the principles and standard disclosures themselves and a separate implementation manual to help reporters make their way through the process. The second document details the necessary steps a reporter needs to take to launch and manage a sustainability reporting process within any organization, regardless of their level of experience. The first document offers flexibility for preparers to choose which disclosures to focus on and how to align efforts to local/regional report requirements and frameworks. In addition, new clarifications on how to report on shared supply chain impacts outside of operational control will hopefully support organizations in taking additional responsibility for supply chain sustainability and governance.

Here are the key changes reporters need to know about from G4: 

Reporting levels

Gone are the lettered reporting levels (A, B, and C) that encouraged American reporters to go for that A+. There will now be an “in accordance” system with two distinct tracks: an entry level track for general disclosures called the Core track and a more Comprehensive track.

The concept of full or partial coverage will no longer be relevant. Now, reports can only be “in accordance” or not. If a company does not have all the data available, in order to be “in accordance,” it now must disclose omissions using detailed guidance within the G4.

Organizations can still determine the depth of reporting they wish to undertake. For the immediate future (approximately three months), GRI will continue to offer Application Level Checks. The board of directors will then meet in September to discuss continuation and/or approach to offering this service now that the levels are going away.

What happens to companies that choose not to be “in accordance”? Reporters that refer to GRI as a guide, but do not fully implement the principles and components are not required to publish a Content Index. They are however, encouraged to state that the Guidelines were referred to.

Materiality

Materiality will continue to be emphasized in prompts throughout the guidelines. Where issues are deemed material, reporters will be required to disclose on those issues.

When organizations are unable to measure and/or track all material aspects or indicators, they will need to acknowledge the relevance and admit limitations in data availablility.

G4 will not require a reporting organization to discuss each indicator – as with the previous A level scenario. Now reporters only need to discuss those that relate to a material aspect. That means that organizations with a large staff of knowledge workers in the U.S. and no physical products, probably do not need to spend much time addressing supply chain issues. For new reporters, this may make things easier as only one indicator from each material aspect requires a response. However, it may require more preparation as going through the materiality process is essential and more details may be required.

Materiality Revisited: It is likely that organizations will be asked to select aspects solely within one or a pair of categories, as opposed to the many different aspects A level reporters were previously expected to report on. This means that some of the reporting process will be a judgment call since organizations need to determine what they can feasibly report on.

Disclosures on Management Approach (DMAs)

DMAs will now be more focused at the Aspect level (GRI’s term for general fields of sustainability performance, like Energy Use or Labor/Management Relations) – meaning that companies will disclose on how they manage each Aspect separately. Makes sense, right? More Generic DMAs will allow for several aspects to be grouped together and addressed at the Category level (one step up). Three distinct elements will help guide reporters in reporting. First, organizations will explain why an Aspect is material and which impacts make it material, second, how the organization manages impacts, and third, which mechanisms are in place for evaluating the management approach.

Though a General Disclosure item will also prompt organizations to describe the supply chain and shared impacts, supply chain mapping as proposed in the exposure drafts will not be a required step in the process. Considering shared impacts across the supply chain and determining who is affected will be an integral concept fed throughout.

Sector Supplements

Current Sector Supplements (specific reporting guidelines for various industries) will be adapted to Sector Disclosure Tables- starting with Financial Services and Mining & Metals. All others will be adapted soon after along with additional sectors developed in time.

External Assurance

The guidelines now allow for external (third party) assurance to be conducted by different organizations for different impact areas. Disclosures about the assurance should be indicated in the Content Index accordingly.

Final thoughts

All in all, these changes will make the G4 much more straightforward and easy for newcomers and experience reporters alike. The development of the guidelines took two years, and GRI went through nearly one thousand drafts to reach these final edits. The development of these guidelines required extensive stakeholder consultation. Working Groups from across the world contributed feedback as did thousands of individuals around the world. GRI should be applauded for conducting such a thorough process and using this enormous amount of feedback effectively to produce a simple and effective guideline for reporting.

If you want to learn more about the G4, a bridging module on the G4 will be incorporated into all the ISOS group GRI certified sustainability reporter trainings happening after July 1st. A free webinar will also be available (soon!) for ISOS Group’s past course participants. Visit our course page to sign up for a full course and when we have more details on the webinar, we’ll update this page with registration info.


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