A version of this piece was originally published on the CSR Reporting Blog.
By Elaine Cohen
Anyone who knows me knows that I just have to respond to a post entitled “Five reasons you won’t be using GRI’s new G4 guidelines any time soon” by Bob Beer of Nowack-Beer Consulting which appeared on Toby Webb’s Smarter Business Blog. In fact, I was even nudged to respond by a client, so how can I not?
In his post, Bob Beer makes the point: “While well-intentioned, GRI’s new G4 reporting requirements are a serious impediment to the widespread and rapid adoption of this protocol.”
The key examples of aforesaid impediments cited by Bob are: the need to revamp processes to assess materiality, more time, effort and cost, “thorny” content issues such as transparency, materiality and stakeholder engagement, lack of report quality assurance and “Lack of a Mandate: Use of the GRI protocol is voluntary and there are no formal requirements or pressure to use GRI. (CDP, by contrast, has 700+ signatory institutional investors who apply formal pressure for disclosure.)”
Well, Bob, I got news for you. Not gonna happen. G4 reporting is a train that has bolted. Oops, shouldn’t that be a horse? Well, whatever it is, it’s still bolting. And it ain’t gonna stop. I already have three G4 reports in the (very) final stages of preparation for global clients, and all my reporting clients who are starting their 2013 reporting cycle around now have confirmed they will move to G4.
In the G4 Master Class I delivered in London last month, which was attended by representatives of some of the largest and most respected reporting companies from a range of sectors including fashion, retail, energy, media, chemicals and more, the interest in G4 was tangible. Wherever I engage, I am seeing interest in G4 and intent to use the new guidelines in the next reporting cycle.
Matthew Swibel, Director of Corporate Sustainability at Lockheed Martin, noted in response to the aforementioned post: “At Lockheed Martin, we intend to apply the G4 framework in our next report. Our analysis anticipates doing so will make the process more efficient and the disclosure more relevant to our core issues.”
Of course, G4 is not perfect, and those who have already started to use it, as I have, find that there are real challenges in using the framework as it is intended. I will talk more about these challenges in future posts, now that I am just catching my breath after a VERY intensive reporting season and have gained much firsthand experience in writing G4 reports. However, there is no doubt in my mind that G4 is a major improvement over G3, and it does require a different reporting mindset. The five reasons you WILL be considering reporting G4 for your next report are as follows:
1) You want to show leadership, responsiveness and agility in your reporting.
Change is not easy for many and often impossible for some. It’s easy to continue to do what you have always done. Early adoption of the G4 guidelines shows that your company is leading the way as a stakeholder-responsive, agile and forward-thinking player in sustainability.
The G4 guidelines didn’t spring out of thin air. They were the result of a multi-year, multi-stakeholder, multi-format engagement process and, despite the complexities of reaching consensus among such a wide range of diverse interests, GRI managed to deliver a product which is the result of what a representative selection of most stakeholders believe to be most important in sustainability reporting. Early adoption makes an important statement about your company’s capacity to listen to stakeholders, navigate the winds of change and demonstrate adaptability and agility.
2) You welcome the opportunity to focus your reporting on the most important things.
The G3 framework actually forced companies who wanted to demonstrate transparency to report on a whole bunch of stuff which was irrelevant to their companies and fill their A level reports with a string of inconsequential statements, such as how biodiversity is not material to our organization. G4 cuts through the verbiage and goes right to what’s most important in terms of the impacts your organization has on society and the environment.
In my experience, this creates a different sort of dialogue within the company, and provides a new legitimacy for sustainability managers to demand greater process and reflection in the development of the sustainability report. Internal and external stakeholder engagement is now a necessity in G4 reporting while it was given lip-service in G3 reporting. My experience is that companies actually welcome this as a refreshing and invigorating approach to reporting, and see opportunity in the materiality focus, both in terms of guiding and managing their own internal sustainability strategy and practice and also in terms of external communication.
To say, as Bob Beer does, that “more detailed analysis and reporting on material issues could alarm investors and stakeholders, causing negative impacts on a business” is, in my view, a complete reversal of the truth. It’s precisely because companies have NOT done this in the past that investors have been alarmed and stakeholders have been mistrustful.
3) Your competitors are doing it or are about to do it.
You will soon realize that G3 is a thing of the past. My prediction is that over 50 percent of the GRI-based reports published in 2014 will be G4 CORE or G4 referenced, well before the official expiry date of G3 at end 2015. As you look around at what your peers are doing, you really won’t want to be left behind using an anachronistic reporting framework that everyone has forgotten.
4) You appreciate the flexibility of the G4 guidelines.
The G4 guidelines offer companies the opportunity to mold the G4 framework around what you really want your stakeholders to know while meeting the information needs that they have requested on the issues which matter most to them. At CORE level, the degree of disclosure is manageable, given that companies can decide where to draw the line in terms of MOST material issues. You can decide that your report will cover in detail the top 5 issues, the top 10 or the top 25, and then you can align your disclosures with that. No one says you have to report on every single sustainability topic or activity that you have ever done. Gone are the days of “we donated $5000 to a local NGO last week, let’s put that in the report,” and “we changed the lightbulbs in the CEO’s office to T5, let’s put that in the report.” Now, it’s about: “these are our most material impacts and let’s talk about those in depth in the report – the rest is just chit-chat.”
A G4 report can tell a story just as well as any other type of report. You can use the G4 Content Index to disclose specific data which you may prefer not to disrupt your narrative. Aside from the General Disclosures which are required for all G4 in accordance reports, some of which are a little challenging (and not so relevant), even at CORE level, the G4 guidelines are all about do-it-yourself relevant transparency enabling flexibility and adaptability to each organization’s needs. Why continue to be constrained by the old rules when you can break free with the new ones?
5) You want more people to use your report.
A G4 report done well should be far more appealing and useful to your stakeholders than a G3 report, no matter how well the G3 report is written and constructed. The worst thing that can happen to a sustainability report is that no one uses it. A G4 report is far more usable because it is more focused and more relevant to the most important sustainability issues.
Finally, I will round off with a quote from my colleague, the sustainability strategy expert, Joss Tantram, who also responded to the blog post by Bob Beer by saying, among other things: “A materiality-centred approach is a step towards translating sustainability into the language and dimensions that have resonance for economics and capitalism.”