EP sets out the key changes that will
be brought in by the newly revamped Global Reporting Initiative
guidelines on sustainability reporting, introduced last month
October’s enormous Global Reporting Initiative conference in Amsterdam
– convened to parade ‘G3’, the third incarnation of the GRI’s
guidelines on sustainability reporting – may have been extremely well
organized, but it contained one glaring omission. Not one of the myriad
sessions at the three-day event, as many of the 1000 delegates
complained, actually outlined what the G3 guidelines say, or how they
differ from the previous version (now known as G2).
A chastened GRI promised ‘plenty of events’ in the future to cover that
ground, and said it would put some material online. But so far the GRI
website is still vague on the subject.
Given that the changes will affect a lot of organizations – there are
now more than 2000 sustainability reporters, of whom 895 cite GRI in
the course of their reporting and 181 say they are complying with the
reporting guidelines in some way – that is a significant oversight. So
here is EP’s quick guide to the main changes introduced in G3.
Materiality is now to the fore
G3 has much more to say on materiality – what a sustainability report
should cover. It says information in a report should cover topics and
indicators ‘that reflect the organization’s significant economic,
environmental, and social impacts, or that would substantively
influence the assessments and decisions of stakeholders’. It offers
practical suggestions on how to do this, such as identifying the main
sustainability topics raised by stakeholders, issues reported by peers
and competitors, and laws, regulations, international agreements or
voluntary codes that have ‘strategic significance’ to the organization
and its stakeholders. G2 did address materiality, but there is now
greater clarity.
Performance indicators pruned
There are fewer performance indicators suggested for use by reporters –
79 compared with the 97 in G2. Some indicators have changed slightly,
and ‘protocols’ now give more in-depth advice on how to calculate each
indicator, in some instances providing detailed formulae for use by
reporters. G2 generally had a maximum of six lines on how to calculate
indicators; G3 devotes a full page to each indicator.
Self-assessment introduced
G3 has scrapped the former practice of the GRI declaring whether
organizations are reporting ‘in accordance’ with or ‘with reference’ to
the guidelines – a distinction that many had felt was unclear and that
had led to companies at an early stage of non-financial reporting
feeling left out. All reporters will now have to make a self-assessment
of the extent to which they have applied the guidelines in their
reporting – from the lowest level of C up to B and then A. G3 offers
guidance on how to do this: to be eligible for a B rating, a company
must, for example, report on at least 20 non-financial performance
indicators and explain the management approach behind each indicator.
Those that have had their reports externally assured will be able to
add a plus sign to their rating, taking them to a more satisfying C+,
B+ or A+. In addition, reporters may send a final draft to the GRI
secretariat to check that their self-assessment is correct. If the GRI
agrees that it is, the report can feature a GRI logo next to each
rating by way of endorsement. This service is free for GRI
organizational stakeholders but will cost others €800 ($1000, £535).
New demands on timeliness
G2 did not specify how frequently reports should be produced, but G3
states that reporting should have ‘a regular schedule’ with information
made available ‘in time for stakeholders to make informed decisions’.
More stress on management processes
There is a much greater emphasis on the management systems that a
company has in place to address social and environmental issues.
Reporters now have to produce separate, detailed accounts of how they
are managing their impacts in six areas: the environment, economic
impact, product responsibility, human rights, labour rights and society.
Greater emphasis on strategy
A new section urges reporters to provide a ‘concise overview’ of the
organization’s strategic approach to sustainability management,
‘including information that will be of specific value for users from
the financial community’. This, the GRI suggests, can be in the form of
a statement from the chief executive together with a separate
description of ‘key impacts, risks, and opportunities’.
Everything is much clearer
Most observers agree that the new guidelines are written in clearer language and are less labyrinthine.
Copies of the G3 guidelines on sustainability reporting can be downloaded at no charge from the website below.
