The Global Reporting Initiative (GRI) has issued a draft of its latest reporting guidelines, G4. The document, which provides standard disclosures and guidance to help organizations prepare sustainability reports, is available for public comment through Sept. 24.
The new proposed guidelines, under development since 2010, include several key changes, focused on materiality in all stages of sustainability reporting, according to GRI. These include:
- Application levels. G3 introduced Application Levels, intended to help organizations communicate the transparency of their sustainability reports, measured against the guidelines. GRI says some report users wrongly understood the Application Levels to be an opinion on the quality of the report. It’s proposing the existing Application Levels be discontinued, and replaced in G4 by criteria that must be met for an organization to claim that the report has been prepared “in accordance with G4.” GRI also says it intends to develop supporting guidance specific to small and medium-sized entities after the launch of G4.
- Boundaries. G4 gives organizations one sequence of process steps on how to define content and boundaries of a sustainability report. The outcome is (1) a map of the organization’s value chain, (2) a list of where the impact occurs within the value chain and material aspects, and (3) related standard disclosures to be included in the sustainability report. If an organization does not disclose a core indicator, it must explain why not.
- Disclosure on Management Approach. These give organizations an opportunity to explain how they manage material economic, environmental and social impacts. G4 proposes that the Disclosures on Management Approach be provided at the Aspect level. (GRI’s Indicators are divided into categories – Economic, Environmental and Social – and then Aspects are presented within each category, as shown in the table above.) But if a topic is managed at a different level, G4 proposes the Disclosures on Management Approach be reported at that level.
- Governance. G4 changes include new disclosures in the Profile section of the sustainability report on the ratio of executive compensation to median compensation, the ratio of executive compensation to lowest compensation and the ratio of executive compensation increase to median compensation.
- Supply chain. G4 includes a new definition of supply chain and of supplier, and new disclosures on the supply chain — procurement practice, screening and assessment, and remediation.
- Structure. The draft splits the text in the Indicator Protocols into standard disclosures and guidance. This is intended to make the reporting requirements more easy to identify and user-friendly. GRI says it plans to offer the approved G4 Guidelines through a web-based platform.
GRI released the most recent set of guidelines, G3.1, in March 2011. Also in 2011, GRI announced 10 global sponsors of G4. The companies are Alcoa, Enel, GE, Goldman Sachs, Natura, Shell, Deloitte, Ernst & Young, KPMG and PwC.