- By: David South
The Global Reporting Initiative (GRI) is a non-profit organization that promotes economic, environmental, and social sustainability. GRI pioneered and developed a comprehensive Sustainability Reporting Framework used widely around the world. The Framework enables organizations, both private and public, to measure and report their economic, environmental, social, and governance performance – the four pillars of sustainability. The Framework includes reporting guidelines, sector guidelines, and other resources.
The GRI launched the first version of the Guidelines (G1) in 2000 and the most recent Guidelines (G4)1 in May 2013. The goal of G4 is to “…encourage more focused sustainability reporting by concentrating on an organization’s material impacts, risks, and opportunities across the whole of its value chain.”2
What is different about G4? G4 recalibrated the previous reporting guidelines to focus on content (materiality) rather than quantity (scope). G4 directs organizations to populate their reports with what really matters, rather than “…reporting on everything the company monitors.” Through the following principle changes, G4 intends to increase organizations’ level and ease of participation:3
- Reporting levels: instead of reporting levels, G4 is now based on an “in accordance” system with two tracks—Core and Comprehensive. If a company does not have all of the data available to be “in accordance,” it must disclose omissions using Guidelines in G4. If a report uses G4 as a “guide” but does not adhere to all the principles and components, it must be identified as not “in accordance.”
- Materiality: where issues are deemed material, the G4 report must disclose on those issues. If these issues cannot be measured and/or tracked the report must acknowledge the relevance and identify limitations in data availability.4
- Disclosures on management approach (DMAs): DMAs are now more focused on what is referred to as the “Aspect” level—for example, energy use; companies must disclose how they manage each Aspect separately. G4 provides the following guidance re DMAs: organizations must explain 1) why an Aspect is material and what impacts make it material; 2) how it manages impacts; and 3) what mechanisms are in place to evaluate the management approach.
- Sector supplements: GRI will develop specific reporting guidelines by industry, starting with financial services and mining and metals.
External assurance: G4 allows for external (third party) assurance to be conducted by different organizations for different impact areas.
Greenhouse gas (GHG) components now align with GHG Protocol
The GHG Emissions Working Group of G4 proposed a number of changes covering disclosures under the Aspects of Energy and Emissions (formerly Emissions, Effluents, and Waste). The proposed G4 revisions intend to support reporting and alignment with the GHG Protocol5 and ISO 14064:6
- The proposed GHG Emissions Indicators are fully aligned with the GHG Protocol's grouping of emissions into three subsets (Scopes 1, 2, and 3), as well as the ISO 14064 grouping.
- The revisions modified Energy Indicators to align with the GHG Emissions Indicators for more streamlined reporting. In addition, the revisions added Intensity Indicators for both energy and GHG emissions.
Utility participation in GRI
In 2011, 26 US utilities submitted GRI reports; many of these same utilities completed reports in 2012. To date (in 2013), three utilities have submitted reports: AEP, Avista Utilities, and Duke Energy. What is in question is whether the recent directive by President Obama (to EPA) to limit the amount of carbon emissions from power plants—both new and existing—will provide additional impetus for utilities to benchmark their current emissions using the GRI G4 Framework.7 In addition, since many investment management firms have become signatories of the United Nations Principles on Responsible Investment (UNPRI), the necessity for utilities to comply with GRI guidelines will likely increase—both to retain their investment level by these firms and to reduce their cost of this capital.
2 KPMG, The GRI G4 Exposure Draft: What Might It Mean for Corporate Sustainability Reporting? (November 2012).
3 Extracted from “Key Changes in Global Reporting Initiative’s G4” by ISOS Group (May 22, 2013).
4 The Materiality Principle, as defined in the G3 Guidelines (2006), has not changed in G4. That is, the GRI report should cover Aspects that: reflect the organization’s significant economic, environmental and social impacts; or substantively influence the assessments and decisions of stakeholders. What has changed in G4 is the concept of “Boundary”—organizations are requested to identify and describe where impacts occur for each material Aspect identified. Source: G4 Sustainability Reporting Guidelines, Frequently Asked Questions (June 11, 2013).
6 http://www.iso.org/iso/catalogue_detail?csnumber=38381 and http://www.iso.org/iso/home/store/catalogue_tc/catalogue_tc_browse.htm?commid=546318
7 ‘We Need to Act’: Transcript of Obama’s Climate Change Speech (Bloomberg; June 25, 2013.