9 things you need to know about GRI's G4

9 things you need to know about GRI's G4

G4 launched yesterday at the GRI Global Conference in Amsterdam. As a GRI-Certified Trainer, BrownFlynn is at the release event -- and got a sneak peek at the new system ahead of time. Here are nine changes we noted during our first review:

1. Materiality is a must

In G4, organizations will be required to report only what matters -- and where it matters. Though it was never the intent of the G3/G3.1 framework, the perception of reporting options over the last few years has centered on the difference in the number of indicators required for different levels of reporting. While materiality is not new, the G4 framework more explicitly requires reporting efforts to center on materiality -- impacts, risks and opportunities. The first step G4 requires is a systematic materiality assessment followed by disclosure of what those material topics are. What was previously known as the Technical Protocol for Determining Report Content (previously an appendix to the G3.1 guidelines) is now front and center in G4 within a simplified set of instructions for planning a reporting process.

2.  ABC gets a D

The Application Levels A, B and C were removed from the framework. A company now has two options (levels) for reporting "in accordance with" the GRI guidelines: "core" and "comprehensive" reports. The most substantial difference between a core and a comprehensive report will be the number of governance and strategy disclosures.

3. The "plus" is no longer part of the equation

The "+" previously used to signal external report assurance has been removed. GRI has added a column to the GRI Content Index that requires explanation of the assurance scope on a line-by-line basis. It will now be easier for readers to determine what specifically has been assured within a report. Interestingly, the guidance GRI gives for the assurance process has not changed. The framework still recommends that assurance providers assess reports for adherence to the GRI principles (which have also remained unchanged).

4.  Simplified into two books

G4 is consolidated into two "books." Book 1 focuses on reporting principles and is designed to provide context, planning and summary information for the organization using the guidelines. Book 2 is an implementation manual containing the guidance for material topics. As our new friend Suzi Ibbotson (from Lodestar, a U.K.-Certified GRI Training Partner) noted, Book 1 tells you how to report, while Book 2 tells you what to report.

Image and graphic of seasons change provided by ischte/Shutterstock

5. The DMAs multiplied

There are now two types of Disclosures on Management Approach. The General DMA asks companies to disclose three basic items for the organization's material topics. For certain topics, GRI provides more detailed guidance on what should be considered for inclusion in the DMA.  

6. GRI Guidance and report requirements split up

The power of the GRI framework is its ability to prompt internal conversations that otherwise would not have occurred. However, companies were often overwhelmed by the number of options provided within the guidelines. They thought it was required to answer every question or report every metric described. G4 literally draws a line between the requirements and the guidance so that companies can understand the purpose of the materials in the framework.

7. Boundary and materiality get together

In G4, a company determines its boundary during the materiality assessment. In G3/G3.1, scope was a question about control and influence -- the focus was on the nature of a company's contractual relationships and entities. In G3/G3.1, lack of control or influence over an entity excluded it from a company’s boundary. In contrast, lack of impact is the only thing that can exclude an entity from a company's boundary in G4. Scope is a question about impact, risk and opportunity, and a company's boundary may be different for each material topic because the entities a company impacts may be different for every reporting topic.  

8. Oversight of executive oversight

The G4 Governance disclosures required for a comprehensive report are vast and deep. G4 asks organizations to describe the procedures in place for oversight of environmental, social and economic impacts, the compensation, training and diversity of the highest governance body as well as their role in the development of mission and vision and values. In total, there are 10 additional governance standard disclosures. G4 also adds a new category of standard disclosures called "Ethics and Integrity" which contains three separate disclosures.

9. Supply chain in, value chain mapping out

While it isn't a surprise that supply chain impacts are embedded throughout the G4 guidelines, reporters now are required to provide a description of their supply chain and the guidance suggests including types, number, locations and how they relate to the business operation. One notable exclusion in the new guidelines is that there is no requirement for a company to outline its value chain.

Stay tuned for further updates from Amsterdam and the Global Conference on Sustainability and Reporting.