What you need to know about GRI standards
There is a learning curve to the new Global Reporting Initiative Standards, but the transition could add substantial value to your sustainability program and your business.
The transition to Global Reporting Initiative (GRI) Standards from GRI G4 feels daunting. Many past GRI reporters may wonder whether their organizations will be able to report in accordance with the GRI standards.
Following are some changes to consider when transitioning from G4 to the new standards — they could add substantial value to your sustainability program and your business.
Discuss your management approach
Reporters using GRI G4 largely have undervalued the Disclosure on Management Approach (DMA), with many organizations not providing thorough answers to the DMA or skipping it completely. G4 re-emphasized the DMA, asking reporting organizations to explain why a given topic is material, how it is being managed and the mechanisms for evaluating the approach. All of these elements remain in the GRI Standards, with some new additions.
The standards now refer to the DMA as the "management approach" and require an expanded discussion of boundary. For all material topics, the management approach will include a description of where the impacts occur and the organization’s involvement.
GRI also has expanded the particular subparts of the management approach. For each material topic, the organization must state the purpose for the management approach, describe any components of the approach and inform stakeholders. Management approaches that cover multiple material topics must state the topics included in each management disclosure.
If not reporting a management approach for a topic, either report the plan to implement one or the reason for not having it. A robust materiality assessment and goal-setting process typically can cultivate answers to each part of the management approach.
Apply the reporting principles
GRI’s reporting principles have been an essential component of the framework throughout its iterations. Questions about answering specific disclosures within GRI typically can be answered by referring back to the bedrock statements for content and quality.
GRI explicitly requires organizations to follow the reporting principles in the standards. What does this mean for reporters? In past iterations, organizations had to generally describe the process to define report content and how they implemented the principles. Now, organizations must explain how they applied the materiality principle to define material topics, as well as any assumptions made as part of its definition.
Reports will need to provide more detail about how impacts and stakeholder feedback informed the topic prioritization process and specify whether your definition of materiality applies to all stakeholder groups or a subset (only investors and customers, for example). Specificity reigns supreme in the standards.
Describe your organization and value chain
In G4 and previous iterations, many companies glided easily through the description of their primary brands, products and services. Companies must expand their definitions when transitioning to the standards.
For all reporters, the organizational profile needs to include a description of the organization’s activities around manufacturing, construction, agriculture, finance and more. GRI does not limit the description of your activities to only primary activities.
Are you a major automotive manufacturer that also finances car loans for your customers? An insurance company that operates significant investment activities? A food manufacturer who engages in large-scale grain trading? Disclose it.
In addition to this major change, organizations must continue reporting primary brands, products and services — including any that are banned in certain markets.
It’s likely that GRI asks for this information to expand your stakeholders’ understanding of the participants and impacts along your organization’s value chain. The description of an organization’s supply chain needs to include its main elements as they relate to the organization’s activities, primary brands, products and services. Your broad description of activities will help stakeholders understand the suppliers that provide the inputs for these activities.
Refine your data collection practices
In many cases, reporters will notice an increase in the depth of data required in the standards. For example, if water is a material topic, companies must disclose both the total volume of water withdrawn and the breakdown by surface water, groundwater, rainwater, wastewater and municipal water supply or other public or private utilities.
Such data breakdowns are common within the standards. Now that the distinction between required and recommended elements within topic-specific disclosures are clear, this detailed breakdown means companies will have to provide a reason for omission if they choose to skip it.
The expanded evaluation of an organization’s value chain further informs new depth required by the standards. For example, several topic-specific disclosures have been revised to reflect the new definitions of "employee" and "worker."
Employees are now defined as individuals who are in employment relationships with the organization, while workers are a broader category and includes all people who perform work, such as (but not limited to), employees, interns, apprentices, self-employed persons and persons working for organizations other than the reporting organization (such as suppliers). Many revised disclosures specify which group they must reflect.
In G4, many companies ignored breaking down employee data, such as full- or part-time status, region or gender. Most companies gave a partial disclosure without much explanation for whether or why subcategories were missing. The standards require these breakdowns and organizations must specify how they compiled the employee data and any assumptions made in that process.
The standards continue to expand the reporting responsibility outside of an organization’s direct operations. GRI established this shift in G4 with the new definition of "boundary." The expansion is most evident within disclosures for two topics: occupational health and safety and labor relations.
If occupational health and safety is a material topic, organizations must report on the types of injury, injury rate and work-related fatalities for both employees and workers. The data must include breakdowns by region and gender. When material, organizations must report similar worker data when involved in occupational activities that have a high instance or high risk of specific diseases.
If labor relations are a material topic, organizations must include operations and suppliers in which workers’ (including non-employees) rights to exercise freedom of association or collective bargaining may be violated or at risk. These risks could come from type of operation and supplier, or countries or regions with operations and suppliers considered at risk.
Obtaining this type of safety and labor data would entail engaging in deeper communication and information-sharing with suppliers and other partners. The key to limiting burden on reporting organizations will be to focus on where each topic is material in the value chain. Each organization will have to decide where to apply the reporting principles to assign topic boundaries.
Despite all the changes described above, the majority of the language from GRI G4 remains the same within the GRI Standards. The keys to success will be expanding your management approach, ensuring adherence to reporting principles, understanding the value chain and refining data collection. If you accomplish those tasks, your organization will gain significant business value and enhance transparency with stakeholders.