Sustainability Reporting: 3 Takeaways to Incorporate the GRI Standards
Consumers, investors and many other key stakeholders increasingly expect companies to go beyond mandated regulations and to be actively working to solve environmental and societal issues. In his third annual letter, Black Rock CEO Larry Fink strongly emphasizes the need for the world’s largest companies to create long-term value by positively contributing to society. Issuing a sustainability or corporate social responsibility (CSR) report is one way for companies to tell their stories while holding themselves accountable and demonstrating continued progress.
More than 80 percent of S&P 500 publish corporate sustainability reports.1 For the world’s largest companies, that jumps to 93 percent.2 The Global Reporting Initiative (GRI) is the most widely adopted sustainability reporting framework – nearly 70 percent of all reports uploaded into the GRI database either cite GRI or are GRI compliant.3
In 2016, GRI introduced the new GRI Standards to replace the then current G4 Guidelines. Many companies have already moved towards the GRI Standards, but if you haven’t, the deadline for transitioning is just a few months away. Effective on or after July 1, 2018, all companies declaring compliance with GRI must be in accordance with the GRI Standards. Is your company ready? Here are three important takeaways as you look to incorporate the GRI Standards into your reporting:
One of the more obvious changes in GRI Standards from previous versions of GRI frameworks is the move to a modular structure. The Standards are divided into two main areas: 1) Universal standards, which include general disclosures and the management approach, and 2) topic-specific standards, which consist of economic, environmental and social disclosures.
Many disclosures were moved, combined with others or eliminated altogether to streamline reporting. Plus, the modular structure helps provide guidance – and the ability to reference GRI – to organizations looking to produce standalone reports on specific topics such as diversity and inclusion, climate change or human rights.
The GRI Standards also feature simplified language that clearly distinguishes between what a company is required to report to fulfill a particular standard and what is a merely recommendation. This has gone a long way toward helping organizations navigate the 100+ indicators and ensure that they are producing credible reports.
For years companies have approached materiality along two dimensions: 1) Impact on external stakeholders and 2) impact on their business. However, GRI provided refreshed guidance on this with the release of the Standards.
Contrary to what may have been interpreted in previous iterations of GRI frameworks, the second dimension does not only represent the impact on an organization, such as a change to its reputation or reduced profits. Rather, the reporter needs to consider the full picture of its significant outward impacts on the economy, the environment and society – both positive and negative. Note, GRI recognizes that outward impacts can also affect the company, but this dimension is not meant to be exclusively about the impacts on the company.
If you’ve recently completed a materiality assessment using the “old approach,” consider explaining how you conducted the research but refrain from publishing the matrix, which is a graphical representation prioritizing material issues along the two dimensions. The refreshed guidance from GRI actually de-emphasizes publishing the matrix, but to be in compliance, it’s still required that you discuss how you identified and prioritized material topics.
When introducing the revised Standards, GRI indicated that it wanted the management approach to be more easily accessible in the report. Additionally, more detail (e.g. policies, commitments, goals and targets) is required on how the organization manages each material topic.
The modular structure helps keep the management approach consistent across all material topics and allows for a single management approach to cover multiple, related topics. For example, see how our client, Monsanto, handled the management approach discussions in their GRI Standards-compliant 2017 Sustainability Report (pages 18, 31 and 41). Each of the three sections—Better Planet, Better Lives, Better Partner—contains a description of how work in that area is managed and how progress is measured.
At FleishmanHillard, our counselors who have completed GRI Standards-certified training are guiding our clients on how to best leverage GRI as a communications and management tool. They can help ensure your GRI report is well constructed and meets the needs of your key stakeholders, as well as help you identify the most important stories to tell that best demonstrate your commitment.
1Governance & Accountability Institute, 2016
2KPMG Survey of Corporate Responsibility Reporting, 2017