WINTER 2014

Cutting through the complexity

of GRI G4: A roadmap to the
December 2015 deadline.
INSIDE
The GRI G4 deadline is looming
and in this issue of Directions,
we look at the rst movers, frame
the problem and break the decision
down into a series of next steps
to ensure that the transition is
seamless and timely.
A roadmap to the December 2015 deadline
NOW DECEMBER 2015
Cutting
through the
complexity
of GRI G4
hen the GRI G4 guidelines were rst released, the
implementation deadline of the end of December
2015 seemed a long way off. Now that we are
heading towards the nal year of reporting under
the GRI G3 and 3.1 guidelines, the decision to go
early or wait until the nal countdown is vexing
quite a few reporters. In this issue of Directions,
we look at rst movers, frame the problem and
break the decision down into a series of next steps to help ensure that
the transition is seamless and timely.
Looking globally at industries, brands and countries, we can clearly see
a move towards G4 adoption and the role that governments and exchanges
play in encouraging reporting transparency and disclosure.
For a few brave reporters who have already taken the plunge, it has been
a journey of discovery. My conversation with some of these early adopters
provides some rst-hand insight and advice.
We know you might be wondering whether to go for GRI G4 or not. Thats
why weve created a decision tree, to answer some of the key questions you
may have, as well as case studies to help inform your own roadmap to the
December 2015 deadline.
SHOULD I STAY
OR SHOULD I GO?
1
Cutting through the complexity of GRI G4
FAY HOGG
Head of Reporting
CONTENTS
1 Introduction
2 First movers
3 Decision tree
4 Brands who have made the journey
6 Conclusions
7 About SALTERBAXTER MSLGROUP
INTRODUCTION
FIRST MOVERS
TOP 10 INDUSTRIES
(Based on total GRI reports)
In the sector table, industry
heavies who take on the
lions share of impacts and
regulatory requirements are
producing the highest number
of G4 reports. This is more
or less proportional to the
inter-industry take-up of
the GRI framework.
BY COUNTRY, THERE ARE A FEW SURPRISES
Countries such as the United States, Colombia, Brazil, South
Africa and the Netherlands are leading the way. The US has
market- and government-led initiatives to address corporate
disclosure requirements; they also have a lot of big companies.
Brazil and the Netherlands both have market- and government-
led reporting initiatives, respectively. But Colombia? Yes, thats
a surprise. Back in the late 90s their government decided that
a Green Economy could give them a competitive advantage.
National policy followed that specically promotes the
disclosure of information using the GRI guidelines. Colombia
is also one of the GRIs Focal Points that were set up to actively
engage organisations in the development of sustainability
reporting. Those efforts appear to be paying off.
What about countries like France, South Africa and Denmark,
who also have extra nancial reporting requirements for listed
or state-owned companies? Many reporters in these countries
are considering the additional value of developing their reporting
to meet international standards against simply being compliant
with local legislation.
The truth is: governments have a key role in setting the baseline
for companies to report on social and environmental issues.
Many work in collaboration with the GRI in drafting legislation.
Some stock exchanges actively promote the GRI framework for
guidance. The move towards rules-based reporting is gaining
ground, and alignment with the GRI framework puts
organisations in a good place should environmental and social
reporting legislation become mandatory.
So far in 2014, more than 35% of GRI reporters have made the leap to G4. Depending on
government-, market- and sector-led initiatives, we can see how reporters in some
parts of the world have come further than others.
Cutting through the complexity of GRI G4
Source: Reports listed on the GRI database
and published in 2014 and correct as of
21st October 2014
164
150
66
54
51
39
30
33
16
13
62
55
34 34
25
20
17
14
14
9
CANADA 29% (65)
SPAIN 32% (75)
SWITZERLAND 27% (67)
UK 30% (44)
SOUTH AFRICA 42% (43)
UNITED STATES 35% (165)
BRAZIL 34% (97)
COLOMBIA 56% (43)
NETHERLANDS 33% (70)
GERMANY 17% (69)
TOP 10 GRI REPORTING
COUNTRIES
% of GRI reports that
are G4 (total GRI reports
in brackets)
2
G4 reports
G3 or G3.1 reports
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DECISIONS, DECISIONS...
Have you decided?
Heres the full journey.
IS YOUR SECTOR COVERED
BY ONE OF THE 10 SECTOR
DISCLOSURES?
These are: Airport operators, Food
processing, Construction and real
estate, Media, Electric utilities,
Mining and metals, Event organisers,
NGO, Financial services, Oil and gas.
IS YOUR REPORT
EXTERNALLY ASSURED?
Conduct a gap analysis against
the GRI criteria. This is helpful to
get ready for the December 2015
deadline.
YES
The Sector Disclosures have been
reorganised to t this structure
but contain no new content.
NO
No further action required.
DO YOU BASE
YOUR CURRENT
REPORTING ON
MATERIAL ISSUES?
Do the criteria for prioritising the
material issues identify those that:
Reect the organisations signicant
economic, environmental and social
impacts; or
Substantively inuence the
assessments and decisions
of stakeholders
PREPARE
REPORT
As Core and all
indicators for each
material aspect
Direct Management
Approach and at least
one indicator for each
material aspect
Include a
statement
in report
YES
A reference to the external assurance
statement should be included in the
Content Index for each Standard
Disclosure Item.
NO
Consider the value of assurance
or other ways to validate the report,
e.g. independent expert panel review
or include stakeholder feedback.
Cutting through the complexity of GRI G4
3
YES
There are two in accordance options
to choose from:
Core and Comprehensive.
The options reect compliance with
guidelines rather than business
performance.
NO
Materiality is a pivotal principle of the
GRI G4 guidelines. See our publication
Beyond the Matrix for further insight
on tackling materiality.
G4 CORE
Core contains the essential
elements of a sustainability report: its
economic, environmental, social and
governance impacts. New elements
of G4 include disclosures on strategy,
governance, ethics and integrity.
G4 COMPREHENSIVE
Builds on Core by requiring
additional disclosure on strategy,
governance, ethics and integrity.
You must report on the Disclosures
on Management Approach (DMA)
and all indicators for each identied
material aspect.
G4 NOT YET READY
You can include the following
statement in your report: This report
contains Standard Disclosures from
the GRI Sustainability Reporting
Guidelines, along with a list of the
disclosures and their location.
STORA ENSO, TERHI KOIPIJRVI,
HEAD OF GLOBAL RESPONSIBILITY, FINLAND
The Finnish wood pulp, paper and packaging producer
has been reporting using the GRI framework since 2003.
For their 2013 report, published in February of this year,
they took a practical approach to move to G4 reporting,
in accordance with the comprehensive level.
Having reported for a decade using G3, Stora Enso took the
decision to go for G4 ahead of the deadline. The companys
ambition is to be a frontrunner in sustainability, and in
reporting, and it acknowledges that the new G4 framework
brings with it interesting developments to move their
reporting forward.
Terhi Koipijrvi, Stora Ensos Head of Global Responsibility,
explained that the company took a practical approach to
moving to G4. We conducted a gap analysis to see what was
needed, and then systematically went through each of those
areas with content owners, she explained. Materiality was,
of course, central to the process, along with incorporating
the results of an internal project around value-chain thinking.
Stora Enso conducts a thorough materiality review, using an
online advisory panel. In 2013, the company reached over 600
stakeholders in over 40 countries using this tool, with a
majority of those being external stakeholders. In addition,
the company analysed feedback from investors, customers
and the global and social media landscapes.
Terhi points to some clear benets of moving early to G4. Our
environmental reporting has been made more concise, while
we have given more attention to the social responsibility
aspects that were emphasised by our stakeholders.
Stora Enso took a practical approach to the transition to G4.
Terhis advice? Gain leadership commitment to the process,
conduct a gap analysis, and invest time in the materiality
analysis up front, she says.
STANDARD BANK, KARIN IRETON,
HEAD OF SUSTAINABILITY MANAGEMENT, SOUTH AFRICA
Standard Bank is a leading African nancial services
provider, based in South Africa. Market-led initiatives there,
have paved the way for the banks transition to G4 reporting
at a core level.
The King Code is South Africas denitive approach to good
corporate governance. Now on its third iteration, the journey
to King III has put listed companies in a strong position when
it comes to governance and stakeholder engagement
because they are required to produce an Integrated Report.
This reporting context has denitely helped their transition
to G4, says Karin Ireton, Head of Sustainability Management
at Standard Bank.
Karin chaired the Stakeholder Council convened for the G4
consultation process, so she knows the content of the G4
well. Even still, with the countrys market-leading approach
and experience on both sides, she says the process can be
daunting.
With a team of two, step one was a complete gap analysis.
From this, Karin said, they could see what criteria they were
already meeting and which aspects were not material.
Taking it step-by-step made the whole index a lot less
frightening. Some of the indicators are complex with multiple
parts: the supply chain indicators, for example, are a little
scary. For companies with complex supply chains, the
breakdown by type or product and service, by point of origin
and by quantum can assist the honing and decision on the
most material issues, Karin advises. By analysing the types
of suppliers and the amount of spend, it became clearer and
a little less scary, Karin explained.
Materiality is also one of the harder areas to crack. Not
because of the concept itself, which is familiar to them: its
applying the materiality lens in practice to lter what you
actually report on. Karin says: you need condence to
determine which parts are applicable to your business and to
decide when you have adequately met the requirements of a
particular indicator.
Karins advice: The direction you take depends on where
youre starting from, and very few companies have a clean
slate to start with.
4
BRANDS WHO HAVE MADE
THE JOURNEY TO GRI G4
Cutting through the complexity of GRI G4
INTEL, LINDA QIAN, CORPORATE SOCIAL RESPONSIBILITY
COMMUNICATIONS, US
Intel is one of the worlds best-known technology
brands. As a mature reporter, theyve been using the GRI
framework for the past 10 years. Implementing the G4, in
accordance with the comprehensive level, was just the
next step on their reporting journey.
As a highly visible company in its sector, Intel fully
appreciates the principles of stakeholder engagement
and materiality. Linda Qian, CSR Communications at Intel,
explains: Intel has had a robust CSR materiality process
for many years, and we know who our stakeholders are and
how to engage them in the materiality process. The focus
on reporting material issues also means that we can narrow
our reporting to key issues.
The only sticking point with G4, Linda explains, is with newer
indicators, for example, with remuneration. It can be
challenging to get executive buy-in on indicators like these,
which are not as material from a CSR perspective, and are
not required from a regulatory standpoint in the US. Other
aspects are much easier to achieve: we helped inform the
changes in the G4 guidelines on supply chain, Linda reveals.
Lindas advice: See the transition as an opportunity: the G4
guidelines put as much emphasis on the process and
governance of CSR as they do on non-nancial reporting and
increased disclosure. Think about how you can better
leverage the reporting process with key stakeholders
internally and externally to move your CSR practice forward.
Todd Camp believes GRI G4 is a part of the journey towards
integrated reporting and welcomes GRIs contribution
towards unied reporting standards.
For Hersheys the main benet was bringing reporting to a
higher global level, something their stakeholders expect from
them. It also helped break through the paradigm of
compliance and developed a platform that demonstrated
how to integrate sustainability into the core of Hersheys
business strategy.
The process is well worth the time and effort requirement,
Todd argues. It will require some internal communication
and change management, but ultimately its about
identifying critical risks and main opportunities and
demonstrating how our company is addressing these items.
BRANDS WHO HAVE MADE
THE JOURNEY TO GRI G4
CONTINUED
Cutting through the complexity of GRI G4
M&S, ROWLAND HILL, SUSTAINABILITY AND REPORTING
MANAGER, UK
The UK retailers adoption of GRI G4 did not aim to be in
accordance, rather it used the framework to cross-check
its own reporting strategy Plan A. The process generated
better indicators for carbon and energy and allowed M&S
to improve their Plan A 2020 vision.
For M&S, sustainability reporting has always been primarily
structured around Plan A. Having a strong reporting strategy
in place, the GRI G4 guidelines were used as a secondary
navigation tool.
Moving to G4, Rowland says, didnt pose a problem
because were not aiming to be in accordance and it has
no impact on our judgements of materiality.
The main benets were using the GRI G4 indicator for carbon
and energy, together with the gap analysis that needed to be
done. The process also started a debate around materiality
that turned out to be very relevant and improved the work
on integrated reporting.
Rowlands advice to rst-timers? Get an accurate
benchmark of what your competitors are doing and dont
be afraid to experiment with GRI. There are lots of issues
and problems with both GRI and regular reporting. The key
is to follow a logical trajectory.
THE HERSHEY COMPANY, TODD H. CAMP, SENIOR
DIRECTOR, CSR AND COMMUNITY RELATIONS,
THE HERSHEYS COMPANY, US
The American chocolate giant Hersheys adopted GRI G4 as
a step in the right direction to bring sustainability reporting
to a higher global common denominator. For Hersheys this
was a natural step in harmony with their brand values.
Having used GRI since their rst CSR report and with a
commitment to increase disclosure and transparency, it was
an easy decision for Hersheys to adopt the framework early.
Regular meetings with internal data owners and legal team
helped to develop a smooth process of collecting data.
Support from Hersheys senior leaders made it an easy choice
without pressure from government or industry requirements.
5
MINUS THE PLUS
The GRI recommends external assurance but does not require it
to report in accordance with G4. The omission of the + sign, that
in G3 denoted whether or not a report had been externally
assured, would seem, at rst glance, to weaken the argument for,
and take-up of, external assurance. But this is not the case,
according to Katherine Lampen, Director of Sustainability
Services at Deloitte LLP, London. In fact, Deloitte are receiving
more requests for external assurance rather than fewer, from
G4 reporters. Katherine attributes this to the requirement to
clearly show in the content index whether each Standard
Disclosure Item has been externally assured and, if it has,
to include the page reference for the External Assurance
Statement in the report.
This is actually a better way to show the scope of the assurance.
Before, you could include a + sign even if only a small part of the
report had been externally assured. Now the content index
shows explicitly the areas that have been assured and those that
have not. This is driving more, rather than less, assurance.
CONCLUSIONS
A main objective of the new G4 guidelines is to focus on the
most material issues to ensure the report is both relevant
and concise.
Materiality, as we have suggested in our decision tree, becomes
the starting point of the journey towards more meaningful
reporting. However, there is a subtle nuance in the description of
materiality in G4 compared with G3 and that is determining
whether issues are likely to substantively inuence the
assessments and decisions of stakeholders.
This suggests a much more in-depth stakeholder engagement
process and this is an area where new technologies can be a
great help in reaching wider audiences. New requirements to
validate these ndings with senior management will also help
strengthen the credibility of GRI reports.
For other reporters, GRI G4 is not the destination but the
compass. It is a useful navigation tool to ensure that they are on
track, but their goal is to communicate the value or impact of
their business beyond the connes of reporting protocol. The
ability to report against the guidelines but stopping short of full
in accordance with requirements will ensure that GRI guidelines
are also relevant for those that adopt this approach, such as
M&S with Plan A.
For new reporters and those in developing markets, a ready-
made framework that is actively promoted by governments
and exchanges around the world also extends the appeal
of these guidelines.
All these factors are likely to ensure that the GRI guidelines
remain the de facto global standard for sustainability reporting
for the foreseeable future.
A popular myth holds that if you ask the people of Maine for directions they will
likely say, You cant get there from here. Well Im with the Maine folks. The rst
step in any journey is to fully appreciate your starting point and maybe move to
a more advantageous point of departure.
Cutting through the complexity of GRI G4
GLOSSARY OF KEY TERMS
Aspects: the list of specic subjects covered by the
G4 Guidelines in each of the Economic, Social and
Environmental categories
Material Aspects: subjects that reect the
organisations signicant economic, environmental
and social impacts or that substantively inuence
stakeholder decisions and assessments
Reporting Content Principles: stakeholder
inclusivity, materiality, sustainability context
and completeness
Reporting Quality Principles: includes balance,
clarity and accuracy
Disclosures on Management Approach (DMA):
explanation of how the organisation is managing
its material aspects why its material and how
its managed
6
CONTACT US
Jeff Sutton
Business Development Director
jsutton@salterbaxter.com
Fay Hogg
Head of Reporting
fhogg@salterbaxter.com
SALTERBAXTER MSLGROUP
The Dome,
Level 4 Whiteleys Centre
151 Queensway
London W2 4YN
Tel +44 (0)20 7229 5720
www.salterbaxter.com
@salterbaxterMSL
With an in-depth knowledge of both corporate and
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Development
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Responsibility
Report 2013
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Report 2013
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Cutting through the complexity of GRI G4
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