GRI G4 Draft Guidelines on Sustainability Reporting - for consultation
Second G4 PublicComment PeriodJune 25 – September 25 2012
DISCLAIMER• These slides were used in the OS exclusive webinar on July 3 and 4 2012. They provide a general overview of the G4 Exposure Draft and can be used for internal or external consultations by Organizational Stakeholders.• The key mechanism for GRI to collect feedback on G4 is through the online platform, which you can access through: goo.gl/ZZnRI.• GRI is also organizing workshops around the world to collect input. Find out more and sign up for these workshops on the GRI website: www.globalreporting.org/reporting/latest-guidelines/g4- developments/Pages/G4-Workshops.aspx.• These slides can be used by Organizational Stakeholders to raise awareness of the G4 Public Consultation Period and to direct people to the online platform. However, such presentations should not be profiled as GRI workshops or official parts of the GRI Due Process. Nor should this slide deck be used for commercial purposes.
Agenda• Background Information G4• Public Comment Period – When & How to Comment• Exposure Draft Contents & Questions – General – Application Levels – Governance and Remuneration – Disclosure on Management Approach – Boundary – Supply Chain Disclosures – References• Questions
G4 Objectives• To be user-friendly for beginners and experienced reporters• To improve technical quality, with clearer definitions• To align with other reporting frameworks• To offer guidance which leads to material reports (“materiality”)• To offer guidance on how to link sustainability reporting and integrated reporting - aligned with IIRC• To provide support to improve data searching (XBRL)
G4 – Six main work streams1. Technical standardization2. Profound revision of parts of G3(G3.1) or new content proposals3. Harmonization4. G4 online5. XBRL – GRI Taxonomy for G46. Sector guidance in G4
Second Public Comment Period• Open for Comment 25 June – 25 September 2012• Download the G4 Exposure Draft – Overview – Questions• GRI invites the public to provide: – General comments in response to questions about the entire set of changes – General comments in response to questions about specific proposed content – Comments on the text in the G4 Exposure Draft• Submit comments via the G4 Consultation Platform
General• Editorial review to improve clarity and technical quality including: – Split of standard disclosures and guidance – Changes to the format of the Guidelines• Integrated Reporting 8
Application LevelsGRI encourages the use of the GRI Guidelines by all organizations, regardlessof their size, sector or location.Organizations may wish to indicate that their report has been prepared inaccordance with the GRI Guidelines. In order to do so, the report mustinclude: 1. All of the Profile Disclosure Items. 2. Disclosures on Management Approach and Core Indicators related to all of the material Aspects identified by applying the Technical Protocol: Defining Report Content and Boundaries. 3. All disclosures identified in any applicable GRI Sector Supplement(s). 4. A GRI Content Index as specified in the GRI Guidelines. 5. A statement, signed by the highest governance body or Chief Executive Officer (CEO), that the report has been prepared in accordance with the GRI Guidelines and that it is a balanced and reasonable presentation of the organization’s economic, environmental and social impacts.
Application LevelsThe unavailability of data or specific legal prohibitions may result in aninability to disclose certain information required by points 1-3 above. If suchinformation is not disclosed, the statement required by point 5 above mustalso clearly: I. Indicate what information has been omitted, II. Explain the reasons why the information has been omitted, and III. In the case of the unavailability of data, identify the steps being taken to obtain the data and the expected timeframe for doing so.First time reporters who wish to incrementally apply the GRI Guidelines may,for the first two reporting periods, state that their report is in accordancewith the GRI Guidelines if the statement required by point above also clearly: I. Identifies what information has been omitted, and II. State the organization’s commitment for the report to fully be in accordance with the GRI Guidelines once the transition period is over.
Application Levels1. Do you agree with the proposal to discontinue with the Application Levels and to replace them with criteria that define when a report has been prepared “in accordance with” the G4 Guidelines?2. Do you support the introduction of transitional provisions to allow new reporters two reporting periods in order for their reports to gradually be in accordance with the G4 Guidelines?
Governance and Remuneration• Current Governance Disclosures 4.1 – 4.10 replaced by new disclosures• New disclosures fall into seven sub-sections: 1. Highest Governance Body’s Role in Setting Purpose, Values, and Strategy 2. Governance Structure and Composition 3. Highest Governance Body’s Competencies and Performance Evaluation 4. Highest Governance Body’s Role in Risk Management 5. Highest Governance Body’s Role in Sustainability reporting 6. Highest Governance Body’s Role in Evaluating Economic, Environmental, and Social Performance 7. Remuneration and Incentives
Governance and Remuneration• New disclosures are aimed to be universally applicable to all regions and all types of organizations• New disclosures aim not to repeat governance disclosures in other reporting mechanisms (such as annual reports) but to, instead, focus on sustainability- related information only
Governance and Remuneration1. Do you consider the proposed disclosures related to Governance & Remuneration disclosures appropriate and/or complete?2. Do you have other general comments related to Governance & Remuneration?
Disclosure on Management Approach• Management Approach disclosures separated into ‘Disclosure’ and ‘Guidance’ sections• All ‘Standard’ disclosures are placed into the ‘Generic’ section, hence reporting for each Category and Aspect can be done by using the same elements
Disclosure on Management Approach[Disclosure] Disclosure 2Report why the topic is material. Report impacts that relate to the materialtopic.[Guidance] Explain why the topic is material. As a minimum, this includesinformation on an organization’s impacts, whether positive or negative.When explaining why the topic is material, include information on how thetopic was identified as material.When reporting on assessments used to identify a material topic, include adescription of each assessment’s boundary, frequency, assessment criteria,and stakeholders engaged. The boundary of these assessments extends to anorganization’s relationships with other parties such as workers, trade unions,suppliers, business partners, and governments.
Disclosure on Management Approach• Management Approach disclosures separated into ‘Disclosure’ and ‘Guidance’ sections• All ‘Standard’ disclosures are placed into the ‘Generic’ section, hence reporting for each Aspect can be done by using the same elements
New StructureFour basic disclosures of the proposed ManagementApproach: 1. Report the material topic. 2. Report why the topic is material. Report impacts that relate to the material topic. 3. Report how the organization manages the impacts related to the material topic. 4. Report how the effectiveness of the management approach is monitored and evaluated. Report the results and the related adjustments to the management approach. [G4 Exposure Draft pp. 42 - 46]
PurposeDisclosure on Management Approach provides narrativeinformation on how an organization analyzes and responds to itsactual and potential material economic, environmental, andsocial impacts. Disclosure on Management Approach alsoprovides context for the performance reported by anorganization, including Indicators if applicable.
PurposeDisclosure on Management Approach enables an organization tomake explicit: 1. What the material topic is 2. Why the topic is material 3. How the topic is managed 4. How management approach is monitored, evaluated, and adjusted
Disclosure on Management Approach1. Do the requirements for Disclosures on Management Approach offer sufficient flexibility to enable organizations to provide answers that will add value without making the report unduly repetitive and lengthy?2. Do you consider the proposed Disclosures on Management Approach an improvement over the current approach?3. Do you consider the proposed disclosures related to Disclosures on Management Approach appropriate/ and or complete?4. Do you consider the proposed guidance provided to support the Disclosures on Management Approach appropriate and/or complete?5. Do you have other general comments about the Management Approach Disclosures? 22
BoundaryBoundary: the range of value chain elements covered inthe report for each material topic. Boundaries may varybased on the topics being reported.
Boundary• WG recommended merging Boundary Guidance with the existing ‘Technical Protocol – Applying the Report Content Principles’ and updating the summary within the Guidelines to reflect this change• Boundary decisions are based on impact considerations and not legal ownership or control• New step recommended in the ‘Define Report Content’ process flow: Map Value Chain.• Value chain becomes a key notion in defining boundaries
Boundary• Recommendation to expand to a four step process
Boundary1. Do you think that the new version of the Technical Protocol helps organizations to express better the relationship between material topics and value chain?2. Do you think mapping the value chain is a helpful exercise for defining boundaries of material topics?3. Is the difference between the term “Aspect” and “Topic” clear when each term is used in the Technical Protocol?4. Do you have other general comments related to the approach for setting boundaries proposed in the Technical Protocol? 26
Supply ChainDefinitionsSUPPLY CHAIN (page 315)The part of the value chain which consists of the sequence of suppliers andactivities that provides materials, products or services to an organization.SUPPLIER (pages 314 - 315)An organization or person that provides materials, products or services directly orindirectly to another organization. In GRI’s Framework, the term ‘supplier’includes but is not limited to: • Brokers • Independent contractors • Consultants • Primary producers • Contractors • Sub-contractors • Distributors • Wholesalers • Home workers
Supply ChainProfile Disclosure[Disclosure]Describe the organization’s supply chain.[Guidance]A description of the supply chain may include but is not limited to:• Total number of suppliers• Total monetary value and/or volume of materials, products and services purchased directly from suppliers, broken down by: – The types of materials, products and services provided by suppliers that are used for the organization’s primary brands, products and/or services, as reported under DI 4 – Types of suppliers – Location of suppliers by country and/or region. Where it will provide appropriate context on relevant risks and impacts, identify the location of suppliers within a country. List those suppliers that are located in weak governance zones and Export Processing Zones (also called Special Economic Zones or Free Trade Zones)
Supply ChainDisclosures on Management Approach• Generic Disclosure on Management Approach Guidance – It includes guidance on disclosing practices for supplier selection, management and termination, product and service design and certification and audit of suppliers• Aspect-specific Disclosure on Management Approach: – Economic Aspect: Procurement Practices (pages 48 - 49) » It includes disclosures on selecting locally-owned suppliers, promoting economic inclusion through procurement, long-term relationships, adjustment of procurement practices that affect suppliers’ compliance and traceability – Labor Aspect: Employment (pages 66 - 67) » It includes disclosures on suppliers’ workers regarding their working conditions, social and labor protection, remuneration, employment relationship and work performed at home
AspectsCategory Economic EnvironmentalAspects • Economic performance • Materials • Market presence • Energy • Indirect economic impacts • Water • Procurement practices • Biodiversity • Emissions, effluents, and waste • Products and services • Compliance • Transport • Overall • Screening and assessment • RemediationCategory SocialSub-category Labor Practices and Decent Human Rights Society Product Work ResponsibilityAspects • Employment • Investment • Local communities • Customer health and • Labor/management • Non-discrimination • Corruption safety relations • Freedom of association • Public policy • Product and service • Occupational health and and collective bargaining • Anti-competitive labeling safety • Child labor behavior • Marketing • Training and education • Forced and compulsory • Compliance communications • Diversity and equal labor • Screening and • Customer privacy opportunity • Security practices assessment • Compliance • Equal remuneration for • Indigenous rights • Remediation women and men • Screening and • Screening and assessment assessment • Remediation • Remediation
Indicators: Procurement PracticesCategory EconomicAspect Procurement CORE EC6 Spending on locally-owned suppliers broken down by Practices other forms of economic inclusion, at significant locations of operation CORE G4 1 Spending on suppliers with which long-term agreements exist CORE G4 2 Percentage of suppliers with which orders were placed for the first time during the reporting period CORE G4 3 Time taken to pay suppliers ADD G4 4 Percentage of monetary value of each type of materials, products and services purchased that have been verified or certified as being in accordance with credible, widely-recognized economic, environmental and social standards
Indicators: Screening and Assessment / RemediationAspect Category Labor Practices and Decent Environmental Human Rights Society WorkScreening and CORE G4 5 Percentage of CORE G4 8 Percentage of CORE HR2 Percentage of CORE G4 12 Percentage ofassessment new suppliers and other new suppliers and other new suppliers and other new suppliers and other business partners business partners screened business partners business partners screened screened for for labor practices, and screened for human rights for society-related environmental actions taken performance, and actions performance, and actions performance, and actions taken taken taken CORE G4 6 Percentage of CORE G4 9 Percentage of CORE G4 11 Percentage of CORE G4 13 Percentage of existing suppliers and existing suppliers and other existing suppliers and existing suppliers and other other business partners business partners identified other business partners business partners identified identified as having actual as having actual and identified as having actual as having actual and and potential adverse potential adverse impacts and potential adverse potential adverse impacts impacts on the for labor practices assessed human rights impacts on society assessed on environment assessed on on labor practices, and assessed on human rights society-related environmental actions taken performance, and actions performance, and actions performance, and actions taken taken takenRemediation CORE G4 7 Number of CORE G4 10 Number of CORE HR 11 Number of CORE G4 14 Number of grievances about grievances about labor grievances about human grievances about society- environmental impacts practices filed, addressed, rights impacts filed, related impacts filed, filed, addressed, and and resolved through addressed and resolved addressed, and resolved resolved through formal formal grievance through formal grievance through formal grievance grievance mechanisms mechanisms mechanisms mechanisms
Supply Chain1. Do you consider the proposed definitions of “supply chain” and “supplier” appropriate and complete?2. Do you consider the proposed supply chain-specific Indicators to be effective measures for performance and feasible to report?3. Do you consider the proposed disclosures related to supply chain appropriate and/or complete?4. Do you consider the proposed guidance provided to support disclosure on supply chain related issues appropriate and/or complete?5. Do you consider the proposed supply chain-related references appropriate and complete?6. Do you have other general comments related to the Supply Chain Disclosures?
General Questions1. Do you believe that the greater focus on materiality introduced in the G4 Exposure Draft will assist organizations in better defining report content, boundaries and issues so as to contribute to better and more relevant reports (as opposed to longer reports)?2. Is the G4 Exposure Draft (including the new structure) clear and understandable in terms of what is expected of organizations for the sustainability report to be in accordance with the guidelines?3. Does the G4 Exposure Draft clearly explain the interaction between the guidelines, the technical protocols and the sector supplements? 34
General Questions4. Do you think that the G4 Guidelines can apply to organizations of various sizes in your region?5. Do you believe that the G4 Guidelines will drive the cost effective preparation of a sustainability report for all organizations? 35
External ReferencesGRI invites suggestions for the names of recent and useful documents that can assistorganizations in either understanding more about the topics listed in the Guidelines,or help them to manage and report on topics.GRI has strict criteria for assessing if a reference should be listed in its Guidelines. – The organization provides publicly-available information about the development process of this reference – The reference was developed using a collaborative, representative, robust, and transparent process; or developed in an inter-governmental setting – The reference is generally applicable – The reference is applicable to all organizations regardless of size or sector – The reference is available in English – The reference is available free of charge – The reference is current and in use 36