Prominence of stakeholders in designing sustainability reporting practices based on g4 guidelines

1. INTERNATIONAL JOURNAL OF MANAGEMENT (IJM)
International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 11, November (2014), pp. 70-75© IAEME
ISSN 0976-6502 (Print)
ISSN 0976-6510 (Online)
Volume 5, Issue 11, November (2014), pp. 70-75
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PROMINENCE OF STAKEHOLDERS IN DESIGNING
SUSTAINABILITY REPORTING PRACTICES BASED ON
G4 GUIDELINES
CA. Rashmi Ainapur
Research Scholar, JAIN University, Bangalore
Dr. Batani Raghavendra Rao
M.Com., FCMA, CFA, ACMA (UK), CGMA (UKUS), PhD
Professor of Finance and Accounting, JAIN University, Bangalore
In the end, all business operations can be reduced to three words: People, Product and Profits.
Unless you’ve got a good team, you can’t do much with the other two.
70
-Lee Iacocca
ABSTRACT
This paper outlines the importance of Stakeholder’s involvement in designing the
Sustainability Reporting Practices of a company based on G4 guidelines. Stakeholders are the pillars
of an organization. An Organization’s success can be measured based on the cordial relationship
with its stakeholders. Sustainability Reporting has a wider spectrum, where it consists of reporting
on Social, Economical and Environmental policies of an organization. A classic example for
maintaining healthy relationship with stakeholders is of Cadbury Limited. The original Cadbury
Company was set up 150 years ago and from inception they believed in fair treatment to their
employees and various stakeholders. Involvement of stakeholders in essential matters of a company
will help in prevention of potential problems, helps in open communication and finally leads to
healthy environment in the company.
Objective of the proposed study is
To outline the Prominence of Stakeholder Involvement in designing Sustainability Reporting
Practices based on GRI G4 guidelines.
IJM
© I A E M E

2. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 11, November (2014), pp. 70-75© IAEME
71
Sustainability Reporting Overview
Till date there is no globally accepted definition of Sustainability Reporting. European
Commission, defined sustainability reporting as “a concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their stakeholders
on a voluntary basis” (The council and the European Economic and Social Committee). Hence the
above definition clearly states the prominence of various stakeholders in designing, implementation
and execution of Sustainable practices.
Sustainability Report: A Sustainability Report is a part of integrated reporting. Integrated reports of
the company include both financial and non-financial reports. Financial Reports indicate the growth
of the company in the monetary terms viz. increase in sales, increase in revenue, increase in market
share etc. Sustainability reports are part of non-financial reports which indicate the corporate’s
efforts towards maintaining ecological balance by reporting about the economic, environmental and
social impacts caused by its everyday activities.
Benefits of Sustainability Reporting
According to Global Reporting Initiative, Sustainability Reporting benefits organizations in
following ways:
· Increased understanding of risks and opportunities.
· Emphasizing the link between financial and non-financial performance.
· Influencing long term management strategy and business plans.
· Benchmarking and assessing sustainability performance with respect to laws, norms, codes and
voluntary disclosures.
· Comparing performance internally and between organizations and sectors.
· Mitigating or reversing negative environmental and social impacts.
· Improves reputation and brand loyalty.
· Enabling stakeholders to understand company’s true value.
Drivers of Sustainability Reporting
A business cannot succeed in isolation. There are various stakeholders involved in the
success of a business. Sustainability Report though is a form environmental reporting can be
effectively designed only with the support of various stakeholders. Following diagram depicts
various stakeholders who drive the company in the preparation of the sustainability report.

3. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 11, November (2014), pp. 70-75© IAEME
G4 DISCLOSURES
72
Overview of Global Reporting Initiative
The Global Reporting Initiative is a non profit and a leading organization which promotes the
use of Sustainability reports by modern organizations. The current world is developing at a great
velocity but development alone will not vouch success unless it is coupled with Sustainability.
Because Sustainable Development can alone help the future generations to lead a healthier and
wealthier life. From its inception GRI has been releasing the various versions of compliance
guidelines that help the organizations to comply with the globally acceptable sustainability reporting
standards. GRI has released G4, the fourth generation guidelines in May 2013. The G4 guidelines
was released after an extensive stakeholder feedback, inputs from thousands of experts across the
world from different sectors such as, companies, civil society, labour unions, academicians and
finance experts. The main aim of GRI is to design, establish and update the globally acceptable
sustainability standards.
Gist of G4 Guidelines
G4 provides the framework to design the Sustainability Report of an organization. It outlines
the various steps involved in designing the report, The following diagram will help us to understand
the flow of the process:
GENERAL STANDARD
DISCLOSURES:
• Strategy and Analysis
• Organization Profile
• Material Aspects
Boundaries
• Stakeholder Engagement
• Report Profile
• Governance
• Ethics Integrity
SPECIFIC STANDARD
DISCLOSURES:
• Material Aspects
• List of specific standard
disclosure related to each
material aspect
Prominence of Stakeholder in Designing Sustainability Report Based On G4
G4 guidelines highlights the importance of stakeholder engagement in the sustainability
reporting process. It specifically mentions that the stakeholder should be engaged from the designing
stage to the reporting period. According to G4 guidelines the following points of stakeholder
engagement should be provided in the sustainability report of organization:

4. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 11, November (2014), pp. 70-75© IAEME
• List of stakeholder group engaged by organization
Outline the categories of stakeholders who are forming part of the sustainability reporting
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practices.
Brief the roles of the above stakeholders in the organization.
Nature of stakeholder whether internal or external.
• Basis for identification and selection of stakeholders
Outline the method followed to select the stakeholders.
Outline whether the selected stakeholders form representative sample.
Brief out the criteria’s based on which the stakeholders were selected.
• Frequency of engagement of each stakeholder group
Brief out the time intervals in which the selected stakeholders were consulted.
Outline the time spent with each group of stakeholders.
• Report of each stakeholder group that raised issues and concerns and the organization’s
response to those issues
Outline the various issues and concerns raised by the stakeholder groups during the reporting
process separately.
Outline the response of management to those issues to different groups.
LITERATURE REVIEW
Following are few of the researches in this area till date, they have tried to bring out the
importance of Sustainability Reporting and Role of stakeholders in the reporting process.
• Thomas W Concannon, Melissa Fuster, Tully Saunders, Kamal Patel, John B Wong, (2014) “A
Systematic Review of Stakeholder Engagement in Comparative Effectiveness and Patient-
Centered Outcomes Research”, Journal of General Internal Medicine, Vol. 107, Iss:3, pp.363-
377- The main purpose of this exploratory analysis is to understand whether, based on evidence
gathered from international best practices selected among corporations which adopt the Global
Reporting Initiative guidelines in sustainability reporting (SR), stakeholders are significantly
consulted and involved.
• Moser, Donald V and Patrick R. Martin. (2012) A broader perspective on corporate social
responsibility research in accounting. The Accounting Review Vol.87, Iss:3, pp. 797-806.- This
study examined the accounting aspects of sustainability reporting practices.
• Cheng, Beiting, Ioannis Ioannou, and George Serafeim. (2014) Corporate social responsibility
and access to finance. Strategic Management JournalVol.35, Iss:1pp.1-23 – This article
explored whether following of best sustainability practices will lead to better access to finance.
• Isenmann, R Kim, K-C 2006, 'Interactive sustainability Accounting: Developing Clear Target
Group Tailoring and Stimulating Stakeholder Dialogue', in Schaltegger, S, Bennett, M Burritt,
R (eds), Sustainability Accounting and Reporting, Springer, pp. 533-555 – This study focussed
on developing a framework to show the importance of interactive sustainability reporting.
• Grafé-Buckstens, A Hinton, A-F 1998, 'Engaging the stakeholders: corporate views and
current trends', Business strategy and the environment, vol. 7, no. 3, pp. 124-133 - This study is
based on research conducted at Imperial College in 1996, in which the authors have reviewed

5. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 5, Issue 11, November (2014), pp. 70-75© IAEME
the extent, purpose and motivation of evironmental stakeholder initiatives (ESIs). The research
objective was to determine ESIs' impact on corporate environmental management through a
survey of businesses engaged in such initiatives, and to propose a set of recommendations for
successful implementation of ESIs.
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CURRENT STUDY
The main objective of the current study was to understand the prominence of stakeholders in
framing and execution of sustainability reporting practices based on G4 guidelines.
ANALYSIS AND FINDINGS
Conclusion
From the above study it is clear that stakeholders form an integral part of an organization.
The modern company cannot work in isolation, there has to be proper co-ordination with various
internal and external stakeholders. An organization can reach the pinnacle only when its stakeholders
are associated to it positively. A happy stakeholder can increase the overall value of an organization.
Hence G4 guidelines should be adhered by the organizations not as a part of reporting but they
should take the steps to see whether the stakeholders of the company are actively engaged from the
framing stage to the execution stage.
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