Since October 19, 2016, the GRI Standards are in force and can be applied. GRI has developed a range of services to familiarize users with the new framework. What is your first impression? Are the new standards being adopted by reporting companies, or is further persuasion needed?
We know that we always have to explain to our stakeholders why we have made this or that change and what the benefits of these changes are for their reporting. We take that very seriously at GRI. I am pleased to say that the new GRI Sustainability Standards (GRI Standards) have been very well received so far. Since we launched the GRI Standards on October 19, they have been downloaded more than 26,000 times through the GRI Standards Hub. In addition, more than 1,200 people have participated in one of the 13 Standards launch events held around the world. In addition, several more launch events are planned for this year. In addition, more than 1,100 people have participated in webinars on the new changes to date. The overwhelming majority of feedback so far has been positive.
Critics say that nothing substantial has changed apart from the wording and the number sequence. What do you say to that? Why do you expect a significant impact on reporting quality and acceptance?
The GRI Standards transfer all concepts and disclosures from G4 into an improved structure with clearer requirements. The content is now structured in a simpler way with less repetition. No new topics have been added to the GRI Standards. In the transition from G4 to the GRI Standards, we have attached importance to maintaining the focus on materiality and minimizing the changes to the G4 disclosures and their systematics. In addition, necessary clarifications have been made regarding required content and recommended or guidance content. This makes it easier for organizations to identify what they need to report and how. Some key aspects have also been clarified, such as the reporting boundaries or the interpretation of “impacts” in the materiality assessment.
Although these clarifications are minor, they are significant and will contribute to more robust reporting. We are confident that the move to the new standard format will increase confidence, particularly among regulators and supervisors, that our reporting framework is 100 percent in the public interest and perfectly complements organizations’ sustainability practices.
What advice do you have for organizations that are just processing the transition from G4 to the standards? What are the pitfalls that need to be considered as G4-oriented reporting now transitions to the standards?
For organizations that have already implemented G4, the changes to the reporting process will be minor. The GRI standards build on the G4 guidelines. They have been reorganized into a set of modular, interrelated reporting standards. Still, there are important points for companies to consider when making the switch. While it was previously crucial for reporting organizations to understand and appropriately apply the reporting principles, they are more prominently highlighted in the GRI Standards. The reporting boundary requirements have also been changed and are now reflected in the GRI Standards under GRI 103 in the Management Approach. In addition, the definition of “impacts” has been revised in relation to the materiality principles in GRI 101 (Foundation). In addition, it is important that organizations refer to the Standards. This is explained in GRI 101: Foundation. Here it is also ensured that organizations correctly refer to the applied standards.
The materiality matrix has often led to intense discussions in reporting practice and has also been misinterpreted at times. The Global Sustainability Standards Board of the GRI (GSSB) has now changed and adapted the concept. But there are no new requirements on how materiality is to be determined. How will the changes affect practice?
The materiality principle itself has not changed compared to G4. But we have made a clarification: Within the principle, “impacts” henceforth refers to the effects of the organization (and its activities, products and services) on the economy, environment and society.
We made this clarification because there has indeed sometimes been a misunderstanding in G4 of focusing on the impacts on an organization, such as risks to its business model or reputation. Although the GRI Standards recognize that an organization’s impacts may also be associated with direct consequences for the organization, the latter is not the primary focus of sustainability reporting when GRI Standards are applied. In addition, we have stated in Disclosures 102-46, in GRI 102: General Disclosures, that organizations are encouraged to explain how they have applied the materiality principle.
Perhaps one of the most important innovations is the possibility to report on specific aspects that have been identified as material in a company and that are not covered by an existing GRI standard. What are your initial experiences here?
It is still too early to make a statement on this, as no reports oriented to the recently published GRI standards are yet available. It is important to remember that for most organizations a reporting cycle covers a full year. Nonetheless, we expect that this innovation will enable sustainability reports that contribute to a more reliable overall picture of an organization’s materiality, in line with the GRI standards, and make it possible to understand how the associated impacts are managed. We know that many companies already practice this correctly, but there has also been repeated misunderstanding and confusion. Incidentally, this innovation also gives organizations the option to open up their GRI report to other frameworks if, for example, a specific topic is not covered by the GRI standards. This will help to improve the connectivity of reporting standards with each other and also reduce the reporting burden.
In the past, there has been criticism that it would be too easy to claim compliance with the Guidelines without actually meeting them. The new GRI Standards will not change this. Why hasn’t the GSSB dealt with this more decisively?
External validation is still strongly recommended in the GRI Standards, but we recognize that this may not be appropriate for all organizations. We want to contribute to universal sustainability reporting and enable a wide variety of organizations to apply the standards. The practice of external validation of GRI reports continues to grow. We see not only the increasing number of GRI reports audited, but also the growing scope of disclosures covered by audits.
Nevertheless, there is still a long way to go before we can say that the majority of reports have been externally audited. GRI has always recommended having reports externally audited. Even though there are costs involved, external validation delivers real value to internal and external decision makers. No one questions the benefit of having an annual report verified by a neutral third party. It simply improves the traceability and reliability of the reported content. At GRI, we believe this should also apply to sustainability reporting. In addition, the new GRI Standards will make external verification a simpler process. The standards will more clearly distinguish between requirements, recommendations, and guidance, which will make it much easier for both sides – the reporting organization and the auditors – to know what to report and how.
When the G4 guidelines were introduced, it took a while before a relevant number of reports were published according to these guidelines. Will there be a significant number of reports under the new standard even before the 2018 transition deadline?
Of course, we cannot predict the future with certainty, but we are cautiously optimistic for several reasons. For one, we have seen that organizations have been quite eager to move to G4, so we are confident that this will also be the case with the change to the GRI standards, especially since there are only minor changes in terms of content. Secondly, we are receiving very positive feedback from reporting practitioners who have attended our many launch events or participated in one of our webinars.
We have also been encouraged by the great interest shown by members of our GOLD Community (editor’s note: formerly Organizational Stakeholders (OS)). With the GRI Standards Pioneers, GRI has also appointed an exclusive group that will actively support the transition to the standards. Already 120 organizations, including crossrelations, have signed up for the program, which gives them direct access to GRI experts who will assist them during the first reporting cycle with the GRI Standards.
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