1. IT’S ALL ABOUT MATERIALITY
G4 focuses on identifying an organisation’s Material Aspects – those issues that reflect:
- the organisation’s significant economic, environmental and social impacts; or
- substantively influence the assessments and decisions of stakeholders.
2. G4 TAKES A BROADER VIEW OF WHAT AN ORGANISATION’S ‘BOUNDARY’ IS: FOCUSING ON IMPACT RATHER THAN LEGAL CONTROL
Boundary refers to where an impact occurs for each Material Aspect identified. Impacts can be of an internal or external nature, that is, occur throughout the value chain.
3. STAKEHOLDER ENGAGEMENT IS A CRITICAL COMPONENT OF MATERIALITY
If you’re not engaging with your stakeholders and addressing their material issues – including joint ventures and other impact locations – you better start.
4. INCORPORATES A PRINCIPLES BASED APPROACH
This covers content and data quality principles.6. G4 IS BOTH BIGGER AND SMALLER THAN ITS
5. G4 IS BOTH BIGGER AND SMALLER THAN ITS PREDECESSOR
The number of Profile-type disclosures go from 42 to 58, Performance Indicators increase from 84 to 91, and Aspects from 37 to 46. BUT you only have to report on what’s material to your organisation, which means there could be less to report than under G3.1.APPLICATION LEVELS (A, B AND C) HAVE BEEN ELIMINATED.
6. APPLICATION LEVELS (A, B AND C) HAVE BEEN ELIMINATED.
In their place, an organisation can report “in accordance with GRI” to either the Core or Comprehensive Levels.
7. THE CORE OPTION CONTAINS ESSENTIAL ELEMENTS
The Core option contains the essential elements of a sustainability report – 34 of the 58 General Disclosures and one Specific Disclosure for each Material Aspect identified.
8. THE COMPREHENSIVE OPTION REQUIRES ADDITIONAL DISCLOSURE
Additional disclosure is required on strategy and analysis, governance, supply chain and performance metrics – all 58 General Disclosures and ALL Specific Disclosures for each Material Aspect reported.
9. SUPPLY CHAIN DISCLOSURE AND DATA CHALLENGE
The new disclosures on supply chain could pose a resource and data challenge for all companies but particularly for large, multinational companies with a complex supply chain.
10. GOING BEYOND THE CORE LEVEL
You can declare your report “in accordance with GRI” at the Core Level but go beyond that to report on as many General Disclosures and Specific Disclosures as you see fit.
11. GRI WILL NOT BE CHECKING CORE OR COMPREHENSIVE REPORTS FOR COMPLIANCE
12. G4 IS OFFERING A ‘MATERIALITY MATTERS’ CHECK, INSTEAD OF THE APPLICATION LEVEL (A/B/C) CHECK FROM G3.1.
The ‘Materiality Matters’ check verifies that the 10 standard disclosures for Identified Material Aspects and Boundaries (G4-17 through G4-23) and Stakeholder Engagement (G4-24 through G4-27) are correctly located in the Content Index and the final report.
13. G4 HAS A NUMBER OF NEW DISCLOSURES ON COMPENSATION
The good news is that some can be satisfied with information from your Proxy report.
14. GOVERNANCE DISCLOSURES “POISON PILLS”
There are TWO potential “poison pills” in the new Governance Disclosures that could make reporting at the Comprehensive level problematic for even the biggest companies. You have to report compensation ratios for highest-paid individual in EACH country of significant operations.
15. DISCLOSURE ON MANAGEMENT APPROACH
You must have a Disclosure on Management Approach (DMA) for each of the Material Aspects you’re reporting on (in theory that could be up to 46 for a large global enterprise), but if you are managing a number of Aspects similarly, you can combine the DMAs in your report (as long as you make clear which ones you have combined) so you don’t end up reporting separately on 40+ DMAs.
16. SECTOR DISCLOSURES
Sector Supplement Indicators (now called Sector Disclosures) if available for an organisation’s sector, will be required for both Core and Comprehensive levels – if they are material. If not, no need to report on sector disclosures.
17. G4 DISCLOSURES CAN BE REFERENCED TO OTHER REPORTS FROM YOUR COMPANY
G4 Disclosures can be referenced to other reports from your company: annual reports, proxy statements, voluntary statements, a CDP response, etc. G4 wants specifics – no general references –with the section, table or pages that address the disclosure
18. CONTEXT INDEX
The Content Index now asks for the location of each Standard Disclosure (page reference or link to other reports), and whether it has been externally assured. The G3.1 Content Index sections for the “Level of Reporting” (Fully/Partially/Not) or the
“Type of data” (qualitative/quantitative) did not make the move to G4.
19. THIRD PARTY ASSURANCE
If you have any disclosures assured by a third party you have to indicate those that have NOT been assured as well.
20. INFORMATION CAN BE EXCLUDED
Information can be excluded if reliable data is unavailable or there are specific legal prohibitions or confidentiality issues at play.
iCompli is a division of BPA Worldwide, a not-for-profit auditing organization established in 1931
to audit circulation for publishers, advertisers and their agencies. Today, BPA’s audit services have expanded to include external assurance of government and industry standards and independent verification of companies’ technology and service claims. iCompli provides third party assurance and certification services for leading global sustainability standards.
ABOUT CLT ENVIROLAW
CLT envirolaw is a niche sustainability consultancy providing expertise to companies and directors specializing in strategy, risk management, ISO20121 risk management, environmental compliance and governance, sustainability policies, human rights due diligence, procurement, reporting and innovation, training and research. We have over 20 years legal experience and work with organizations to explore and better understand the relationship between sustainability and the law. We use our best practice sustainability knowledge to help companies’ go beyond compliance and tailor advice according to your requirements.