When it comes to sustainability reporting, it is hard to overlook the guidelines of the Global Reporting Initiative (GRI). Asthildur Hjaltadottir, Director of Services at GRI, has been so kind as to share her thoughts on current trends and developments regarding sustainability reporting and the GRI guidelines.
DQS: In September 2014, the Council of the European Union adopted the Directive on disclosure of non-financial information. The directive requires a large number of companies to report on their sustainability performance. How much of an impact do you think this will have?
Asthildur: According to the Directive, around 6000 large public interest enterprises will have to report on a number of sustainability related topics, including environmental, social and employee matters, respect for human rights, anti‐corruption and bribery. This will strengthen transparency and accountability across the EU and beyond.
With more companies required to, or choosing to, disclose sustainability information, a comprehensive and reliable reporting framework will be indispensable. G4, GRI’s latest sustainability reporting framework, is aligned with the requirements of the Directive as referenced in its Recital (9). G4, which includes all issue areas covered by the Directive as well as other specific issues, will be a fundamental tool for governments during the transposition and for companies during implementation.
DQS: GRI released the fourth generation of its Guidelines – G4 in May 2013. Which are the most important improvements?
Asthildur: The most significant improvement brought to fruition in G4 is its focus on materiality, ie. the principle that organizations should base their reports on the topics that are the most relevant for their operations, as identified via a robust and inclusive stakeholder engagement process. The emphasis on what is material encourages organizations to provide only information that is critical to their business and stakeholders. This means organizations and report users can concentrate on the sustainability impacts that matter, where they matter, resulting in reports that are more strategic, more focused, more credible, and easier for stakeholders to navigate. G4 also includes up-to-date disclosures on governance, ethics and integrity, supply chain, anti-corruption and GHG emissions.
DQS: Earlier this year, GRI has published a booklet for SME’s. Is it safe to say that SMEs are still daunted by the prospect of sustainability reporting?
Asthildur: The GRI Guidelines are designed to be universally applicable to all organizations, large and small, across the world. The booklet we published is for SMEs that are considering whether sustainability reporting is relevant for them and if so, how to start the reporting process. The booklet can be downloaded for free from the GRI website and is available in multiple language versions, including German.
It is not our only publication that is relevant for SME’s, though. In December 2014, GRI published a publication called ‘Introducing the GRI Sustainability Reporting Process – A ‘How-to’ Handbook for all G4 Reporters’. This handbook is aimed at anyone who is either already in the process of preparing a sustainability report using the GRI G4 Guidelines or is about to start the reporting process. It provides a step-by-step approach to the reporting process and is suitable for all types of organizations – small, medium or large, commercial or not-for-profit, regardless of sector, region – public or private – that are new or relatively new to reporting.
DQS: In 2012, 46 % of the reports listed on the GRI database indicated a form of external assurance. In your opinion, why are half the companies still not seeking external assurance, although GRI explicitly recommends this?
Asthildur: There doesn’t seem to be one common explanation for why some companies have not opted to submit their reports for external assurance. This differs per individual organization. There are some factors that may be playing a role. First, external assurance costs money and some organizations cannot justify the additional expense. Second, some organizations may not see the added value in external assurance, especially if their internal and external stakeholders are not requesting this check. Finally, before enlisting third party review of their reports, organizations often want to establish a high level of comfort with using the Guidelines. As a result, organizations often begin opting for external assurance only after they have gone through a number of reporting cycles.
Asthildur, thank you so much for your time.