GRI fuels improvement in sustainability reporting
The Global Reporting Initiative (GRI) has released an update to its reporting standards, replacing the previous reporting structure, G4.
What is the GRI reporting framework?
The GRI Standards aim to provide a best practice framework for companies reporting and managing their social, environmental and economic impacts. This integrated form of reporting goes far beyond having a single CSR page in a company’s annual report. Instead, social and environmental indicators are deemed to be as important as economic indicators: the triple bottom line approach to business sustainability.
The ultimate aim of the GRI is to increase the transparency and accountability of organisations. By following the GRI Standards, companies improve the quality of information disclosed and reporting performance between organisations becomes easier to compare. As our Sustainability Reporting Performance of the IBEX 35 research suggests, adhering to the GRI Standards is also likely to improve companies’ overall sustainability performance.
The GRI and sustainability reporting performance
This year we have applied the same framework as used in our flagship Sustainability Reporting Performance of the FTSE 100 research to Spanish companies. The research explores how the 35 largest companies listed on the Madrid Stock Exchange report their environmental sustainability priorities, initiatives and achievements. Companies were assessed and scored across five key areas. In the first of these areas, Measurement, Reporting & Verification, companies were rewarded for using the GRI framework to structure their reporting.
The IBEX 35 research revealed:
- 33 out of 35 companies report using the GRI framework. This impressive proportion of companies highlights the strength of Spanish companies in sustainability reporting.
- When compared to the FTSE 100, where GRI reporting is less common, it seems that GRI reporting may correlate with a higher overall score for sustainability reporting. While 23% of the IBEX 35 scored below 40%, the proportion of FTSE 100 companies scoring this low was almost double (42%).
What is materiality?
The main principle used to guide GRI reporting is materiality. This concept is used to establish the most important sustainability issues for the company, informing what should be measured, monitored and reported. According to the framework, a group of stakeholders must discuss and agree on the most material areas for their company. This helps ensure that companies’ sustainability strategies are designed to mitigate business risk, capture key opportunities and align with the overall business objectives.
Changes to the GRI reporting framework
The updated GRI Standards do not feature any new topics or additional requirements. Rather, the main changes include some reporting aspects being merged or re-structured to make reporting more logical and to avoid duplication.
For existing GRI reporters, there is a tool called ‘Mapping ‘G4 to the GRI Standards’ to help in the transition to the new reporting framework. The GRI have given a generous deadline of the 1st July 2018 to enable companies to transition to the new framework, with support provided to those companies wishing to adapt the standards earlier. For companies that do not currently follow GRI reporting, the release of the new standards provides an excellent opportunity to begin reporting in line with the GRI. The revised modular structure of the GRI Standards and the clear definition of key concepts make the standards easily accessible to new reporters.
Reporting to the GRI is likely to help companies build trust amongst stakeholders, gain a competitive advantage and enhance internal processes. The new GRI Standards remain well aligned with the CDP and can be effectively used to report progress against the UNDP’s Sustainable Development Goals. As the IBEX 35 companies have shown, adhering to the GRI framework boosts sustainability reporting. By choosing best practice reporting, companies demonstrate a long term commitment to triple bottom line sustainability, aligning their sustainability programmes with business needs and securing the future of their business in the face of upcoming challenges.