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The GRI G4 Guidelines “What matters”

Sustainability & Integrated Reporting

Insight into the GRI G4 guidelines

The Global Reporting Initiative (GRI) is a nonprofit organisation that provides a Sustainability Reporting Framework. On 23 May 2013, GRI issued the fourth generation (G4) Sustainability Reporting Guidelines. This Deloitte update outlines the main changes compared with the G3 Guidelines. The transition period for applying the G4 Guidelines is two years. The GRI expects sustainability reports published after 31 December 2015 to be prepared under the G4 Guidelines.
“Application Levels” are out; “In Accordance” is in The application levels, indicating which elements of the GRI Reporting Framework have been applied, are no longer included in the G4 Guidelines. Instead, the Guidelines offer two options for preparing a sustainability report “in accordance” with the Guidelines: the Core option and the Comprehensive option. The Core option contains the essential elements of a sustainability report. In the Core option organisations should report on at least one indicator of each of the material aspects. The Comprehensive option builds on the Core option by requiring additional Standard Disclosures and more extensively reporting on performance by incorporating all Indicators related to identified material aspects. A new feature compared with the G3 Guidelines is that, for both options, only Standard Disclosures related to identified material aspects should be included. The G3 guidelines required reporting of all Standard Disclosures applicable for the application level applied. This change

should contribute to the GRI’s objective to have more focussed reports. Assurance On top of that, the G4 guidelines no longer use the “+” to indicate external assurance. This is replaced by a reference in the GRI Content Index where the reporting organisation should indicate for each disclosure item whether external assurance is obtained. Reporting Principles The reporting principles are fundamental in achieving transparency in sustainability reporting. These principles thus remain unchanged in G4, although a much stronger focus is placed on them. These principles (10 in total) are divided in principle for defining report content and report quality. The reporting principles guide the choices to ensure the information quality in the report to guarantee that stakeholders make sound and reasonable assessments of the reporting organisation’s performances. Materiality is a must The content of the report should be relevant and should provide valuable information as well as insight into the most critical sustainability-related topics. To keep the report concise, G4 requires disclosing primarily on material aspects. So when preparing a sustainability report, it is key that the organization first identifies the topics and aspects on sustainability.

Only then it can decide what is material, set appropriate boundaries, and decide on what to report. When assessing materiality, it is important to identify stakeholders and explain how their expectations and interests have been met. But equally importantly, the report should present the organization’s performance in the broader context of sustainability. To make sure the wider context is addressed, G4 requires more Disclosure on Management Approach (DMA). DMA should help users of sustainability reports interpret performance and ambitions in the broader context of sustainability. New in G4 is the Aspectspecific DMA. The Aspect-specific DMA is designed to give additional detail on the information to report for the Aspect, such as emissions, investments and employment. The Aspect-specific DMA has not yet been developed for every Aspect in the G4 Guidelines. New: supply chain disclosures The G4 Guidelines feature two new disclosures relating to the supply chain:  a description of the organisation’s supply chain, and  reporting on any significant changes, e.g., in location or supply chain structure. Both of these must be included in reports prepared in accordance with the GRI Framework. On top of that, new indicators are introduced that reflect the environmental, human rights and social impacts caused by an organisation’s supply chain, which are required to be reported if determined material. This will bring additional challenges for organisations, such as requiring relevant and reliable data

on labour practices of suppliers in emerging countries. How does this link to Integrated Reporting? Recently the International Integrated Reporting Council published its consultation draft of the International Integrated Reporting framework. Through an integrated report, an organisation provides a concise communication about how its strategy, governance, performance and prospects lead to the creation of value over time. The G4 Framework is a guideline for preparing a sustainability report, but a separate section of G4 is dedicated to the relation between integrated reporting and sustainability reporting (G4). The objectives of sustainability reporting and integrated reporting may differ as a result of diferent primary users concerned. The primary user of an integrated report is the provider of long-term financial capital, whereas a sustainability report focuses on a broader group of stakeholders. Nevertheless the differing inteneded users will affect the materiality assessment and the content of the report. In general, a sustainability report will contain a broader level of detail of sustainability aspects than an integrated report. How Deloitte can help? We can assist you with a G4 Gap-analysis, practical assistance and help you start with Integrated Reporting.

Are listed companies moving towards Integrated Reporting?
Deloitte has examined the status of the corporate communications of Dutch listed companies compared with the IIRC Framework for Integrated Reporting.

For more information, updates or other related questions, please contact one of our team members. Contact Frits Snijder Sustainability & Integrated Reporting +31 (0)88 288 1965 +31 (0)6 2078 9605 fsnijder@deloitte.nl Udeke Huiskamp Sustainability & Integrated Reporting +31 (0)88 288 4376 +31 (0)6 1234 2829 uhuiskamp@deloitte.nl Gijs Vermeulen Sustainability & Integrated Reporting +31 (0)88 288 7901 +31 (0)6 8333 9441 gvermeulen@deloitte.nl

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