Saturday, August 3, 2013

The UG4 Webinar: 14 questions about G4

This week we ran our first Understanding G4 Webinar. By we, I mean DōSustainability and the DōShorts Sustainable Business Collection who were kind enough to publish Understanding G4: The Concise Guide to Next Generation Sustainability Reporting. We had close to 180 registrants from almost as many countries... well, a lot of countries anyway, and from a range of sectors and also from a range of stakeholders including CSR and Sustainability Managers, consultants, academics, NGOs and media.

I'd like to emphasize that I do not speak on behalf of the Global Reporting Initiative (GRI) not do I have any official connection to the GRI in relation to G4, other than the fact that my company, Beyond Business Ltd has been a GRI Organizational stakeholder for several years and we act as a data partner in Israel for advising the GRI of locally published reports. I have developed my understanding of G4 through attending the G4 launch in Amsterdam in May 2013, and thereafter spending many pleasant hours of study of the 300 pages of the guidelines, plus a couple of conversations for clarification with Bastian Buck, Reporting Framework Manager of the GRI, and also, through conversations with colleagues and clients around the world. In particular, Dr. Glenn Frommer, Head of Sustainable Development at the MTR Corporation was extremely helpful in sharing insights and working through my Understanding G4 manuscript with an eye for detail and balance. Also, as we are currently working on G4 report preparation for clients, and preparing detailed G4-Ready Analyses, for which we have developed some proprietary tools, for example, our G4-Ready Dashboard, I find myself reciting Specific Standard Disclosures in my sleep. Therefore, I feel my knowledge of G4 is, modestly, pretty good :). Even when I am sleeping.
If you want to see the webinar recording, you can do so here:  

As usual when I am in webinar mode, I talked too much and didn't get to answer all of the questions that were tabled by participants. So, what better place than to do this than on the CSR Reporting Blog? Here are the questions as I received them from webinar moderator Gudrun Freese, DōSustainability's co-founder and Communications Director. And my answers.
(Big thanks to all those who participated and submitted these questions)

Question: G4: First mover or fast follower? What the right time to move from 3.1 to G4?
My answer: The time to move to G4 is now. Sure, there is always a reputational point or two to be gained from demonstrating agility, openness, flexibility and adaptability to new guidelines and requirements, so "first mover" may well give you an edge for a short time. However, this is of far less value than getting your first G4 report right. That doesn't mean perfect. It means right.
The quality of your G4 report will be defined by the robustness of your materiality process the way you engage to determine what's most material for your business and for your stakeholders. Once you have this clear enough (not clear perfect, but clear enough), you can work towards your G4 report. No need to wait. It's not a race or a competition to see who gets through the G4 goalposts first, but there is no real reason to delay transitioning to a better framework. CORE and COMPREHENSIVE G4 options are equally relevant and equally commendable options. 
Question: Elaine, Do you think that we have to add linkage tables to the sustainability reports due to the high number of existing frameworks. What has to be done?
My answer: GRI has not prepared nice neat linkages content indexes such as existed for G3. The Book of Reporting principles does includes three tables which show the correlation between (1) UNGC ten principles (2) OECD Guidelines for Multinational enterprises and (3) UN Guiding Principles on Business and Human Rights. In the G4 Manual, these tables show the key principles or chapters from these three frameworks and then a reference to a G4 Category and/or Aspect, which I personally don't find terribly helpful. In Understanding G4, I developed tables which show this the other way around, using the G4 as the start point and showing which Specific Standard Disclosures align with the UNGC and OECD principles and chapters respectively.

For use in a G4 report, companies will have to create the tables themselves, unless GRI actually publishes a tool that can be used. There are no linkages to other frameworks, such as, for example, UNGC Advanced COP criteria, or LEAD criteria, CDP, or the UN CEO Water Mandate, or ISO 26000, or other sector frameworks such as they exist.

Question: Is it necessary to answer/include sector supplement questions to be in accordance to CORE?
My answer: It is advisable to consider sector supplements, although these exist for only a small number of sectors at present. When selecting material issues, a company should also consider sector supplements (now called "Sector Disclosures") and if a sector-specific issue is material, then the relevant performance indicators should be used. 
Question: How rigorously GRI does cross check / verify the reports?
My answer: For G4, so far, zero rigorously. At this point, GRI has not committed to performing an "Application Level Check" (ALC), which we know from our ABC days of G3, on new reports which are "In Accordance" with G4. Time will tell if GRI will do this. If so, the In Accordance check will have to be somewhat different and unequivocally more rigorous than the current ALC, in my view. All the issues around false claims in GRI reports which prompted a weak response from GRI earlier this year would only undermine G4 if they resurface. Either GRI will elect to stay on the sidelines and let stakeholders do the work, or they will opt for a full and reliable check which adds value to companies and stakeholders.  

Question: Where can we find the downloadable Book of Principles, please?
My answer: All the G4 materials can be downloaded from the GRI website - click here for direct teleportation. Phew. Glad that was an EASY question.
Question: Is the G4 aligned to the UN Global Compact?
My answer: Sort of. There are general linkages to the ten principles of the UNGC in the Reporting Principles book of G4, and throughout the Implementation Manual by indicator where relevant.  However, with a G4 report, where it is possible to, say, completely omit at COMPREHENSIVE level any discussion of Human Rights or Anti-Corruption, if they are not material, or even environmental disclosures, a G4 CORE or COMPREHENSIVE report may not meet the requirements for an Active Level or Advanced Level COP, where a G3 A level report almost certainly would have done and a B level report probably would have done.
Given the seemingly close relationship between GRI and the UNGC, it is indeed rather curious that greater alignment was not designed into both organizations' disclosure requirements.   

Question: Would there still be the C, B and A levels in reporting?
My answer: Only by mistake.  Or by anachronism. I have already forgotten them.
Question: Are the KPIs in G4 different from the ones on G3.1?
My answer: Yes. And No. G4 has 91 KPIs (Specific Standard Disclosures) where G3.1 had 84  and G3 had 79. (Inflation happens, even to the GRI). About 12 of these disclosures are completely new, but many more have been modified. In many cases, the formal reporting requirement of a certain part of an indicator has been moved to "guidance" which means, essentially, take it or leave it.
Question: Can you specify the information "One performance Indicator per Aspect"? Is there a minimum number like 10 indicators as it was in G3?
My answer: No, there is no minimum. The number of performance indicators is determined by the number of Material Aspects you select. If you have 346 Material Aspects, then for a CORE report, you would have to spill the beans on 346 Performance Indicators. If you have 1 Material Aspect, then in theory, your CORE report could be very short indeed. In practice, though, there is an expectation that due process will prevail and that companies will deliver a result which includes an appropriate and relevant set of Material Issues by adhering to the reporting principles for content and quality.  

Question: How G4 is accepted internationally and how is the comparison with ISO standards?
My answer: G4 has received significant appreciation from a wide range of those connected to Sustainability Reporting in different ways, as it is seen to provide a more relevant and targeted approach to sustainability reporting. There are some who feel that G4 doesn't go far enough is some areas, but on the whole, G4 is welcomed by the global CSR and Sustainability community, at least, that's the way it seems to me. G4 does not directly compare with ISO standards, as it is a reporting framework and not a quality standard. G4 blissfully ignores ISO26000, despite the fact that many companies are using ISO26000 to structure sustainability reports. G4 does make references to ISO standards on occasions, such as ISO14604 and the GHG Protocol for carbon emissions reporting.

Question: How about other emissions like Mercury, POPs, other pollutants considered hazardous in Basel, Stockholm, Rotterdam, PIC conventions?
My answer: G4 contains a performance indicator relating to "other" emissions including Nox, Sox, POPs, HAPs, VOCs and PMs. (Ha-ha. Don't you just love the language of sustainability?). Check out Specific Standard Disclosure G4-EN 21, Emissions Aspect, Environment Category. As to other pollutants, companies are free to add specific references if these are material to their business and their stakeholders. G4 is less prescriptive here.

Question: How is supply chain environmental degradation considered by G4 in developing nations. Like conflict material issues. Can a company intentionally limit or reduce the boundary of supply chain issues dealing with Env, Child Labor, against ILO basic criteria, and still be acceptable by GRI authorities, e.g. metals extracted from African countries - being used by multinational mobile manufacturers?
My answer: Great question and a very serious issue which goes right to the core of how a company should use G4 for reporting on important issues. Of course, the G4 framework is only as good as the companies who use it. As with any set of guidelines, companies may abuse them. It is indeed possible to "doctor" your set of material issues and leave out the ones that are uncomfortable for a company to report on. It is indeed possible to deliver an "In Accordance" G4 report at COMPREHENSIVE level and leave out half of the information that would have been required at G3 Application Level A. It is indeed possible to lack integrity in the preparation and publication of G4 reports. At this point, GRI has not announced plans to check and monitor how the G4 framework is being used.
However, this speaks to the guiding approach in the development of G4. That of encouraging companies to take ownership for their reporting and demonstrate accountability in a mature way. This means that companies should follow due process (see the G4 Reporting Principles on Content and Quality Book) in the development of a materiality matrix, consult with internal and external stakeholders as relevant and define the list of issues that make sense for the business and its stakeholders. The report should be constructed around these issues.
G4 starts from the point that companies will and should want to do this because it's right for their business. Of course, we all know better, and that many companies will not be quite as far-sighted. We will all need to be very alert when we see the first G4 reports entering the reporting landscape and first, before counting how many performance indicators a company has responded to, scrutinize the way in which material issues were defined and whether those issues make sense in a broader context of a company's role in society and impacts on people, society and the environment.
Specifically, as regards conflict minerals, child labor issues etc., these should be reported if they are considered material by the reporting company. G4 does not prescribe disclosures on these issues. 

Question: How global usage of G4 is acceptable - specially in Middle East UAE? 
My answer: Globally, the GRI Reporting Framework is very widely used. What the uptake of G4 will be remains to be seen. In UAE, there are very few reporters at this time and my impression is that uptake of the GRI Framework is about half and half. Some use GRI - including Masdar, who delivered a first Sustainability Report for 2012 at GRI Application Level A+, and some don't. What will happen with G4 is anybody's guess. Anyone for a little wager?

Question: Should it be necessary to refer to G3 before using this new version? Or just apply G4 without looking back the previous version?
My answer: Fabulous question to finish up with. I think the best way to approach G4 is to start with G4. It really doesn't matter what was in G3. Of course, if you have published G3 reports, you might wish to make some comparisons of different disclosures and this might help with decision making in certain areas as you make the transition.
But in my view, G4 needs a G4 mindset, not a "G3-plus-changes" mindset. G3 has tended to start with a set of reporting requirements and you work down the list deciding what you can or cannot report on. G4 starts with a process to define a set of issues that are important and a decision about how to report on them. It's a different game.
G4 is a standalone framework. We don't need G3 any more. In fact, I predict that very soon, G3 reports will be no more than nostalgia.
Thanks again to all who attended the webinar and for all your questions.
Looking forward to seeing loads of G4 reports in the coming months :)

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of  Understanding G4: The Concise Guide to Next Generation Sustainability Reporting  AND Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via   or via my business website   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)


kR said...

Hi Elaine.

One question which popped up now (not during your webinar though :/) is how companies should migrate from G3 to G4 - as in, how would comparability of sustainability performance be addressed during the migration (this would only be a short term effect though)

elaine said...

Hi Kiran, thanks for your question. Yes, this is an interesting one. G4 doesn't really address this. A company who has reported at A level disclosing all sorts of data which now selects G4 CORE may actually cease reporting on many previously reported indicators. This is a complex issue and requires a response far longer than I can write quickly on this blog. I will address this in a separate post in the coming days. Best, elaine

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