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G4 is really taking off.... hundreds of G4 reports have now been published....and almost all the new reports that are released are talking the G4 language. It's time to take a quick look to see if G4 has really changed the game. I used the GRI Sustainability Disclosure Database (now showing 427 G4 reports) to check out the current and past reports of companies.
G4 was supposed to be a game changer. It was supposed to move reports from box-ticking to focused, relevant transparency based on robust stakeholder engagement process. Like any framework or standard, it's only as good as its application in practice. While expecting a certain degree of continuity, we could nevertheless have expected G4 to create a different kind of report where material issues are not only clearly stated, they drive the content and structure of the disclosures. As I often say, if the material issues don't smack you in the face, it's not G4.
In applying G4, have companies gone back to basics, re-engaged, re-materialized, re-prioritized, re-focused and re-emerged with a G4 report that looks, feels and speaks differently? Or is it more of the same, with a new name?
In order to assess whether G4 reports have changed the game or changed the name, I consider five broad reporting dimensions in a comparison between G4 and prior reports of different companies. The five points are: Materiality, Focus, Engagement, Integrity and Impact.
In applying G4, have companies gone back to basics, re-engaged, re-materialized, re-prioritized, re-focused and re-emerged with a G4 report that looks, feels and speaks differently? Or is it more of the same, with a new name?
In order to assess whether G4 reports have changed the game or changed the name, I consider five broad reporting dimensions in a comparison between G4 and prior reports of different companies. The five points are: Materiality, Focus, Engagement, Integrity and Impact.
Materiality - drives the report or just for show
Materiality in G4 is not just about putting a slick materiality matrix out there. It's about connecting the report content to the issues that are most important - as defined in the list of material issues in matrix form or otherwise. If I have to search and search and search for the material issues, and then, once I find them, I have to work hard to find disclosures related to those issues.... this is not game-changing G4. I like to see a clear set of material issues and a report structure which ensures those issues are dealt with up front in the report. Material issues need to be prominent, without readers having to look for them like a needle in a haystack.
In a G4 report, the idea is to focus on what's most important. Clearly, some reporters need to maintain a measure of continuity with previously reported information, and others may use the report for wider disclosure to meet different stakeholder needs. However, in general, the report should not contain a whole load of irrelevant information, or minor performance details which divert focus from the most important issues. Longer isn't smarter and fuller isn't better. Websites, data books, other formats are available for additional information needs.
Engagement - process or lip-service
Over the years we have seen reporters write reams of rubbish about how they are engaging in dialogue with stakeholders and how that helps them build trust, understand needs, define what's most important. There have been so many empty words written about stakeholder engagement that you began to wonder if reporters were given big bonuses for the number of times they included the words stakeholder and dialogue in a single report. When you actually try to figure out what kind of engagement actually takes place, it's all a big mystery. Engagement is one of the hot topics of sustainability... it's getting more important... people are realizing that it's a process, not a survey monkey to hundreds of anonymous box-tickers. In G4, the emphasis is on this process and the use of quality engagement to first, understand sustainability priorities and second, report about them. G4 reports should demonstrate a different kind of stakeholder dialogue than the reports we have been used to so far.
Integrity - shapes up or misleads
Integrity - shapes up or misleads
I have been referencing the quality of reports for years, and while I believe there is some improvement, there is still a mismatch between the disclosures that reports declare they report and what they actually report. A reporting framework exists for a reason. No-one ever said it's perfect, but, if you voluntarily decide to adopt a certain framework, the first rule of responsible reporting is to apply the framework with integrity. Now that GRI has removed the school scores A,B and C, I expect companies that declare in accordance with G4 to step up and execute G4 in the way it was intended.
Impact - what we did or what difference we made
Impact - what we did or what difference we made
Sustainability reporting should be about impacts and outcomes, not about activities. Clearly, you need to tell the story of what you have achieved in order to describe what difference it made. What we really want to know, however, is not how companies are behaving but what sort of an impact they are having. In general, 90% of sustainability reporting content is historical activity with no punchline. The punchline is whether the activity made a difference and if so, can we quantify that in some way, economically, socially or environmentally. Environmental outcomes are generally easier to describe - greenhouse gas emission reduction or water conservation or even biodiversity protection. But social and economic impacts are harder, and most companies have failed to address this effectively. With G4 focus on (material) impacts, I would like to see more of the talk being walked and more of the impacts being reported.
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In many cases, we can already start to see the change in reporting and the influence of materiality analysis and process. In some cases, we can detect a refreshed approach to stakeholder engagement and use of stakeholder input to determine sustainability direction. In a few cases, we see correct application of the G4 guidelines in their entirety. In general, we are seeing a tentative transition and even some experimentation with the best way of using the G4 guidelines.
On the other hand, materiality is not yet fully driving the reporting structure and delivering greater focus, relevance and clarity. List of issues are there, but they are not truly creating the reporting story. Reporting is still far removed from the disclosure of impacts (except in environmental resource efficiency) and still overly focused on behavior and shopping lists of activities. Greater rigor in defining and describing the difference a company makes is needed in reporting.
As with any transition, progress is varied. Uptake is fast, but real change is slow. There is a light at the end of the tunnel... but it's a verrrrrrrry long tunnel. In my next few posts, I will share analyses of the G3 to G4 reporting journey of Fiat Group, Ahlstrom and Johnson&Johnson, asking the question: did they change the game with G4 or did they just change the name?
Bet you can't wait.......
On the other hand, materiality is not yet fully driving the reporting structure and delivering greater focus, relevance and clarity. List of issues are there, but they are not truly creating the reporting story. Reporting is still far removed from the disclosure of impacts (except in environmental resource efficiency) and still overly focused on behavior and shopping lists of activities. Greater rigor in defining and describing the difference a company makes is needed in reporting.
As with any transition, progress is varied. Uptake is fast, but real change is slow. There is a light at the end of the tunnel... but it's a verrrrrrrry long tunnel. In my next few posts, I will share analyses of the G3 to G4 reporting journey of Fiat Group, Ahlstrom and Johnson&Johnson, asking the question: did they change the game with G4 or did they just change the name?
Bet you can't wait.......
elaine cohen, CSR consultant, 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 www.twitter.com/elainecohen or via my business website www.b-yond.biz (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)
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