The Fourth Generation of GRI
The Fourth Generation of GRI
The Fourth Generation of GRI
By: Matt Cox 4 minute read

As the fourth generation of GRI begins, Burns & McDonnell recommends that businesses plan a gradual transition from G3 to G4, thus making reporting processes valuable and a tool to advance organizations' sustainability agendas.

By Matt Cox, PE, GRI Certified; Candice Derks, GRI Certified; and Kindra LeFevre, GRI Certified

The long-awaited changes to the Global Reporting Initiative's (GRI) Sustainability Reporting Guidelines were rolled out in Amsterdam in May. The revised guidelines, known as the GRI G4, represent the fourth generation of the reporting framework and the first major revision since 2006. The first generation guidelines were developed in 2000. They will be continually updated to reflect changes in sustainability reporting and adapt to challenges while meeting the goal of integrating sustainability into mainstream corporate reporting.

GRI is expecting a gradual switch to the new standard. A useful approach would be to begin transitioning during the next reporting cycle (published 2014) and make the full switch the following year. GRI's deadline is that reports slated for publication after Dec. 31, 2015, should be prepared in accordance with the G4 guidelines.

Previous iterations of the GRI standards have been all-inclusive, encouraging reporters to detail their financial, environmental, social and governance issues. Some critics of the G3 and G3.1 standards voiced concern that GRI rewarded breadth over depth by categorizing reports into three levels (A, B and C) - with the "best grade" given to the reports with the biggest scope.

The G4 represents a big shift in the standard - away from "put it all out there" to "less is more," as long as what gets reported is material to the organization.

The new standards require reporters to use the sustainability report to document their most critical sustainability components.

The G4 is split into two complementary documents: a manual of the principles and standard disclosures, and a separate implementation manual to help reporters through the process. The second document details the necessary steps to launch and manage a sustainability reporting process within any organization, regardless of its level of experience. The first document offers flexibility for preparers to choose which disclosures to focus on and how to align efforts to local/regional report requirements and frameworks. In addition, new clarifications on how to report on shared supply chain impacts outside of operational control aim to support organizations in taking additional responsibility for supply chain sustainability and governance.

Six Key Changes for G4


Materiality is again emphasized throughout the guidelines, with reporters required to disclose on those issues or aspects. Material aspects are those that may be reasonably considered important for reflecting the organization's economic, environmental and social impacts, or influencing the decisions of stakeholders. GRI encourages reporters to focus content on the aspects that matter most to their business, rather than reporting on everything.

When organizations are unable to measure and/or track all material aspects, they will need to acknowledge the relevance and admit limitations in data availability.

The G4 will not require a reporting organization to discuss each indicator as under the previous A-level scenario. Now reporters only need to discuss those that relate to a material aspect. Organizations must explain the process they go through to define their material aspects, risks and opportunities, and describe how stakeholders are involved in this process.

Reporting Boundaries Redefined

For each material aspect, organizations must consider whether the impact of that issue lies inside or outside the organization, and assess and describe where the impact ends. This is the boundary. For instance, a material aspect (such as greenhouse gas emissions) could be most relevant to the reporting organization's own operations (inside), or it could be relevant primarily to entities outside the organization, such as suppliers, distributers or consumers.

To comply with the G4, organizations need to report on the process they use to define the boundary of impact for each material aspect. Organizations that do not yet have this process in place will need to design it before moving to the G4, and all reporters will need to document and report on this process. Reporting organizations will also have to pay more attention to the economic, social and environmental impacts in their supply chains, as the broader boundary for reporting on material aspects encourages a greater focus on supply chain impacts.

‘In Accordance' Levels Replace A, B, C

The G4 takes a new approach to demonstrating the maturity of organizations' reports by introducing two "In Accordance" levels: Core and Comprehensive. Organizations can choose to prepare a report that either meets one of the two levels, or use the guidelines without meeting the In Accordance criteria.

If a company does not have all the data available, it now must disclose omissions using detailed guidance within the G4.

Disclosures on Management Approach (DMAs)

DMAs are more focused at the aspect level, meaning that companies must disclose how they manage each aspect separately. Three distinct elements will help guide reporting. First, organizations need to explain why an aspect is material and which impacts make it material. Second, reporters must explain how the organization manages impacts and, third, which mechanisms are in place for evaluating the management approach.

New Governance Disclosure Requirements

Several new standard disclosures have been introduced on governance, along with a new category of disclosure on ethics and integrity. Most of the new disclosures relate to information on the composition, involvement and authority of the reporting organization's highest governing body.

New Supply Chain Requirements

Since the G3 guidelines were launched in 2006, companies' understanding of their supply chain impacts and responsibilities has changed significantly. This is reflected in the G4 as supply chain issues are more prominent. Organizations must disclose how they manage environmental, social and societal issues related to the material impacts of their supply chains. The G4 requires companies to disclose significantly more information on supply chain impacts, including details of supply chain assessments, risks identified, the organization's performance in managing these risks, and the management process put in place.

Next Steps

Burns & McDonnell recommends that organizations plan a gradual transition from G3 to G4. The new guidelines require more focused reporting, yet they also require more information to demonstrate robust management and reporting processes. Materiality lies at the heart of GRI, and the first step is that your report reflects this principle. Start by planning or enhancing your materiality assessment, considering impacts of your business and the views of stakeholders in your value chain. Build on the results of this process to align your report with the G4 criteria and reporting requirements. This will help make your reporting process valuable and a tool to advance your organization's sustainability agenda.

About the Authors

Matt Cox, PE, is a GRI-certified sustainability specialist at Burns & McDonnell assisting Fortune 500 companies in developing corporate sustainability reports that follow the internationally recognized GRI framework. He earned a Bachelor of Geological Engineering from the Missouri University of Science & Technology, and a Master of Construction Management from the University of Kansas.

Candice Derks is a GRI-certified sustainability specialist at Burns & McDonnell assisting Fortune 500 companies in developing corporate sustainability reports that follow the internationally recognized GRI framework. She earned a Bachelor of Business Administration and a Bachelor of Spanish from the University of Kansas, and a Master of Business Administration from Ottawa University.

Kindra LeFevre is a GRI-certified sustainability specialist at Burns & McDonnell assisting Fortune 500 companies in developing corporate sustainability reports that follow the internationally recognized GRI framework. She earned a Bachelor of Journalism and a Bachelor of Arts in German from the University of Missouri and a Master of Business Administration with a marketing certificate from the University of Houston. 

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