G3 Sustainability Reporting Guidelines
B. General Questions
B1. What is your overall assessment of the G3?Overall, we welcome the new G3 guidance, particularly with its new principles-based approach, and the continuation of the multi-stakeholder process. We believe you have responded to most stakeholder requests, in particular reducing the number of indicators and thus complexity of the guidance. The overall presentation of the guidance could be clearer, with the addition of diagrams - there are various typos, mixed case headings and repititions throughout. We look forward to the development of the reporting levels, and the publication of G3 later in 2006.
B2. Generally speaking, what are the three most useful areas in terms of content or design of the draft G3 Guidelines?
#1: Disclosures on management approach
#2: Detailed description of each principle and tests
#3: Increased guidance on report content and boundary
B3. Generally speaking, what are the three areas of content or design that need the most further attention?
#1: Poor presentation and layout of guidelines
#2: Principles used for both report content & quality
#3: Separating principles of materiality & relevance
G3 Part 1: The Reporting Principles
C1. What is your overall assessment of the Reporting Principles? SatisfactoryC2. What do you like about the Reporting Principles and their design?
We support the principles-based approach and the new, greater prominance GRI has given to this in G3. The division into principles relating to content and quality can be useful but will need to be better explained.
C3. What about the set of Reporting Principles should be improved?
G3 would benefit by including clearer guidance with regards to the inter-relationship between the different principles and how each principle applies to the reporting indicators. This would assist users to understand why the division has been made between principles primarily relating to content and primarily relating to quality (although many are relevant to both). Potetial and probable conflicts between the different principles is not covered adequately. It should be made very clear that sometimes one principle affects another and at times a company will need to grapple with a trade-off between two principles eg. accuracy and timeliness. Including some form of flow diagram would be beneficial and priovde a clear, quick, easy summary of all the principles, their links and possible conflicts. Inclusivity is treated as a content principle but is recognisable as being close to the over-arching principle in the AccountAbility 1000 Series. The part of the definition relating to disclosure in the report of how the organisation has responded is akin to an indicator and out of keeping with the other plinciples. We suggest that it be treated differently from the other principles relating to report content. It could be more closely linked to the Transparency imperative at an overall level.
C4. Should 'relevance and materiality' be defined in terms of the organization's sustainability impact OR by information that would influence the decisions of an organization's stakeholders?
Sustainability impact
Explanation:
We do not consider the question valid as both factors are important. Stakeholders have to be informed about impacts so that they can decide what is important to them. The report is part of that process as much as stateholder views determine what is to be included. Different stakeholders have different needs, and thus make different decisions based on differing data input. A company from a certain sector operating in specific locations will have material sustainability impacts irrespective of who its stakeholder groups are. A company should therefore report on impacts which have material consequences - and on those disclosures, decisions by mixed stakeholder groups can be based.
G3 Part 1: Commenting on individual Reporting Principles
C5. Reporting Principle: AccuracyC5. Comments on the Reporting Principle:
C5. Specific suggestions for changes to wording of the definition of the Principle:
C5. Specific suggestions for changes to the tests:
C5. Reporting Principle: Assurability
C5. Comments on the Reporting Principle:
We strongly support the inclusion of this principle. Assurability is an uncommonly used term. In order to avoid criticism that G3 should not address assurance we suggest that the principle be renamed 'reliability' as it is essentially about excluding information that might not be reliable due to the absence of proper support for its inclusion. We are disappointed that the lenghty annex on assurance and credibility in G2 has not be developed and carried forward into G3.
C5. Specific suggestions for changes to wording of the definition of the Principle:
Change name of principle to 'Reliability'.
C5. Specific suggestions for changes to the tests:
C5. Reporting Principle: Balance
C5. Comments on the Reporting Principle:
We agree with including the principle of balance.
C5. Specific suggestions for changes to wording of the definition of the Principle:
We recommend that the word 'neutral' is included in the definition to increase the clarity of the description.
C5. Specific suggestions for changes to the tests:
C5. Reporting Principle: Clarity
C5. Comments on the Reporting Principle:
We agree with the inclusion of the principle of clarity. Clarity can refer to both report content and quantity of reported information. This should be made clearer in the description.
C5. Specific suggestions for changes to wording of the definition of the Principle:
C5. Specific suggestions for changes to the tests:
C5. Reporting Principle: Comparability
C5. Comments on the Reporting Principle:
We agree that the principle of comparability is included in G3. We agree that it is important to publish reports that are comparable year-on-year and between companies. We recommend therefore that GRI produces detailed guidance to those 1000 organisations already using G2 to advise them how to make the transition to G3 run smoothly, and to those countless report-users to advise how to compare performance in G2 reports to that in G3. Footnote 5 is unclear - we recommend GRI states what its stance is on frequency of reporting. We recommend an annual basis. We would like to see a reference to encouraging G3 users to include peer/industry benchmarking data.
C5. Specific suggestions for changes to wording of the definition of the Principle:
C5. Specific suggestions for changes to the tests:
C5. Reporting Principle: Completeness
C5. Comments on the Reporting Principle:
We agree with including the principle of completeness. However we would GRI to note that there is a difference between GRI and IFRS' definitions (specifically with regards to the terms 'control' and 'significant influence', and as such is likely to cause confusion in the market-place due to this incompatibility.
C5. Specific suggestions for changes to wording of the definition of the Principle:
C5. Specific suggestions for changes to the tests:
C5. Reporting Principle: Inclusivity
C5. Comments on the Reporting Principle:
Inclusivity is treated as a content principle but is recognisable as being close to the over-arching principle in the AccountAbility 1000 Series. The part of the definition relating to disclosure in the report of how the organisation has responded is akin to an indicator and out of keeping with the other plinciples. We suggest that it be treated differently from the other principles relating to report content. It could be more closely linked to the Transparency imperative at an overall level.
C5. Specific suggestions for changes to wording of the definition of the Principle:
If retained as a principle for defining report content it should be reworded as follows: The reporting organization should identify its stakeholders and the report content should respond to their issues.
C5. Specific suggestions for changes to the tests:
C5. Reporting Principle: Relevance and Materiality
C5. Comments on the Reporting Principle:
We recommend you discuss, as part of this principle, the common tensions between financial materiality/relevance and environmental & social materiality/relevance.
C5. Specific suggestions for changes to wording of the definition of the Principle:
C5. Specific suggestions for changes to the tests:
We recommend you include 'sustainability interests/issues raised by key stakeholders' as one of your tests, which is subtley different than the current 'major sustainability interests/issues raised by stakeholders'. We recommend you add challenges to the second test, so it reads 'the main issues and future challenges for the sector reported by peers and competitors'.
G3 Part 2: Standard Disclosures
C6. Please comment on the different sections of the Disclosures Items:'Strategy and Analysis': Satisfactory
Improved over G2:Yes
Explanation:
Long-term vision and strategy issues are not specifically mentioned - what about long-term future challenges such as climate change?
'Organization Profile': Good
Improved over G2:Yes
Explanation:
Slight improvement over G2. 2.2 refers to 'degree to which the organisation relies on outsourcing' - GRI should give guidance on units for this measurement (eg. number of people, number of product groups, or financial measures).
'Report Parameters': Good
Improved over G2:
Explanation:
'Governance, Commitments and Engagement' : Good
Improved over G2:
Explanation:
C7. Other general comments (if needed) on the set of Disclosure Items as a whole:
Section 2 assumes a stand-alone report is being prepared. Where it is not, we recommend content is not repeated.
G3 Part 2: Disclosures on Management Approach
C9. Do you consider the Disclosures on Management Approach a useful innovation? UsefulExplanation:
This section is certainly clearer for report users: the qualitative information will be collated in one area and separated out from the performance-orientated data.
C10. Has any essential information been lost under the proposed G3 Disclosures and Performance Indicators as compared to the 2002 Guidelines, particularly with respect to disclosures on social performance?
No
Explanation:
C11. Do you think that the Disclosure on Management Approaches currently proposed is generally appropriate? Yes
Explanation:
C12. If the Disclosure on Management Approach is not generally appropriate, what are the key elements that should appear in it?
G3 Part 2: Performance Indicators and Technical Protocols
C14. What is your overall assessment of:Economic Performance Indicators? Unsatisfactory
Environmental Performance Indicators? Good
Human Rights Performance Indicators? Satisfactory
Labour Performance Indicators? Satisfactory
Product Responsibility Performance Indicators? Unsatisfactory
Society Performance Indicators? Satisfactory
Explanation:
Economic and product responsibility indicators are the least developed. Too little focus on environmental impacts of product.
C15. To what extent are the G3 Performance Indicators an improvement from the Indicators contained in the 2002 Guidelines? Improved
C16. What has been improved?
Fewer, so more concise, set of reporting indicators. Better and clearer explanations provided for each.
C17. What could still be improved further?
There are currently three sets of indicators: core, additional and sector-specific (which could, for that sector include 'core' and 'additional'). The distinction between core and additional is based on different presumptions of materiality. Reporting entities. whether in a sector or not, will consider other indicators for relevance and materiality. We do not find sufficient guidance in G3 or in the Technical Protocols of the reasons why indicators were considered to be core or not. The 'Relevance' section of the Technical Protocol could be expanded (or a 'Materiality' section added to describe why a particular indicator was considerded to be important to one or more stakeholder groups. This would provide valuable guidance for users. For example, there exist national differences in law that could make human rights performance indicators less relevant to a reporting entity operating in one jurisdiction. If the reporter was informed that an indicator assumed global operation, it would be better placed to make materiality decisions with its stakeholders.
C18. In what ways are the Technical Protocols most helpful or useful?
They help to make the guidelines more user-friendly, better accepted and more highly regarded.
C19. What could be improved in the format of the Technical Protocols?
We do not find sufficient guidance in G3 or in the Technical Protocols of the reasons why indicators were considered to be core or not. The 'Relevance' section of the Technical Protocol could be expanded (or a 'Materiality' section added to describe why a particular indicator was considerded to be important to one or more stakeholder groups. This would provide valuable guidance for users. For example, there exist national differences in law that could make human rights performance indicators less relevant to a reporting entity operating in one jurisdiction. If the reporter was informed that an indicator assumed global operation, it would be better placed to make materiality decisions with its stakeholders.
D Conclusion
D21. Please indicate for each of the listed areas the level of satisfaction and if the G3 has improved over the G2 on these areas.Relevant for you: Satisfied
Improved over G2:Yes
Explanation:
Comparable: Somewhat satisfied
Improved over G2:Yes
Explanation:
Auditable or assurable: Not so satisfied
Improved over G2:
Explanation:
Lacks definitions and detail.
Performance Based : Somewhat satisfied
Improved over G2:Yes
Explanation:
Universally-applicable: Somewhat satisfied
Improved over G2:
Explanation:
GRI must promote G3 carefully to SMEs, service-sector and other non-MNC groups such as the public sector.
User-friendliness : Not so satisfied
Improved over G2:
Explanation:
As the guidance grows and the complexity of the documents develops, GRI must take great care in improving navigation and increasing user-friendliness.