Four Principles for Good ESG Report

g4

 

When preparing sustainability reports using GRI G4, organizations should be aware of four principles for defining report content.  I have made an acronym for them – MSCI.

Materiality

GRI puts most emphasis on materiality. Organizations usually find a wide range of issues on what to report, but they have to ask themselves, “what issues (among economic, environmental and social impact) are necessary for the organization and what is it doing about them?” To be strategic, concise, credible, and be easy to navigate, organizations should report only the information critical to their business and aspects that have a profound influence on stakeholders. GRI provides a tool on how to select material topics and explain the boundaries of where these occur.

You can test materiality by answering the following questions:

  • Are sustainability impacts, risks or opportunities identified through sound investigation by people with expertise?
  • Are the issues on the report main sustainability interests and topics raised by stakeholders?
  • Are the issues on the report the main topics and future challenges for the sector reported by peers and competitors?

Sustainability Context

On the report, the organization’s performance should be presented in wider context of sustainability. For example, the report should state whether the organization is with 100 employees in a small town or New York. One of the questions that the organization should answer in the report is, “how an organization contributes to the improvement of economic, environmental, and social conditions at local, regional or global level, or vice versa?” Reporting only on individual performance fails to answer this question, so the report should state the sustainability performance depending on the context of the limits and demands of different environmental and social resources.

You can test sustainability context by answering the following questions:

  • Does the organization present its performance in a manner that attempts to communicate the magnitude of its impact and contribution in appropriate geographical context?
  • Does the organization present its understanding of sustainable development?
  • Does the organization describe how the topics can be related to long-term organizational strategy, risks, and opportunities?

Completeness

The report should cover the material economic, environmental and social impacts so that stakeholders can assess the organization’s performance in the reporting period. This principle encompasses the dimension of scope, boundary, and time, and used to refer to practices in information collection and assessment on the appropriateness of presentation of information.

You can test completeness by answering the following questions:

  • Does the report include all critical impacts in the reporting period, and reasonable estimates of significant future impacts when those impacts are reasonably foreseeable?
  • Does the report take into account impacts within and outside of organization and prioritize all material information?

Inclusiveness

The report should clearly state who are the organization’s stakeholders (customers, employees, investors, or NGOs) and how it responded to their different interests and expectations. Meeting the reasonable expectation of each stakeholder is an essential reference point for making decisions in preparing the report. During this process, the organization can be aware of the issues, and how it influences on them. Increased awareness of certain issues means it can be reflected in its internal decision making. Consequently, it leads to building trust between the organization and different stakeholders.

You can test inclusiveness by answering the following questions:

  • Does the organization describe the stakeholders to whom it considers itself accountable?
  • Does the report include the outcomes of stakeholder engagement process used by the organization in its ongoing activities?
  • Does the report discuss the outcomes of any stakeholder engagement process undertaken specifically for the report?
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About Alaya Consulting

Alaya Consulting is a specialist consultancy focusing on sustainability, responsible investment, and strategic communications. One of the first sustainability communications firms established in Hong Kong, Alaya Consulting is a GRI Certified Training Partner, Data Partner, Organizational Stakeholder and an AA1000 Licensed Assurance Provider. The consultancy specializes in helping clients that need a strategic approach to sustainability, but don’t necessarily have the budget or expertise to do it all by themselves.
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