Sustainability reporting: Materiality matters
16 Apr 2014
The GRI G4 Sustainability Reporting Guidelines kick in after the end of 2015, and companies need to prepare for its main focus: materiality. Mint Kang from Eco-Business.com reports.
This year, companies that adhere to international standards for sustainability reporting are preparing for something new: transition to the G4 Guidelines published by the Global Reporting Initiative (GRI).
GRI is an international non-profit organisation which develops sustainability reporting standards for use around the world, and the G4 Guidelines are the latest generation of its sustainability reporting guidelines.
The G4 Guidelines, released in May 2013, will be applicable to all sustainability reports published after 31 December 2015. They are notable for several new requirements: firstly and most importantly, reports following the G4 Guidelines
must focus on materiality.
Materiality is an accounting principle that describes how important something is. In terms of sustainability reporting, materiality means that the report should focus mainly on those issues that are most important to the business and its shareholders.
A simple example is that of a manufacturer saving electricity in two ways: by keeping restroom lights turned off when not in use, and by rescheduling production lines to be more efficient. Under the G4 Guidelines, the second method has greater materiality, because it has a far greater impact on business costs. It should therefore be reported in greater detail than the first.
However, the G4 Guidelines do not place a strict definition on materiality. Instead, those tasked to prepare sustainable reports are expected to use their own judgement.
For the complete article, see here. Image is provided by Shutterstock.
However, the G4 Guidelines do not place a strict definition on materiality. Instead, those tasked to prepare sustainable reports are expected to use their own judgement.
For the complete article, see here. Image is provided by Shutterstock.