G4, the next stage in sustainability reporting

Materiality^[2] —taking into account the effect that certain circumstances will have on a company’s value, will become ever more important. Ernst Ligteringen emphasizes that companies need to disclose their strategy, results and management approaches in the context of what he calls ‘the real economy” — an economy that not only depends and reports on financial capital but also encompasses the relationships to natural and social capital. “That’s the future economy that we need in a world that we will be sharing with even more billons of people in the next decades, and where many more people need a better standard of living and also have very rightful aspirations to improve their standard of living. That is all possible; but then fundamental business models must fundamentally change.”

“The economy is changing”, Ligteringen stresses. “You cannot just look at financial capital in isolation as if that is the only driver of an economy. The economy will be increasingly dependent on the availability of natural resources.” He sees increasing resource scarcity and volatility on the resource market, and calls it “just unthinkable” that for some more decades we will continue to have an economy based on fossil fuels. “Businesses have over-used natural resources. “Currently we are using at least one-and-a-half planet in terms of renewable resources every year, and we’ve been doing that since the mid-nineteen eighties… We have built up a growing deficit relationship since that time; we are living in a bit of a bubble.”

The G4 Guidelines

The G4 Guidelines—the latest edition of GRI’swidely used sustainability reporting framework—has been significantly revised and places an even greater emphasis on the concept of materiality. G4 encourages reporting organizations to provide only disclosures and indicators that are material to their business, on the basis of a dialogue with their stakeholders. This will allow reporting organizations and report users alike to concentrate on the economic, environmental, and social impacts that really matter, resulting in reports that are more strategic, more focused and more credible, as well as easier for stakeholders to navigate.

At the global launch of the G4 Guidelines in May this year, Ernst Ligteringen said, “The G4 Guidelines are unique; they are created in consultation with hundreds of experts from around the world, through an inclusive process that captures input and ideas from thousands of individuals and organizations. These contributors draw on their collective knowledge and cumulative experience, to connect the best practices of the past with new solutions with which to tackle the challenges of the future. This is the time to focus our efforts and resources on what really matters and what needs to change.”

References

This video was taped at the 2013 Global Conference on Sustainability and Reporting hosted by the Global Reporting Initiative (GRI) in Amsterdam, May 22-24, 2013.

1. “Materiality in the context of the GRI Reporting Framework”, Global reporting Initiative.
2. “The new sustainability language: materiality and risk”, Joel Makower, greenbiz.com, June 11, 2012.

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “G4, the next stage in sustainability reporting”, Ingrid Ramaan, www.tias.edu, June 14, 2013.

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