©2012 William Blackburn Consulting, Ltd.

Background Global Reporting Initiative Sustainability Reporting Guidelines = the international gold standard for public sustainability/CSR reporting— env., social, econ. (Currently G3 or G3.1) G4= the 4th edition, to be finalized May 2013 GRI seeks stakeholder input on G4: Online survey (Nov 2011) GRI Working Groups September 25 Feedback on draft NAEM letter (major/common issues) ©2012 William Blackburn Consulting, Ltd.

Developments Influencing G4 GRI 2015 Goal: All large and medium companies from OECD (developed) and large emerging countries (BRICS, etc.) should publicly report their sustainability (soc., env., econ.) performance or explain why not (“report or explain”) Mandatory integrated (financial + sustainability/ESG) reporting (S. Africa, UK, France, Denmark, Sweden, et al.) Voluntary integrated reporting Voluntary reporters (AEP, United Technologies, Southwest Air, et al.) International Integrated Reporting Comm. (IIRC) ©2012 William Blackburn Consulting, Ltd.

G4 Objectives Create user friendly guidance Improve clarity Harmonize with international standards Strengthen “materiality” guidance Link with integrated reporting (IIRC) (to be done later) ©2012 William Blackburn Consulting, Ltd.

G4 Objectives Address needed improvements (with Working Groups) Application levels Disclosure on Management Approach (DMA) Boundary/materiality Supply chain Governance & remuneration GHG and anti-corruption (coming in a few weeks) ©2012 William Blackburn Consulting, Ltd.

Application Levels A, B, C Levels replaced with single “in accordance” criteria requiring: All Profile Disclosure Items (now includes supply chain info) DMAs and Core Indicators for all material Aspects (can group) Material Aspects identified per Technical Protocol All applicable Sector Supplement indicators CEO statement on GRI conformance plus “report or explain” GRI content index ©2012 William Blackburn Consulting, Ltd.

Defining Report Content and Boundaries Step 1. Map Value Chain (entities and relationships where there may be significant sustainability impacts). E.g., : Upstream Elements Downstream Elements Local Communities Company Customers Recycling Facilities Suppliers Carbon Disclosure Project Transportation Transportation Etc. ©2012 William Blackburn Consulting, Ltd.

Defining Report Content and Boundaries Step 2. Identify Relevant Topics and Their Boundaries Show which value chain elements may have which sustainability issues (a) with important impacts or (b) which may influence the decisions of the organization’s stakeholders At a minimum, consider all GRI Aspects in G4 and applicable Sector Supplement as relevant Carbon Disclosure Project ©2012 William Blackburn Consulting, Ltd.

Defining Report Content and Boundaries Step 3. Prioritize Aspects (for materiality and depth of disclosure) Material issues= Significant economic, social and environmental impacts, or Substantively influence the assessments and decisions of stakeholders More in-depth disclosure for Aspects with greatest impacts on organization or its stakeholders Need consistent, systematic, documented process Carbon Disclosure Project ©2012 William Blackburn Consulting, Ltd.

Defining Report Content and Boundaries Step 4. “Validation” …to check the completeness of the material Aspects to assure the report will provide a reasonable and balanced picture of the organization’s positive and negative performance Carbon Disclosure Project ©2012 William Blackburn Consulting, Ltd.

Question 1: Core Indicators for “In Accordance” Status ___A. The number and scope of Core Indicators (66 vs 49 for G3, plus sector supplements) are appropriate given the materiality process for prioritization and selection. ___ B. To make G4 less intimidating and more user friendly, Core Indicators should be trimmed based on an analysis of actual use and by abbreviating sector supplements. (Probably needed for integrated reporting anyway?) ©2012 William Blackburn Consulting, Ltd.

Question 2: Postpone G4 to Identify List of Core Indicators for Integrated Reporting ___A. We recognize that G4 may be further revised to add content for the International Integrated Reporting Committee project but believe G4 should be issued on schedule even if that content is not available. ___ B. To minimize confusion from repeated GRI revision, GRI should postpone issuance of G4 until after simplified list of Core Indicators is identified for integrated reporting. ©2012 William Blackburn Consulting, Ltd.

DMAs Generic DMA and some category- and indicator- specific DMAs Generic DMA content for material topics “Topic” (aspect, multiple aspects or category) and why it’s material How impacts are managed Policies, commitments, goals Responsibilities, resources Specific actions Challenges and Dilemmas How effectiveness of approach is monitored and evaluated; results from approach and related adjustments to it ©2012 William Blackburn Consulting, Ltd.

DMAs Poor DMA conformance under A and B reports for G3 and G3.1 (300+ data points) New DMA rules for added flexibility: Only report for material topics Can group by multiple Aspects or Categories if manage on broader basis (e.g., ISO 14001 for multiple environmental Aspects) Less information for less significant material items Need examples? ©2012 William Blackburn Consulting, Ltd.

Question 3: DMA Number and Scope ___A. The number and scope of DMA provisions are appropriate, even though DMAs are now required for “in accordance” status, because the new rules provide sufficient flexibility in trimming and grouping them. ___ B. DMA content should be trimmed because DMA guidance is still too long, complicated and intimidating. (Suggestions of items to cut:______________________________________) ©2012 William Blackburn Consulting, Ltd.

Question 4: Examples of Good Reporting ___A. G4 Guidance is sufficiently clear such that examples of good reporting text would not add much value and might reduce reporting innovation. ___ B. GRI should provide sample text of good reporting on: __DMAs; __Materiality/prioritization process __Supply chain reporting __Other (specify:________________________) ©2012 William Blackburn Consulting, Ltd.

Significantly Increased Content Profile Governance & remuneration Supply chain Boundary/value chain mapping (revised tech protocol) Screening and assessment; remediation (added under several categories) ©2012 William Blackburn Consulting, Ltd.

Question 5: Overall Burden and Complexity ___A. The increased content of G4 improves the user friendliness and clarity of the guidance and offers reporters more choices, including more flexibility in selecting report content through the materiality process and DMA application rules, etc. ___ B. G4 is too long and complicated, and the way it is presented may well be intimidating to new and current reporters, alike. (Suggestions about content to cut or simplify:____________________________) ©2012 William Blackburn Consulting, Ltd.

Other major issues with G4? ©2012 William Blackburn Consulting, Ltd.

See GRI questions in G4 draft. ©2012 William Blackburn Consulting, Ltd.

Complete NAEM Feedback Survey ©2012 William Blackburn Consulting, Ltd.