Principles for defining report content

From the project record

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Part 1: Report Content, Boundary, and Quality

Principles for Defining Report Content

Each of the reporting principles consists of a definition, an explanation, and a set of tests for the reporting organization to use in assessing use of the principles. The tests are intended to serve as tools for self-diagnosis, but not as specific items to report against. They can, however, serve as references for explaining decisions about the application of the principles.

Inclusivity

The reporting organization should identify its stakeholders and explain how it has responded to their issues in the report.

Explanation:
The results of stakeholder engagement inform a range of decisions regarding a report, including but not limited to: the issues to include in a report, the selection and prioritization of performance indicators and other information, the definition of the report boundary, the format of the report and the approaches taken to reinforce the credibility of the reported information. Organizations initiate different types of stakeholder engagement on a regular basis. These may include stakeholder engagement for the purpose of informing ongoing organizational or business processes, as well as engagement that is implemented specifically for the organization’s report preparation. Stakeholders include those internal to the organization (e.g., employees) as well as those who are external (e.g., communities).

An organization can use a standardized method for stakeholder engagement or design its own approach. The engagement process should be sufficiently systematic to ensure that stakeholder views are properly understood. For a report to be assurable, the process of stakeholder engagement should be documented. The reporting organization should clearly and openly explain its approach for defining which stakeholders it engaged with, how and when it engaged with them, and how this engagement has influenced the report content and the organization’s sustainability activities.

An organization will have a wide range of stakeholders with which it wishes to engage or towards which it seeks to exercise transparency. However, not all stakeholders will be likely users of the organization’s sustainability report. Particularly where an organization’s stakeholder groups have a broad or diverse range of interests, it may not be possible to meet the full information needs of all stakeholder groups through sustainability reporting alone. Therefore, an organization’s assumptions about which stakeholders are envisioned as users of the report is important information for understanding the context of a report and decisions underlying its preparations. Under disclosure item 3.7, an organization can disclose which stakeholders it expects to use the report.

Failure to identify and engage with stakeholders is less likely to result in reports that are suitable to their needs and thereby less than fully credible to all parties. In contrast, systematic stakeholder engagement enhances stakeholder receptivity and the usefulness of the report. Executed properly, it is likely to result in continual learning within and outside the organization, and to strengthen trust between the reporting organization and its stakeholders. Trust, in turn, fortifies report credibility.

Tests:

• The organization can describe the stakeholders to whom it considers itself to be accountable, and identifies the stakeholders that it expects to use the report.
• The report content draws upon the outcomes of stakeholder engagement processes used by the organization to manage its activities.
• The report content draws upon the outcomes of any stakeholder engagement processes undertaken specifically for the report.
• The stakeholder engagement processes that inform decisions about the report are consistent with the scope and boundary of the report.

Relevance and Materiality

The information in a report should cover issues and indicators that would substantively influence the decisions of the stakeholders using the report.

Explanation:
Relevance and materiality are concepts that help define the content of a report. An organization has faces a wide range of issues that it could report on. Relevant issues and indicators are those that may reasonably be considered to be important in influencing the decisions of the organization and of the stakeholders using the report, and therefore potentially merit inclusion in a report. Materiality is the threshold at which an issue or indicator becomes sufficiently important that it should be reported, and is also used to assess the relative priority of issues and indicators.

The relevance and materiality of sustainability information is determined by considering the combination of management or organizational priorities, the organization’s sustainability impacts, and the interests of stakeholders in the organization’s current and future activities. Factors such as the organization’s overall mission and competitive strategy, concerns expressed by stakeholders, and the organization’s range of influence in its value chain all affect the assessment of what is most material for the report.

Sustainability reports and all the information contained within should support assessments of performance and decision-making by stakeholders regarding the organization. This may involve disclosure of information for external stakeholders’ use in a format that differs from the way the information may be used internally for day-to-day management purposes. However, such information does belong in a report where it can inform decision-making or support exchanges between the organization and stakeholders that can result in actions that would significantly influence performance or address key issues of stakeholder concern.

The report should focus the majority of its space on disclosing and explaining performance regarding the issues most material to its users, and the issues where the organization has the most significant sustainability impacts. Other material issues should be included, but be given less prominence. The organization should explain its processes for determining the relative priority of issues for its report. In the context of sustainability reporting, materiality is not a just a threshold beyond which all information is of equal importance, but it is also a reflection of the relative priority and level of interest in an issue.

Tests:

External Factors
In defining material issues, the reporting organization takes into account external factors, including:

• Major sustainability interests/issues raised by stakeholders.
• The main issues for the sector reported by peers and competitors.
• Local, regional, national and international regulations, laws, or voluntary  agreements with strategic significance to the organization.
• Reasonably estimable sustainability risks or opportunities (e.g., global warming, HIV-AIDS, poverty) identified through sound investigation by people with recognized expertise or by expert bodies with recognized credentials in the field.

Internal Factors
In defining material issues, the reporting organization takes into account internal factors, including:

• Key organizational values, policies, strategies, operational management systems, goals, and targets.
• Major risks to the organization.
• Critical factors for enabling organizational success.
• The organization’s core competencies and the manner in which they contribute to sustainable development.

Prioritizing

• The report prioritizes material issues and indicators.

Transparency
Transparency is a value and a goal that underlies all aspects of sustainability reporting. Transparency is defined as the complete and balanced disclosure of information on the issues and indicators required by stakeholders to make decisions, and on the processes, procedures, and assumptions used in preparing those disclosures.

Sustainability Context 

The reporting organization should present its performance in the wider context of sustainability, where such context has significant interpretative value.

Explanation:
Performance information should be placed in context. The underlying question of sustainability reporting is how an organization contributes to the improvement or deterioration of economic, environmental, and social conditions at the local, regional, or global level. Simply reporting on trends in individual performance (or the efficiency of the organization) will fail to respond to this underlying question. Reporting organizations should therefore seek ways to express their individual performance in relation to broader environmental and social sustainability. This will involve discussing the performance of the organization in the context of the limits and demands placed on environmental or social resources at the local, regional, or global level. For example, this could mean that in addition to reporting on trends in eco-efficiency, an organization might also present its absolute pollution loading in the context of the capacity of the regional ecosystem to absorb the pollutant. This concept is most clearly articulated in the environmental area in terms of global limits on resource use and on pollution levels, but can also be relevant with respect to social and economic objectives such as national or international socioeconomic and sustainable development goals.

The organization’s own sustainability and business strategy provides an important context for discussing performance. The relationship between sustainability context and organizational strategy should be clear, as should the context within which performance is reported.

Tests:

• The organization presents its understanding of sustainable development and draws on the best available information and measures of sustainable development for the issues covered in the report.
• The organization presents its performance with reference to broader sustainable development conditions and goals as reflected in recognized local, regional, and/or global publications.
• The organization presents its performance in a manner that attempts to communicate the magnitude of its impact and contribution in appropriate geographical contexts.
• The report describes how major sustainability issues relate to long-term organizational strategy, risks, and opportunities, including supply-chain issues.

Completeness

Coverage of the relevant and material issues and indicators, and definition of the report boundary should be sufficient to enable stakeholders to assess the reporting organization’s economic, environmental, and social performance in the reported period.

Explanation:
An organization should disclose its performance in sufficient detail to enable stakeholders to make assessments. Completeness primarily encompasses the dimensions of scope, boundary, and time.

Scope dimension:
Scope refers to the range of sustainability issues covered in a report, which should meet the expectations of the principle of relevance and materiality. The sum of the issues and indicators reported should be sufficient to enable the stakeholders who are expected to use the report to assess the organization’s performance. Determining whether such information is sufficient for stakeholders should be based both on stakeholder engagement processes and on broad-based societal concerns that may not have surfaced through the stakeholder engagement process.

Boundary dimension:
Boundary refers to the range of entities’ (e.g., subsidiaries, joint ventures, etc.) performance that is represented in the report. In setting the boundaries for a report, an organization must consider the range of entities over which it has control (often referred to as the “organizational boundary” and linked to definitions used in financial reporting) and the range of entities over which it exercises influence (often called the “operational boundary”). The boundary may vary based on the specific issue or type of information being reported.

Boundary setting
For details on boundary-setting, see the next section on Setting the Report Boundary and also the Boundary Technical Protocol.
www.globalreporting.org/boundary

Time dimension:
The selected information should be complete with reference to the time period declared by the reporting organization. As far as practicable, activities, events, and impacts should be presented for the reporting period in which they occur. This includes reporting on activities that produce minimal short-term impact, but which have a significant and reasonably foreseeable cumulative effect that may become unavoidable, or irreversible in the longer term (e.g., bio-accumulative or persistent pollutants). In making estimates of future impacts (both positive and negative), the reporting organization should make well-reasoned estimates that reflect its best understanding of the likely size, nature, and scope of impacts. Although by nature subject to uncertainty, such estimates can provide useful information for decision-making as long as the bases for any estimates are clearly disclosed and the limitations of the estimates are clearly acknowledged. Disclosure of the nature and likelihood of such impacts, even if they may only materialize in the future, is consistent with the goal of providing a balanced and reasonable representation of the organization’s economic, environmental, and social performance.

Tests:

• The report covers issues and indicators prioritized on the basis of materiality, sustainability context, and stakeholder engagement, and was developed taking into account the whole value chain.
• The report includes all entities controlled or significantly influenced by the organization unless otherwise declared. 
• The information in the report includes all significant actions or events in the period reported on, and reasonable estimates of significant future impacts of past events when those impacts are reasonably foreseeable and may become unavoidable or irreversible.
• The report does not omit relevant information that would influence stakeholder decisions.

Completeness and quality
Completeness can refer to practices in information collection (for example, ensuring that compiled data includes results from all sites within the report boundary) and whether the presentation of information is reasonable and appropriate for users. These issues are related to report quality, and are addressed in greater detail under the principles of accuracy and balance later in Part 1.

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