Setting the report boundary

From the project record

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Part 1: Report Content, Boundary, and Quality

Setting the Report Boundary

In parallel with defining the content of a report, an organization must determine which entities’ (e.g., subsidiaries and joint ventures) performance will be represented by the report. The boundary of a sustainability report should include the entities over which the reporting organization exercises control or significant influence.

The strategic significance of a given entity for information collection depends on the scale of its sustainability impacts. Entities with significant impacts typically generate the greatest risk or opportunity for an organization and its stakeholders, and therefore are the entities for which the organization is most likely to be perceived as being accountable or responsible. They are also most likely to affect the perceived sustainability performance of an organization. Figure 1 is a visual tool that can be used to assess whether an entity falls within the report boundary, using entities A-E as examples.

Within the report boundary, not all entities will be reported on in the same manner. The manner for including an entity within the boundary will depend on the nature of the reporting organization’s control or influence and whether the disclosure relates to operational performance, management performance, or narrative/descriptive information. For example, operational information such as emissions data can be reliably compiled from entities under the control of an organization, but may not be available for a joint venture or suppliers.  The guidance on boundary setting is intended to recognize that the type of information that is available about entities will vary based on the nature of the relationship to the reporting organization.

Relationship between principles and boundary setting
The report boundary is primarily a dimension of the principle of completeness. However, the process of setting the boundary is also closely related to the application of the principles of inclusivity, materiality, and sustainability context,. The boundary itself influences the application of the principles of assurability, balance, comparability, accuracy, timeliness, and clarity.

Guidance for Setting the Report Boundary:

• A sustainability report should include in its boundary all entities that generate significant sustainability impacts (actual and potential) and/or over which the reporting organization exercises control or significant influence over financial and operating policies and practices.
• These entities can be included either through the use of indicators of operational performance, indicators of management performance, or narrative descriptions.
• At minimum, the reporting organization should cover the following entities in its report in the ways specified:
  • Entities over which the organization exercises control should be covered by indicators of operational performance.
  • Entities over which the organization exercises significant influence should be covered by indicators of management performance.
• The boundaries for narrative disclosures should include entities over which the organization does not exercise control/significant influence, but which are associated with key challenges for the organization because their impacts are significant.
• The reporting organization may choose not to gather data regarding a particular entity or group of entities within the defined boundary on the basis that it will not significantly change the final outcome of a disclosure. However, it is responsible for representing a reasonable and balanced picture of its performance considering the sum of all entities within its boundary.

Boundary setting
For further details, see the Boundary Technical Protocol.
www.globalreporting.org/boundary

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