Whereas the previous post looked at the qualitative aspect of supply chain reporting and strategy, the last entry of the Ecovadis blog series dedicated to the GRI G4 project focuses specifically on the aspects and indicators.
Aspects & Indicators
In total, the G4 proposes at least 20 new or revised indicators that are associated directly or indirectly to the supply chain.
The ‘Economic Category’ was revised to include a whole new “Aspect” on Procurement Practices, which covers five new or revised Indicators on:
- Spending on locally-owned suppliers
- Spending on suppliers with which long-term agreements exist
- Percentage of suppliers which received first orders from company during reporting period
- Time taken to pay suppliers
- Percentage of product or services with environmental or social certifications
Indeed, traceability is now an additional indicator (G4-4) and covers the percentage of product or services purchased externally verified or certified on social and environmental standards.
Last but not least, a major shift is the inclusion of “screening and assessment” and “remediation” aspect across the four main categories: human rights, labor, society and environment. This includes three new or revised Indicators on screening new suppliers, assessing new suppliers and grievances that repeat through the categories.
What will be mandatory in G4?
With the proposed removal of the Application levels (A,B and C) some requirements are necessary for a report to be prepared ‘in accordance with’ G4:
- All of the Profile Disclosure Items
- DMA and Core Indicators related to all of the material Aspects
- All disclosures identified in any applicable GRI sector supplement (only 10 are currently available).
- A GRI Content Index
- A Statement from the CEO.
This said, there will be some exceptions for first time reporters, which are allowed a grace period for two reporting cycles, however existing GRI reporters (e.g. B and C levels in the G3) will be asked to report on the G4.
As seen through this blog series on the G4, the project introduces a major shift towards supply chain transparency. It is likely that the massive reporting requirements introduced in the G4 will deter some companies from reporting on the new guidelines. However, a potential trade-off is that GRI reporters are invited to define the reporting boundaries and identify with more accuracy what are the most material CSR topics impacting the value chain. In other words, GRI reporters will be also offered the opportunity to narrow down issues, a giant leap toward quality reporting.
See the ANNEX1 – New Disclosure Items and Indicators
This article was written by Simon Gargonne, CSR analyst at Ecovadis
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