GRI 306: WASTE 2020 IS NOW AVAILABLE

GRI announced the launch of GRI 306: Waste 2020, the first globally applicable tool for organisations to report and communicate on their waste impacts. The Waste Standard introduces a stronger relationship between materials and waste to assist reporters in identifying and managing their waste-related practices and impacts throughout their value chain. By including updated disclosures, circularity and waste prevention concepts, GRI 306: Waste 2020 reflects global best practices on waste management and will be effective for reports and other materials published on or after 1 January 2022. GRI 306: Waste 2020 gives insight into the quantity and quality of waste generated and how it is managed.

GRI 306: Waste 2020 has two management approach disclosures, namely Disclosure 306-1 Waste generation and significant waste-related impacts and Disclosure 306- 2 Management of significant waste-related impacts.

Three Topic-specific disclosures including Disclosure 306-3 Waste generated, Disclosure 306-4 Waste diverted from disposal and Disclosure 306-5 Waste directed to disposal are required in GRI 306: Waste 2020 as well.

Here are the key features of GRI 306: Waste 2020:

• Helps provide a comprehensive overview of waste-related impacts of activities, products and services
• Enables organisations to identify and report on circularity and waste prevention opportunities and actions
• Assists to identify management decisions and actions that can lead to a systemic change

• Introduces a stronger relationship between materials and waste, so as to help organisations understand how procurement, design, and use of materials lead to waste-related impacts
• Encourages organisations to assess waste generated throughout the value chain, prompting them to recognise responsibility for waste-related impacts upstream and downstream

Source: https://www.globalreporting.org/standards/media/2595/gri-waste-leaflet.pdf

Increasingly, more and more corporations in private sectors are realising that they are having huge impacts on the social and population health of all stakeholders including employees, families and communities. Interested in the correlation between an array of business practices and the population health, Robert Wood Johnson Foundation (RWJF) partnered with the Global Reporting Initiative (GRI) to work on a research project named Culture of Health for Business (COH4B), hoping to better understand the basis for the means by which the private sector influences health and to identify the business practices that have discrete health and business impacts. This project aims to push the companies to think differently on how they can affect the population health and society.

The views on health, well-being and equality may vary in different places, but the definition used in this project is based on the global definition of health developed by the World Health Organisation (WHO) so it is applicable to everyone. Through extensive research, 16 Culture of Health Business Practices were identified that are particularly effective in influencing both health and business outcomes:

Measures and indicators are important for corporations to establish a culture of health for business. In the current environmental, social and governance (ESG) reporting guidance, there are several traditional indicators such as health and safety, which are strong but not enough in covering the full scope of measures that are needed to support the widespread of adoption of culture of health. By incorporating the COH4B framework into the current reporting guidance, not only can it enhance their report content and reporting quality, but also help private sectors to holistically elevate their health issues and well-being. For instance, when using it during stakeholder engagement process, this tool can help corporations to identify and prioritise material topics, which in turn help the corporation to pay more attention and efforts on evaluating these specific health related issues. While it is not a requirement to include COH4B framework into the ESG/Sustainability report that is generated under both local and international reporting standards, this framework is flexible and it is up to the businesses how to interpret and incorporate it into their reporting. They can use this framework as a tool to create new business strategies or to validate their current business plans.

When this project started four years ago, there was no demand from the business side. Yet, with the social development and the change in public/investors’ expectation towards corporations, there are increasingly more private sectors realise the importance of these aspects such as the cost of health insurance, mental health issues, the lost of productivity, etc. Especially after this COVID-19 pandemic times, the businesses are starting to realise the value of how business health cultures can help with the resilience of the companies towards these kinds of significant events. COH4B framework is a real-time tool, which is practical and handy for business corporations to use beyond the times of pandemic.

Reference:

1. GRI announces the Culture of Health for Business(COH4B) Task Force for US-based companies–https://www.globalreporting.org/information/news-and-press-center/Pages/Culture-of-Health-for-Business-Task-Force-announced.aspx
2. A Culture of Health for Business Guiding Principles to Establish a Culture of Health for Business-https://www.globalreporting.org/SiteCollectionDocuments/2019/GRI_RWJF_CultureofHealthforBusiness.pdf
3. GRI Community-https://www.globalreporting.org/private/community/Pages/default.aspx

At the beginning of 2020, the sudden coronavirus pandemic caused unprecedented impacts on the global economy. Facing the great challenge of global economic development and the increasingly complex international relationships, it is the primary task of all enterprises to learn to be resilient and transform the risks into opportunities during the crisis and uncertainties arising from various aspects, in order to show their corporate responsibility, bear the historical mission and enhance risk adaptability.

It is widely acknowledged that the ESG issues and plans for sustainable development under the pandemic will meet the dilemma of being put aside just as the consequences of the financial crisis in 2008. The facts and research manifest that many governments are gradually taking measures, including temporarily cancelling the environmental constraints in relation to air pollutions and fuel economy (e.g. the US National Highway Traffic Safety Administration and the US Environmental Protection Agency announced that the new SAFE rules will replace the previous CAFE rules, in order to mitigate the impact of the outbreak on the US economy and boost the economy at the cost of environmental benefits) and supporting the enterprises from various industries suffering the hardship with lenient management in relevant health, safety and emissions standards. Does it indicate that the ESG and sustainability-related topics will gradually fade away from the stage of social and economic recovery and corporate development? GreenCo believes that the answer is negative. A number of governments, enterprises, investors and other stakeholders actually have been or are cumulating the experience, seizing the opportunity and promoting the reform of sustainable development during the fight against the pandemic.

During the outbreak, international societies, organisations, governments and enterprises raised and effectively implemented a host of measures for environmental protection, which indicated that ESG matters did not take the backseat. The Korean government recently announced that it will introduce the new green policy in its economic stimulus plan, including investing vastly in renewable energy, levying carbon emission tax and gradually halting the finance in international coal business of public organisations. The total cost will be approximately 110 billion US dollars to avoid economic recession, which also marked that Korea is the first Asian economic entity to pledge that by 2025 it will become net-zero emission economy. At the corporate level, Shell will realise zero emission from the manufacture of its products by 2050 at the latest (all emissions from Scope 1 and Scope 2), and reduce the net carbon footprint of its energy products by around 65% by 2050 and around 30% by 2035. S&P will design and launch a series of Paris-aligned and Climate Transition (PACT) indices, which cover climate- and sustainability-related goals and metrics.

The description of Davis and Blomstrom about corporate social responsibility in 1975 was that social responsibility is an obligation for management and regardless of the benefits for the entire society or organisation, the enterprise should take actions to protect and improve its social responsibility. It was found in a study by Optimy in 2017 that 60% of customers were willing to pay higher for the prominent brands and products from companies with good value, while 71% of millennials preferred to work for the company that had made contributions to the local community and fulfilled its commitments. Robbins believed in his book ‘Management’ that fulfilling social responsibilities can bring long-term profits and increase the stock price of the company. An increasing number of corporate practices and research outcome also suggested that there was a positive correlation between the fulfilment of social responsibility and corporate financial performance, which could help build a great business reputation for the enterprise. As a globally well-known brand in the B2B E-commerce, Alibaba actively responded to and fully implemented the principles of Six Protection raised by the CPC Central Committee, which was to ensure security in job, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains, and the normal functioning of primary-level governments, by allocating funds and resources worth CNY3.356 billion for epidemic prevention and control as at the end of 31 March that made Alibaba the first internet enterprise that disclosed the details of corporate donations in epidemic control. In supporting the medics, infection prevention and control with technologies, upholding economy and protecting people’s livelihood, Alibaba fully exhibited its major mission and responsibility in fighting against the COVID-19 epidemic and stabilising economic and social development, and its inherent characteristics and spiritual core and leadership in the industry as the top enterprise in the world. This also reflected the management philosophy of Alibaba in fulfilling its social responsibilities as shown in its ESG report – 凝聚阿裡味兒：責任導向的價值文化管理’.

There is no denying the fact that the adaptability of human beings will be emphasised more after the pandemic, which will be directly shown in the change of internal management approaches of companies. The outbreak put countless enterprises at risk and shrank their business scopes. The massive lay-off and pay cuts also forced entrepreneurs and investors to re-evaluate the ‘fat’ in business systems and pay more attention to the resilience building and risk management ability of companies in facing public health emergencies. As more investors perform re-analysis of corporate management models and frameworks during and after the pandemic, KPIs including the salary ratio between senior executives and general staff and the incentive policy that links the target completion in the social responsibility of the management will be evaluated and scrutinised more by various parties more strictly. Sands China (HK.1928) announced that as a giant enterprise in Macau, it has inescapable accountability for its staff and decided to raise their salary by from 2% to 4.7%, which was in effect on 1 March that covered 99% employees. This measure under the pandemic also reflected its determination to regard its employees as the valuable assets and its management resilience in corporate governance.

The huge slap of this COVID-19 epidemic on most enterprises made it hard for us to imagine how the aftermath and indirect impacts of the disaster will change the socio-economic structure and business development models. In the post-pandemic era, how to cumulate the experience from setbacks and use the brand new financial values and management system called‘ESG’to empower corporate sustainability development will be a new trend of global development.

Reference:

[1] Why the Coronavirus Puts a New Lens on ESG Investing https://www.morganstanley.com/ideas/coronavirus-corporates-esg-investing

[2] 企業社會責任研究回顧與展望 https://www.sinoss.net/qikan/uploadfile/2010/1130/9402.pdf

[3] 公司治理對公司社會責任的影響分析 https://www.szse.cn/aboutus/research/secuities/documents/P020180328492322936082.pdf

[4] 轉型期中國企業社會責任研究 https://books.google.com.hk/books?id=0Z1ODwAAQBAJ&pg=PA9&lpg=PA9&dq=Davis+%E4%B8%8E+Blomstrom%E4%BA%8E1975%E5%B9%B4&source=bl&ots=_Ym1V1SAXs&sig=ACfU3U0gGxsdAtSE2jgCPE_ErqBXVl-6pQ&hl=zh-CN&sa=X&ved=2ahUKEwj4gYnxms7pAhUywYsBHYnDAJEQ6AEwAHoECAoQAQ#v=onepage&q&f=false

[5] 轉“危”為“機”：韓國出臺新冠肺炎刺激政策，推動經濟綠色化 http://greenfinance.xinhua08.com/a/20200518/1937397.shtml

[6] 疫情應對給全球環境治理帶來哪些啟示？http://www.ccchina.org.cn/Detail.aspx?newsId=73035&TId=62

[7] 阿裡巴巴發佈抗疫財報 互聯網企業中首先公佈抗疫投入明細 https://finance.sina.com.cn/chanjing/gsnews/2020-05-23/doc-iircuyvi4627932.shtml

[8] From ‘E’ to ‘S’ and ‘G’ as responsible investors take stock post-pandemic http://www.ethicalcorp.com/e-s-and-g-responsible-investors-take-stock-post-pandemic?utm_campaign=ETH%2022MAY20%20Newsletter%20Database-ReutersEvents&utm_medium=email&utm_source=Eloqua&elqTrackId=ecb951f29def4f79aad825cc608356e5&elq=e319e14bee7e4009abce587970df41e7&elqaid=53577&elqat=1&elqCampaignId=34487

Climate change is one of the most critical challenges of today, which is entwined with multiple affairs that deserve the attention of companies:

1. Climate warming is linked to aboard range of sustainability issues: natural resources constraints, human rights, biodiversity and many more;
2. Non-state actors including business have a crucial role to play in addressing climate change. A key part of this is around measuring, managing and communicating corporate sustainability (including climate change) performance;
3. GRI standards enable organisations to look at climate change and other global sustainability challenges from a clear perspective and support them to make better decisions and ultimately contribute to sustainable development.

Business and climate change have mutual impacts on each other. Business influences climate change with climate-related reporting today laying more emphasis on different business models’ carbon footprint while climate change does sway business models to some extent with the reporting promoted by Task Force on Climate-related financial disclosures (TCFD) focusing on financial implications of climate change on business models. Hence, what TCFD aims to achieve is to develop a framework that allows the voluntary, consistent climate-related financial risk disclosure to investors, lenders, insurers, and other stakeholders.

Source: Final Report – Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)

However, it is found that the implementations of TCFD recommendations into sustainability reporting still need improvement, despite the enormous support from a host of global entities:

Insufficient disclosure for investors

• 91% of sample companies have decided to implement the recommendations
• 67% will do so within three years
• Progress made, but implementation is not fast enough

More clarity on the potential financial impact of climate-related issues

• Users do not comprehend potential financial impacts to inform their financial decisions

The strategy is not resilient enough

• 3 out of 5 companies that say they use scenario analysis to assess the resilience of strategy do not reveal information on this topic
• Key reasons lie in competitive confidentiality issues

Multiple functions are needed for implementation

• Sustainability and corporate responsibility functions appear to be the primary driver
• Risk, finance and executive management need to be involved more proactively

Considering the common challenges companies may face in adopting TCFD recommendations, GRI standards provide disclosure requirements in line with the recommended disclosures of TCFD that reporting organisations can follow. Here list the specific standards that can be matched up with what TCFD recommends in climate-related financial disclosures around four thematic areas that represent core elements of how organisations operate:

Governance: Disclose the organisation governance around climate-related risks and opportunities

(A) Describe the board’s oversight of climate-related risks and opportunities

GRI 102-18 Governance structure

GRI 102-19 Delegating authority

GRI 102-20 Executive-level responsibility for economic, environmental, and social topics

GRI 102-26 Role of highest governance body in setting purpose, values and strategy

GRI 102-29 Identifying and managing economic, environmental, and social impacts

GRI 102-31 Review of economic, environmental, and social topics

GRI 102-32 Highest governance body’s role in sustainability reporting

(B) Describe management’s role in assessing and managing climate-related risks and opportunities

GRI 102-20 Executive-level responsibility for economic, environmental, and social topics

GRI 102-29 Identifying and managing economic, environmental, and social impacts

GRI 102-31 Review of economic, environmental, and social topics

GRI 102-32 Highest governance body’s role in sustainability reporting

GRI 103-2 The management approach and its components, used with GRI 201-2 Financial implications and other opportunities due to climate change, and GRI 305 Emissions

Strategy: Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning where such information is material

(A) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term

GRI 102-14 Statement from senior decision-maker

GRI 102-15 Key impacts, risks, and opportunities

GRI 103 Management Approach, used with GRI 201: Economic Performance, with GRI 201-2 Financial implications and other risks and opportunities due to climate change

(B) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning

GRI 102-15 Key impacts, risks, and opportunities

GRI 103 Management Approach, used with GRI 201: Economic Performance, with GRI 201-2 Financial implications and other risks and opportunities due to climate change

(C) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario

No similar disclosures in GRI Standards currently 

Risk management: Disclose how the organisation identifies, assesses, and manages climate-related risks

(A) Describe the organisations processes for identifying and assessing climate-related risks

GRI 102-15 Key impacts, risks, and opportunities

GRI 102-29 Identifying and managing economic, environmental, and social impacts

GRI 102-30 Effectiveness of risk management processes

GRI 102-31 Review of economic, environmental, and social topics

GRI 103-2 Management Approach used with GRI 201: Economic Performance, with GRI 201-2 Financial implications and other opportunities due to climate change, and GRI 305 Emissions

(B) Describe the organisations processes for managing climate-related risks

GRI 102-15 Key impacts, risks, and opportunities

GRI 102-29 Identifying and managing economic, environmental, and social impacts

GRI 103-2 The management approach and its components

(C) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management

GRI 102-15 Key impacts, risks, and opportunities

GRI 103-2 Management Approach used with GRI 201: Economic Performance, with GRI 201-2 Financial implications and other opportunities due to climate change, and GRI 305 Emissions

Metrics and Targets: Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material

(A) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process

GRI 102-30 Effectiveness of risk management processes

GRI 103 Management Approach, when used with GRI 201 Economic Performance, Disclosure 201-2; GRI 302 Water and Effluents; GRI 305 Emissions; and GRI 306 Effluents and Waste

(B) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks

GRI 103 Management Approach used with GRI 305 Emissions, GRI 201 Economic Performance, Disclosure 201-2 Financial Implications and other risks and opportunities due to climate change

(C) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets

GRI 102-15 Key impacts, risks, and opportunities

GRI 103 Management Approach, when applied with GRI 201 Economic Performance, Disclosure 201-2, GRI 302 Energy, GRI 303 Water and Effluents, GRI 305 Emissions, and GRI 306 Effluents and wastes

Reference:

[1] ‘How to report the TCFD recommendations using the GRI Standards’ – GRI Website

Content development is the stage of transformation where all the materials and data being collected turn into the actual report that is being presented. It is, however, more than just a “writing-up”, but an on-going process of narrative development of the report that involves collaboration and coordination. A good sustainability report should share the story of a company, show how a company is moving forward, present and highlight the information of a business, instead of a plain write-up of hard facts. GreenCo summarises GRI’s guidance on content development to the following processes:

1. Benchmarking and gap analysis about report content

By exploring the reports produced by the peer, you may identify best practices in terms of reporting format and content, as well as identify gap and what is required to close these gaps. On-going benchmarking process also helps keep you up-to-date to reporting style and standard of the market and how sustainability is being practised by the industries. Great examples of reports can be found on GRI’s Sustainability Disclosure Database.

2. Define report type and structure

To define the reporting type, style, and structure, it is important to consider the key question: who are your readers? From this, it guides you to determine the below:

It is always better that these directions are settled earlier in the process.

The exact content of the sustainability report depends on the GRI Reporting Standards you choose: Core, Comprehensive, or a ‘GRI-referenced’ claim. Details of the differences and criteria to make a claim between Core and Comprehensive standard, or GRI-referenced can be found in Section 3 of GRI 101: Foundation. It is required to set out specific wording for all claims to be used in published materials with disclosures based on the Standards. Also, you can refer to the materiality assessment that has been produced in the earlier stage in determining what content to include in the report.

3. Organise information and produce content

When organising information and producing content, you need to make sure the report:

• gives the whole picture but also precise
• includes all the information that is required
• applicable and relevant to the industry/activities
• follow the Reporting Principles
• include GRI Content Index to ensure the completeness of the report

It is recommended that the report should be concise and engaging. There is no point producing reports that people are not interested in reading after-all (for example, think about if the language is too technical for the lay public to understand). A good report should consist of both graphics and text that best present the information. There are GRI supporting materials available to aid the reporting writing, including the Content Index Tool that can be used as templates, and Digital Reporting Tool that helps publishing.

4. Translation

It is optional to translate the report in languages where the company operates but it would be useful as it allows wider readership.

5. Reporting’s internal review, approval and sign-off

This starts from checking draft that is in line with the company’s operation and values, reporting standards and other materials, and proof-reading, to final review and approval by the Board. This process can go forward and backward, so remember to leave enough time before the publication deadline.

Data collection is a very time-consuming activity and requires collaborative efforts. It should be a customised and unique process for the organisation and therefore remains a fairly flexible element in the sustainability reporting process. Therefore, there is no strict GRI standards but only suggestions and recommendations on how to carry out the data collection process for ESG reporting. The data collection process is however a highly important step as it often determines the content and the quality of the reporting in terms of data accuracy and reliability, hence GreenCo suggests the following steps below to ensure an effective data collection process to be adopted.

According to the GRI standards, the sustainability report shall cover topics that:

• Reflect the reporting organisation’s significant economic, environmental, and social impacts; or
• Substantively influence the assessments and decisions of stakeholders.

Materiality assessment helps the reporting entity to identify those topics that are of great importance to the economic, environmental and social impacts on stakeholders’ assessments and decisions. To perform materiality analysis, here are the 8 steps the reporting entities are recommended to follow.

Stakeholder engagement, as a method to obtain stakeholder’s opinions and focus areas, is an essential part of preparing the sustainability report under the GRI framework, which could assist companies to establish the sustainability strategies that suit own development models based on stakeholders’ expectations.

Stakeholders are the entities or individuals that can reasonably be expected to be significantly affected by the reporting organization’s activities, products, and services, or whose actions can reasonably be expected to affect the ability of the organisation to implement its strategies and achieve its objectives.

The reporting principles linked to stakeholder engagement in GRI Standards are stakeholder inclusiveness and materiality. Stakeholder inclusiveness entails that the reporting organization shall identify its stakeholders and explain how it has responded to their reasonable expectations and interests, while the principle of materiality refers to the reporting organization shall identify the key stakeholder groups with which it engages itself.

The reporting process for stakeholder engagement normally encompasses the following five steps, which are:

• Benchmarking and gap analysis regarding stakeholder engagement
• Identification and prioritisation of various stakeholder groups
• Design stakeholder engagement plan
• Perform stakeholder engagement
• Collect and analyse information

The Global Reporting Initiative (GRI) is an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption.

The GRI standards are a set of interrelated reporting standards, enabling organizations to report publicly on their economic, environmental and social impacts and contribution towards sustainable development. GRI standards represent global best practice for reporting sustainability information – enhancing its comparability and quality.

Under the increasing pressure from different stakeholder groups – such as governments, consumers and investors – to be more transparent about their environmental, economic and social impacts, many companies have been encouraged to publish relevant reports in various forms to reflect their non-financial performance concerning environmental commitment, social responsibility and corporate governance structure in the management of sustainable development. These reports are also well known as Corporate Social Responsibility (CSR) report, Environmental, Social and Governance (ESG) report and sustainability report in different regions of the world. Given the ascending demand from stakeholders and urgency for a unified and standardized methodology for reporting on company’s sustainability performance, the emergence of GRI standards serves as a useful tool, in which the criteria and framework for sustainability reporting recommended helps companies identify, gather and report the relevant information in a transparent and comparable manner that makes for more effective internal control and external comparison.

GRI standards provide companies with a flexible and future-proof reporting structure, that is, the forward-looking and rigorous approach advocated by GRI ensures its process and topics can always remain up-to-date and relevant. GRI standards take policy integration and referencing into consideration, enabling that governments and market regulators are able to easily reference the standards in their policy initiatives. Therefore, GRI standards are the reporting framework that meets all needs for sustainability reporting – from comprehensive reports to issue-specific disclosures. Meanwhile, GRI has been developed with multi-stakeholder contributions and rooted in the public interest, upholding its strong credibility and robustness among companies’ stakeholders.