Magazine article The CPA Journal

Imminent Changes to Corporate Social Responsibility Reporting: An Overview of the Updated GRI Guidance

Magazine article The CPA Journal

Imminent Changes to Corporate Social Responsibility Reporting: An Overview of the Updated GRI Guidance

Article excerpt

Corporate social responsibility (CSR) reporting is the disclosure of business practices that fall outside of the activity normally disclosed in GAAP-based financial statements and that provide benefits to society. These practices include philanthropy, ethical business practices, stewardship of the environment, and positive interactions with the community. Over the past to years, voluntarily reporting on CSR activities has become a standard business practice for the world's largest corporations. Because businesses often look to accountants for CSR reporting guidance, CPAs will be well served by familiarizing themselves with the current state of CSR reporting and upcoming changes to CSR reporting guidelines.

The Current State of CSR Reporting in the United States

The Global Reporting Initiative (GRI) publishes the most widely used CSR reporting guidelines and maintains a database of organizations that prepare CSR reports referencing those guidelines. According to "The Future of Corporate Sustainability Reporting" (Brian Ballou, Dan L. Heitger, and Charles E. Landes, Journal of Accountancy, December 2006,, in October 2006, approximately 1,000 organizations from more than 60 countries were registered with the GRI as issuers of CSR reports using the GRI's Reporting Guidelines. Of those, 100 were U.S. organizations.

As of April 2016, the number of organizations registered with the GRI had increased to 9,065, of which 909 were U.S. organizations. In addition, KPMG's 2013 "Survey of Corporate Responsibility Reporting" ( reported on global trends in CSR using information from the 100 largest companies in 41 countries. The survey found that, among the 100 largest U.S. companies, 86% issue a CSR report, compared to 71% of the largest companies in the 41 countries studied. Based on the high rates of CSR reporting, KMPG's publication suggests that CSR reporting "is now standard business practice worldwide."

Although the United States is among the global leaders in percentage of firms issuing CSR reports, it lags behind the global average in obtaining external assurance for these reports. According to the 2013 KPMG survey, the majority (59%) of the largest companies in the 41 countries studied opted to enhance the credibility of their CSR disclosures by obtaining external assurance, compared to only 23% of the 100 largest U.S. companies. The statistics in the KPMG report suggest that CSR assurance for U.S. companies could be a growth area in which CPAs can make a significant contribution.

Upcoming Changes to CSR Reporting Guidelines

In an effort to improve reporting guidelines and help organizations produce the most useful reports for stakeholders, the GRI issued its fourth update on sustainability reporting, the G4 Reporting Guidelines, in May 2013. Designed to address stakeholder sentiment that reports included too much information on issues that were not material, the G4 guidelines encourage organizations to focus on identifying and reporting on "material aspects" in order to make reports more focused and credible. Because the majority of CSR reports are prepared according to the Reporting Guidelines, CPAs should be aware of changes resulting from the transition from the G3.1 to the G4 guidelines. The official transition date was December 31, 2015, and the G4 Reporting Guidelines must be used for all reports issued thereafter.

The most notable change is the report classification system. Under the G3.1 Reporting Guidelines, CSR reporters could choose to include any number of predefined disclosures related to the entity's strategy and analysis; organizational profile; report parameters; governance, commitments, and engagements; management's approach to addressing each category of sustainability (economic, environmental, and social); and economic, environmental, and social performance indicators. Organizations measured their level of disclosure against the GRI's Application Level criteria and self-declared an application level (A, B, or C); in general, the more disclosures an organization included, the higher the self-declared application level. …

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