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Question: The Global Reporting Initiative is an international not-for-profit organisation that has pioneered and developed the worlds most widely used voluntary Sustainability Reporting Framework. Answer: 1. Introduction The Global Reporting Initiative (GRI) is a nonprofit organization that introduces the accounting guidelines for the economic sustainability reporting of the companies. The organization produces the widely used standards for sustainability reporting which is also known as ecological footprint reporting, environmental social governance reporting, triple bottom line reporting and CSR reporting. Ward (2010) opined that GRI Focal Point Australia works effectively to bring about rules of sustainability reporting within the Australian organizations and also introduce rules to upgrade the sustainability disclosure of the Australian organizations. The report here focuses on the analysis of application of voluntary guidelines in alteration of the information of Flight centre 2014. Further the report evaluates the benefits of the investors in complying with sustainability reporting. The report also focuses on the negative aspects of the global reporting initiatives in the concluding part. 2. Concept of sustainability reporting With the increasing demand for the large requirement for environmental and global initiatives, sustainability reporting has become an important part of the global accounting system. The companies abiding by the rules of sustainability reporting should include Global reporting imitative (GRI), Carbon Disclosure project (CDP), UNCTAD or environmental accounting, the sustainability consortium and International integrated reporting (Adams, 2013). Sustainability reporting is considered to be the practice of measuring disclosing and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development (Cohen, 2013). Figure 1: GRI reporting framework (Source: Horngren , 2013, pp-36) According to Horngren (2013), the GRI reporting framework was intended to serve as a widely accepted process of accounting that will help the investors and stakeholders to judge the companies from different industries under a standard parameter. The GRI reporting initiatives allowed the companies to make sector specific report. The mandatory disclosure norms made the companies suffer economically as well as socially. Alstine (2009) opined that it was seen that the investors reacted strongly to poor environmental performers denying those companies any kind of monetary help. The negative incidents and disclosures were more effective than the negative financial disclosures. As per the signaling theory the negative aspects of the present can be mitigated in the future however the mandatory disclosure was making it difficult for the companies to attract potential investors and shareholders. Amran Haniffa (2011) opined that in some cases the reporting of the negative aspects may be recorded as a positive signal for the future and it may suggest that the companies will be able to manage risks effectively an avoid any kind of future issues. 3. G4 guidelines established by GRI As per Bloomberg Press release GRI updated the existing sustainability reporting guidelines in May 2013 to establish a new set of guidelines namely the G4 guidelines which provides organizations to voluntarily report on their environmental, social and governance performance (Hopwood, 2009). The amendment of the guidelines have made the GRI reporting more practical for the organizations thereby encouraging the organizations to report only the information that are material to the business. The G4 guidelines also include new or updated disclosures on governance, greenhouse gas emissions and supply chain issues. As per the guidelines of G4 the companies are presently required to include the following disclosures in the sustainability report. The energy consumption unit of an organization or the energy used per unit of a product of service within the organization (Bamford Szilagyi, 2010). The intensity of greenhouse gas emissions and the extent of gas emissions of the organization Percentage of new suppliers screened using environmental criteria Important environmental impacts on the supply chain process of the organization Other sustainability related issues According to Duran-Encalada Paucar-Caceres (2011) The G4 guidelines contains the following subparts namely Focus on material aspects This section states that an organization will indentify relevant topics for financial reporting based on their impact on the internal as well as external aspect of the organization. According to Ward (2010) the organizations face dilemmas regarding the availability of the large number of topics which it can report within the sustainability report. However Alstine (2009) opined that relevant topic s and indicators are those that may reflect the economic, environmental and social impacts and may influence the decision of the stakeholders and hence should be included in the report. In accordance scheme Cho et al. (2010) opined that the current (A, B, C) application levels rules initiated by the G3 rules will be replaced by the in accordance scheme which will involve two tiers namely core which is the easier level and the comprehensive which is a high level. The G4-34 to G4-55 provides the guidelines for the same. Consideration of indirect activities Previously the G3 guidelines provided the companys to make sustainability disclosures for only the direct activities however the G4 guidelines G4 12 and G4-EC 9 provides rules for the indirect activities like the reporting for entire value chain system. The sustainability reporting for the value chain system will help the investors to understand the environmental sustainability f the production and the delivery process (Duran-Encalada Paucar-Caceres, 2011). The end product is expected to be sustainable if the value chain system is sustainable in nature. New and revised Standard disclosures Previously the G 3 initiatives required the companies to make disclosures in three segments namely Strategy and profile of the company, Management approach and performance indicators of the company (Globalreporting.org.2015). The guideline under G4- 56 required the companies to compulsorily make disclosures related to ethics and integrity and G4-S03to G4-S06 requires the companies to make disclosures relating to the anti corruption practices and public policy (Lund Nadvi, 2010). Moreover the G4-EN3 to G4- EN 21 requires the companies to report for any kind of Green house gas emissions and also the extent to which the companies are responsible for the emissions. Disclosures on management Approach (DMA) The new guidelines focus on three major reporting frameworks namely Describing why an aspect is material How the aspect is being managed How the management reviews and improves the management approach (Dingwerth Eichinger, 2010). 4. Effect of G4 guidelines on Flight Centre annual report 2014 Flight centre Limited is an Australian travel agency group with around 2000 business in around 11 countries. The company provides a pleasurable travel service to the business travelers in Australia, New Zealand, United States, Canada, UK, South Africa, China, India and Dubai. On reviewing the annual report 2014 of Flight centre it was found that the company has followed the standard guidelines relating to the G3 guidelines of GRI. However with the advent of the new guidelines under G4 the company will have to make the following changes in the annual report (www.flightcentrelimited.com, 2015). The following initiatives taken by Flight Centre to make its business sustainable affect both internal as well as external stakeholders of the company. Hence these initiatives should be reported under the G4 guidelines in the annual report of the company. 1. Standard disclosures Carbon emissions: G 4-EN3 requires Flight centre to disclose information relating to carbon emissions. The company is working to reduce the office related carbon emissions by teaming up with the Cleaner climate Ltd to provide the company with a carbon emission calculator. Moreover the company has taken the initiate to install solar energy bulbs and compact fluorescent light bulbs (CFLs) and engaged into energy renewable projects in order to make the business sustainable. Bamford Szilagyi (2010) opined that under the new guidelines the company needs to mention these activities in the annual report under the standard disclosure norms. Office environmental policy: The Company has established certain recycling and waste management policies for the internal staffs of the office namely Ensuring the availability of recycling bins in all accessible office areas Usage of email for external and internal communication has reduced the wastage of paper Practicing double sided printing to save paper consumption Using recycled, unbleached paper for printing purposes Donations of old computers and cell phones to charities for re use Usage of large recyclable milk carton instead of creamers in office kitchens (Burritt, 2010). Energy consumption unit: The standard disclosures also requires Flight centre to report about the units of energy consumed. To make sustainability energy consumption the company has focused on minimizing the usage of ACs, Installation of multipurpose devices to reduce the number of appliances, using sensor lighting and installation of blinds to reduce cooling and heating costs (Adams, 2013). 2. Environmentally sustainable shop design Flight centre has initiated an environmentally sustainable design program for its retail shops at different locations (Ward, 2010). The system provides guidelines relating to usage of Fit out materials including timber usage, waste management, lighting and signage and usage of sustainable water supply equipments. 3. Sustainable supply chain system Flight centre has introduced the environmental Supplier Award for the potential suppliers who engage in environment friendly activities. The award recognizes the supplier that has made the greatest effort to minimize their environmental impact. The company has a corporate travel management network that spans in more than 75 countries. The value chin system of the company works proactively on mutually beneficial business partnerships with suppliers having the same kind of financial and sustainability goals and values (Globalreporting.org. 2015). 4. Disclosures on management approach The company also needs to report on the disclosure for management approach. This section will require the company to make full disclosure of the facts like the importance of the facts that are disclosed and the ways the company is managing the disclosed facts (Burritt, 2010). In relation to this norms Flight centre should make the facts important because they will affect the environment and the internal management of the company as well as the stakeholders decision. The company will also show the initiatives taken by the management to control the negative impact of business process on the supply chain and sustainability of the company. 5. Evaluation of benefits of sustainability reporting to investors Adams (2013) opined that sustainability reporting is an important step towards achieving of the sustainable global economy. The major stakeholders of the companies that is the government, investors and suppliers are highly benefited from the sustainability reporting system. The following are the benefits for the sustainability reporting to the stakeholders Generation of trust Ward (2010) suggested that the full disclosure of all the direct as well as indirect activities of the companies makes the financial report transparent and can generate a sense of trust among the users of the information. The transparency of the report also helps to reduce reputational risks and demonstrate openness and accountability. Competitive advantage The companies gets an added competitive advantage over the other companies of attracting investment, initiating new activities, entering new markets and negotiating contracts with the help of GRI reporting (Lawrence Beamish, 2013). The investors and the stakeholders are ready to supply capital and make long term investments in these companies because they have a clear view of the financial as well as the non financial aspects of the company. Fulfilling the needs of the stakeholders Sustainability reporting helps the companies to fulfill the basic demands of the stakeholders thereby creating a positive image in the mind of the stakeholders. According to Burritt (2010) the stakeholders demand more transparency from profit and not for profit entities. They further demand for the economic sustainability and social sustainability compliance from the business. Improvement strategies The use of the GRI guidelines helps the organizations to highlight the weaknesses within the b business and also calls for improvement that can enhance the future performance of the company. The analysis of the level of energy consumption, wastage and environmental pollution will help the company to introduce new sustainable methods for controlling of the wastage and increase the goodwill of the company (Globalreporting.org. 2015). Enhance reputation A survey conducted in 2011 on corporate reputation showed that expansion of business activity transparency and recording of good deeds were the two most effective ways to create a positive image in the mind of the investors and concerned stakeholders particularly the customers of the business (Hopwood, 2009). In the year 2013 the survey by Earnest and Young showed that around 50% of the respondents issuing sustainability reports suggested that the adoption of the sustainability reporting has helped them to improve their reputation among the stakeholders. Employees expectations fulfillment As per the survey reports of EY and GreenBiz in 2011 the sustainability reporting is also beneficial for the internal employees of the organization. They are regarded as one of the major stakeholders as well as the backbone of the company (Lawrence Beamish, 2013). The report helps the employees with information like environmental activities of the company and also makes them aware of the goodwill and future expansion plans of the company. This helps the employees to feel connected with the company and work with loyalty (Hopwood, 2009). Improved access to capital The companies high on sustainability have higher probability of securing capital form both local as well as foreign institutional investors since the investors are certain about their returns from the company. The potential investors will also find it helpful to make decisions as to long and short term investments (Hopwood, 2009). The GRI guidelines helps the investors to assess the risks related with the investments in a particular company and also the risk of loss of reputation can be assessed by the investors before they take a long term investment decision. Creating and maintaining shareholder value Adams (2013) suggested that the investor presentations, quarterly earnings, quarterly spending on sustainable activities, carbon emission rates, electricity usage rates, employee engagement techniques, announcements and press releases, socially responsible investment surveys, social projects and periodic reports on stock exchange and security analysis helps to increase the shareholders value and make them well informed about the current status of the company. It also provides an insight into the future status of the company. 6. Conclusion The report shows the benefits of the sustainability reporting system and also focuses on the revised guidelines that are implemented by the new G4 guidelines. However the there are also certain negative factors associated with the process of sustainability reporting. Since sustainability reporting integrates the reporting and transparency of all business activities so at times it may be found that some kind of negative activity of the business has been reported in the process. The publication of negative reports not only effects the reputation of the company abut also affects the related stakeholders specially the investors and the customers of the business. Before the introduction of the G4 initiatives the companies were required to make mandatory disclosures of the sustainable reports. This gave rise to reporting of many negative incidents like use of a deplorable resource or mistreatment of the employees within the organization. However the introduction of the voluntary reporting system has integrated the whole policy and has also made it possible for the companies to include only the aspects which are economically, environmentally or socially beneficial or influence the decision of the investors or the stakeholders. Reference list Books Burritt, R. (2010). Sustainability accounting auditing and accountability. Bradford: Emerald Group Pub. Cohen, E. (2013). Understanding G4. Oxford: Do Sustainability. Horngren, C. (2013). Accounting. Frenchs Forest, N.S.W.: Pearson Australia. Lawrence, J., Beamish, P. (2013). Globally responsible leadership. Thousand Oaks, Calif.: SAGE Publications. Ward, S. (2010). Global journalism ethics. Montreal Kingston: McGill-Queen's University Press. Journals Adams, A. (2013). Sustainability reporting and performance management in universities. Sustainability, 4(3), pp-384-392. Alstine J. V. 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