Questions about Materiality and topic Boundary

Has the Materiality principle changed?

The principles for defining report content and quality, including the Materiality principle, have not changed compared to G4. 

However, the following important concepts have been clarified with respect to the Materiality principle:

  • Definition of ‘impacts’ as related to materiality: It has been clarified that the term ‘impacts’ refers to the effects an organization has on the economy, the environment, and society – not to impacts on the organization itself (e.g., reputation). It is acknowledged that these impacts can also be related to consequences for the organization itself, but the latter are not the focus of the reporting activity. See page 27 in GRI 101: Foundation for the definition of ‘impact’.
  • Identifying material topics based on the two dimensions of the Materiality principle: It has been clarified that in order to apply the Materiality principle, organizations are expected to identify material topics based on the two dimensions in the principle: (1) the significance of the organization’s economic, environmental, and social impacts (as per the definition of ‘impacts’ provided) and (2) their substantive influence on the assessments and decisions of stakeholders. Other factors (such as the importance of an impact on the organization’s strategy) can be factored into this assessment, but they cannot replace altogether the two dimensions of the Materiality principle. A topic can be considered material based on only one dimension of the principle. Disclosure 102-46 in GRI 102: General Disclosures requires organizations to explain how they have applied the Materiality principle to identify material topics, including any assumptions made.
  • Reporting on material topics not covered by the GRI Standards: It has been clarified that organizations are required to identify and report on all material topics, which can include topics covered by the existing GRI Standards as well as other topics not yet covered. See pages 10-11 in GRI 101, and clause 2.5, which explains how to report on material topics not covered by an existing GRI Standard.

How and why has the concept of ‘Boundary’ changed?

The concept of ‘Boundary’ has evolved significantly since the first version of the GRI Guidelines. It is arguably one of the most challenging areas of sustainability reporting, and was inconsistently understood by G4 reporters. 

This concept has now been simplified in the GRI Standards, to be more clear and to align more closely with key international references.

The topic Boundary now requests a description of ‘where the impacts occur’ for each material topic, and ‘the organization’s involvement with the impacts. For example, whether the organization has caused or contributed to the impacts, or is directly linked to the impacts through its business relationships.’

The concept of ‘topic Boundary’ is based on the expectation that organizations have a responsibility not only for impacts they cause directly, but also for impacts they contribute to or that are directly linked to them through their business relationships – for example, with suppliers or customers. These concepts are covered in the UN ‘Guiding Principles on Business and Human Rights’ and the OECD Guidelines for Multinational Enterprises.

The topic Boundary can be found in Disclosure 103-1 of GRI 103: Management Approach. It also includes new guidance and examples for reporting the topic Boundary.