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GRI 204: Procurement Practices · 2016

Disclosure GRI 204-1

Proportion of spending on local suppliers

Practical guidance for preparing this disclosure. Use this card to identify datapoints, verify claims and organise supporting evidence. For exact requirements, always refer to the official GRI source.

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Reviewed by Dr Ross Kurinko · GRI Certified Trainer LRA educational guidance · Not issued or endorsed by GRI

To prepare this disclosure

3datapoints↓ 5claims to verify↓ 5evidence areas↓ 3report examples↓

Disclosure focus

This disclosure asks an organisation to explain how much of its purchasing spend goes to suppliers based in the same local area or country as its operations, compared with total procurement spend. The point is to show the share of spending that supports local supply chains, rather than simply naming a few local suppliers or describing a sourcing policy.

The practical focus is on the scope used for the calculation and whether it covers the organisation’s full operations or only selected sites, business units, or regions. A clear explanation of what counts as “local”, what spend is included, and how the figure was calculated helps readers understand the result and compare it with other reporting periods.

This LRA educational guidance supports disclosure preparation. For the exact requirements, always refer to the official GRI source.

Before you start

A quick mental checklist before you prepare this disclosure — tick each as you settle it.

Have you fixed which sites count as significant operating locations for this calculation? Have you agreed what counts as a local supplier for each site, in geographic terms? Have you chosen the spending period and the budget basis you will use for the percentage? Can you trace the spend figure back to source records for each included site? Have you checked that the local-supplier definition is applied consistently across all included locations?

Preparation

Key datapoints to prepare

Datapoint What to capture Evidence hint Owner

Local supplier spend share The share of procurement budget for each significant operating location that is paid to suppliers based in that same local area, with the numerator and denominator calculated on the same basis and period. Procurement spend reports, supplier master data showing supplier location, location-level budget or spend analysis, and any working paper showing how the local supplier set was identified. Procurement / Finance

Local area definition The exact geographic rule used to decide whether a supplier counts as local for this disclosure, stated in plain terms and applied consistently across all locations. Disclosure methodology note, internal policy or mapping that defines the local area, and any location-by-location interpretation guidance. Sustainability reporting / Procurement

Operating location scope The internal definition of which sites or business locations are treated as significant for this calculation, including any criteria used to include or exclude locations. Reporting boundary memo, site list, operational significance criteria, and sign-off from the team that owns the location inventory. Finance / Operations

＋ Show GRI 204-1 sub-elements (LRA working checklist)

How to prepare it

1Set the reporting boundary first: list the operating sites you will treat as in scope, and agree which of them count as significant for this disclosure.

2Write down your working definition of a local supplier, using a clear geographic rule that can be applied consistently across the sites you include.

3Pull together the procurement spend for the in-scope sites, then identify the portion paid to suppliers that meet your local-supplier rule.

4Calculate the share as a percentage of the relevant procurement budget, making sure the numerator and denominator are built from the same scope and time period.

5Keep the supporting records that show how the site list, local definition, spend figures, and percentage were derived, including any exclusions or changes in method.

6Check the final disclosure against the source requirement and confirm that the figures and definitions match the evidence before publishing.

Request the data

Request the local-supplier spend data

Translate the disclosure into an internal business question — then adapt it to your organisation's own language.

What share of our procurement spend in the reporting period went to suppliers we treat as local for each significant operating site?

Use your organisation’s own terms first, then map them to the disclosure. For example, if you say ‘site’, ‘region’, ‘branch’, ‘plant’, ‘depot’ or ‘business unit’, use those labels in the request and only translate them into the reporting wording when you prepare the final disclosure pack. Keep the ask in the language your procurement team and systems already use.

Weak request

Please provide the GRI 204-1 data for local suppliers.

Why it fails: It uses framework language only, gives no clue which team should act, and leaves out the practical details needed to produce a usable extract. The owner would still have to guess the period, the site list, the spend basis, the local rule, and the source system.

Better request

Please pull the [reporting period] procurement extract for our [sites / business units] showing total spend and the amount spent with suppliers we treat as local. Include the local rule, the site list, the source system, the spend basis, and any exclusions so we can calculate the local-supplier share for the reporting pack.

Formal email template

Subject: Request for local-supplier spend extract for [reporting period]

Hi [name],

Could you please share the spend extract for [reporting period] showing, for each [site / business unit / operating location] we treat as significant, how much of the procurement spend went to suppliers we classify as local?

Please include:
- the list of sites in scope;
- the rule you use to treat a supplier as local;
- the spend basis used in the extract;
- the source system(s) and report date;
- any exclusions applied;
- the total spend and the local-supplier spend for each site;
- a short note explaining how the site list and local rule were defined.

If the data is easier to pull in your usual format, that is fine — we can map it for the reporting pack. Please also confirm the person who can sign off the extract.

Thanks,
[preparer name]

Short Teams / Slack version

Hi [name] — could you send over the [reporting period] spend extract for our [sites / business units] showing total procurement spend and the amount with suppliers we treat as local? Please include the local rule, source system, exclusions, and a note on how the sites were defined. We can map your usual fields into the reporting pack. Thanks.

Industry examples

Manufacturing

Context. A group with a main plant, a packaging line, and a regional warehouse wants site-level procurement data.

Adapted request. Please provide the [reporting period] spend extract for the plant, packaging line, and warehouse showing total procurement spend and the amount with suppliers we classify as local. Include the local rule, the site list, the source system, the spend basis, and any exclusions.

Example response. Plant: total spend GBP 12,000,000; local-supplier spend GBP 3,600,000; local rule: supplier registered in the same country as the site; site definition: main production site. Packaging line: total spend GBP 2,500,000; local-supplier spend GBP 900,000. Warehouse: total spend GBP 4,000,000; local-supplier spend GBP 1,100,000.

Retail / Distribution

Context. A retailer with a head office and several distribution centres wants spend data by operating location.

Adapted request. Please send the [reporting period] procurement summary for head office and each distribution centre, showing total spend and the amount with suppliers we treat as local to that location. Please include the local rule, the location list, the source system, the spend basis, and any exclusions.

Example response. Head office: total spend GBP 8,000,000; local-supplier spend GBP 1,200,000; local rule: supplier within the same metro area as the site. Distribution centre A: total spend GBP 5,000,000; local-supplier spend GBP 2,000,000. Distribution centre B: total spend GBP 6,500,000; local-supplier spend GBP 2,275,000.

Draft your disclosure

Notes that turn data into a disclosure

LRA training templates — adapt them to your organisation, and check the official source before sign-off.

Method note

State how you identified the important operating sites, how you decided what counts as nearby supply, and how you calculated the share of procurement spend for each site.

Context note

Explain what the figures indicate about how much of the procurement budget at key sites stays within the surrounding area, and what that suggests about local sourcing patterns.

Fluctuation statement

If the share changes materially from one period to the next, note whether this is linked to changes in the sites covered, the local-area definition, supplier mix, or purchasing volumes.

Content index entry

GRI 204-1 Proportion of spending on local suppliers — [location / page] / [notes]

Download Centre

Preparation tools & forms

Professional preparation tools for GRI 204-1 — free with an LRA Community membership. Register once (it's free) and every download unlocks, together with the Disclosure Library, templates and the LRA AI-assistant.

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01XLSPrep & Assurance workbookDatapoints, risks, evidence to check, owner and evidence pack.Get it free ↧ 02XLSData-request packRequest email, message template, response fields and sign-off structure.Get it free ↧ 03PDFLibrary CardPrintable one-page summary of this disclosure card.Get it free ↧

Assurance readiness

For each claim, check the evidence

ClaimRiskEvidence to check

We calculated the coverage figure using only the spend linked to the sites we treated as in scope, and we matched that spend to suppliers we classified as local for those sites.An assurer will test whether the in-scope sites were selected consistently, whether the spend base is complete, and whether the local-supplier classification was applied in the same way across the dataset.Scope list for the sites included; procurement extract showing the spend base used; supplier master data or mapping showing local/non-local status; calculation workbook with formulas; review notes showing how exceptions were handled.

For the local-supplier split, we used a documented geographic rule and applied that rule consistently when tagging suppliers.An assurer will probe whether the geographic rule was defined before the calculation, whether it was applied consistently, and whether any supplier locations were ambiguous or manually overridden.Written definition of the geographic rule; policy or methodology note; supplier address/location records; tagging logic or system report; evidence of any manual judgments and approvals.

We used a documented business definition to decide which sites counted as in scope, and we kept that definition with the working papers supporting the figure.An assurer will check whether the site-selection rule was clear, whether it was applied consistently, and whether the final list of sites agrees with the underlying records and reporting boundary.Definition note for the site-selection basis; list of included and excluded sites; boundary or consolidation papers; management sign-off on the scope decision; reconciliation between the site list and the calculation file.

Before publication, we checked the figure back to source records and reviewed the working to make sure the disclosed number was arithmetically sound.An assurer will look for evidence of completeness, mathematical accuracy, and review controls before release, including whether the published number can be traced to source data without unexplained adjustments.Source invoices or spend reports; reconciliation from source data to the published figure; calculation checks; review and approval evidence; version history showing the final pre-publication file.

We retained the supporting evidence for the coverage figure, including the scope decisions, the local-supplier rule, and the calculation trail, so the result can be re-performed.An assurer will test whether the audit trail is sufficient to re-create the figure and whether the retained evidence covers both the assumptions and the underlying data.Document pack or evidence index; archived calculation files; methodology note; approvals for scope and definitions; data extracts used in the calculation; retention location and access controls.

Evidence pack to prepare

The governing policy or written commitment behind this disclosureA methodology / definition note setting out how the disclosure was scoped and preparedSource-system exports the figures or facts were drawn fromThe internal approval / sign-off record for the disclosure before publicationMinutes or records evidencing the relevant engagement or consultation

Common reporting gaps

A percentage is stated without the underlying counts (numerator and denominator).The denominator — what the figure is a share of — is not explained.Partial scope is reported as if it were complete coverage.One-off activities are counted as if they were ongoing programmes.Boundary or period changes that move the figure are not flagged.Exclusions from the reported scope are not listed or explained.

Common gaps

Mistakes to avoid when collecting the data

Wrong owner

The request goes to the procurement team in framework language, but the people who actually hold the spend data, supplier master, or site list are never brought in.

No scope set

The team starts pulling figures before agreeing which operating sites count and which supplier spend lines sit inside the calculation.

Local not defined

Different sites use different ideas of what counts as local, so the same supplier can be treated one way in one place and another way elsewhere.

Wrong time basis

The spend period is taken from a different reporting cycle than the supplier and site records, so the numerator and denominator do not line up.

Mixed counting basis

Some teams use invoice value, others use budget or purchase order value, which makes the percentage impossible to compare across sites.

Source labels lost

The original file names, site codes, and supplier tags are stripped out during consolidation, so the calculation cannot be traced back to the source records.

Populations merged

Spend from sites that should be assessed separately is rolled together, hiding differences between locations and distorting the local-supplier share.

No evidence trail

The working papers do not keep the definition notes, extracts, or reviewer sign-off, so nobody can show how the figure was assembled.

Where judgement is often needed

Set the site list before calculating the share

Explain which operating sites you treated as in-scope, and if that list changed through a purchase, sale, opening or closure, say which version of the site list sits behind the figure.

Define what counts as local in each country or region

State the geographic rule you used for each operating area, especially where a single country-wide rule would not reflect how buying is organised on the ground.

Decide how to treat mixed-location suppliers

If a supplier serves more than one site or has multiple trading locations, explain whether you used the branch closest to the site, the supplier’s registered address, or another practical rule.

Choose the spending basis and keep it consistent

Make clear whether you used orders placed, invoices approved, or payments made, and use the same basis across the calculation so the percentage is comparable.

Explain any estimates used for hard-to-tag spend

Where purchase data cannot be cleanly split by site or supplier location, describe the estimate or allocation method used and note that it is an approximation.

Show how you handled group-wide or central buying

If head office or a shared buying team places orders for several sites, explain how you assigned that spend to the relevant operating location, or why it was left out.

State the cut-off date and treatment of late postings

Clarify the period covered and how you dealt with late supplier invoices, credit notes, or other timing differences that could move spend between periods.

Be explicit about rounding and small differences

Say how you rounded the percentage and whether minor differences arise from rounding, so readers can reconcile the published number to the underlying totals.

Protect supplier confidentiality through aggregation

If naming or separating local suppliers would expose commercially sensitive information, explain the level at which you aggregated the data and how that still supports the reported percentage.

Examples

Illustrative examples

Synthetic, written by LRA — not from a company report, not text from any standard.

Illustrative (synthetic) example — Food manufacturing

*Synthetic illustration only.* For our main production sites, we treat a location as local when the supplier is based within 100 km of that site. We define a significant operating location as any site that accounts for at least 10% of group procurement spend in the year; under that approach, our three qualifying sites together had a procurement budget of £120 million, of which £78 million was spent with local suppliers, or 65%. - This example is written in the first person and is purely illustrative. - The figures are internally consistent and rounded to whole percentages.

This example shows how a reporter can explain the boundary used for important sites, define what counts as local, and state the share of spend with nearby suppliers for those sites.

Illustrative (synthetic) example — Utilities

*Synthetic illustration only.* In our network operations business, we treat a site as significant if it represents at least 5% of annual external purchasing in the country where it sits. For those sites, we use a local-supplier test of the same country or within 50 km of the site, depending on which is more practical for the market. Across the four sites that met our threshold, the procurement budget was £200 million and £110 million went to suppliers meeting that local test, which is 55%. - This is a made-up example for training purposes. - The numbers are consistent and the percentage is calculated from the stated amounts.

This example demonstrates a different way to describe the site threshold, the local geography, and the resulting proportion of spend directed to suppliers that meet the local test.

Company reports

How companies report GRI 204-1

Real reports where this topic is disclosed. These are report practice, not exact disclosure templates to copy.

WNC Corporation

Technology Hardware and Equipment · Taiwan · 2024

Open report →

WNC Corporation’s 2024 Sustainability Report provides a clear figure for local procurement at its headquarters, which stands at 45%, and notes that 195 RMAP-conforming smelters account for 99.0% of the total, indicating strong supplier compliance (p.44). The report also includes a water recycling rate calculation based on recycled water volumes, including cooling water, supported by rainfall statistics (p.75). However, while there is some narrative on recyclable waste definitions aligned with local regulations, no headline value or comprehensive data on waste generation is provided (p.78).

Snam S.p.A.

Gas Utilities · Italy · 2025

Open report →

Snam S.p.A.'s 2025 Annual Report provides a percentage value for total spending on significant Tier 1 suppliers, reported as 78% and 64% on page 400. The report also includes narrative information on the geographical context, noting that 100% of the regulated business was included in the scope of analysis (p.314), and mentions that certain indicators, such as those related to competitive behaviour and environmental volumes, are not applicable to Snam (p.477). However, the report does not clearly address some other potential disclosure elements, such as detailed impacts on local communities or specific environmental incidents beyond noting no significant spills occurred (p.496).

Compal Electronics, Inc.

Technology Hardware and Equipment · Taiwan · 2025

Open report →

Compal Electronics, Inc.'s 2025 ESG Report includes a covered datapoint on the proportion of spending on local suppliers, referenced on page 210. The report also discusses responsible supply chain management and supplier audits on pages 193 and 201, indicating some attention to procurement practices. However, there is no clear narrative or methodological explanation found in the report regarding procurement practices, as these elements are marked unclear or not found.

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Check your understanding

Scenarios to work through

A group has three major operating sites. For the year, the procurement team spent £10 million across those sites, and £3.4 million went to suppliers that the organisation treats as local to those sites. The team also has a written note explaining what counts as local and which sites are treated as significant.

QShould the disclosure show 34% and include both the local-area definition and the rule used to decide which sites are in scope?

Reveal model answer →

A preparer has the spend data for two large plants but not for a third warehouse that management considers minor. The warehouse is excluded from the calculation, yet the team has not documented why it was left out.

QCan the disclosure be completed without stating how the organisation decided that the warehouse was not a significant operating location?

Reveal model answer →

The finance team can calculate total procurement spend for the year, but local-vs-non-local coding was only applied in one region. The remaining regions use different supplier records, so the team cannot yet produce a single organisation-wide percentage.

QShould the preparer publish a partial figure now, or wait until the same local-supplier basis can be applied across all significant sites?

Reveal model answer →

An organisation defines local suppliers as those based within the same country as the operating site. For one site, however, the team has been using a 50-kilometre radius instead, and both methods produce different results.

QWhich local definition should be used in the disclosure, and what should happen if the method changed during the year?

Reveal model answer →

Framework references