GRI Standards: Enhancing Transparency and Accountability in Business
In an era where sustainability is a fundamental aspect of business strategy, organisations worldwide are turning to sustainability reporting to communicate their environmental, social, and governance (ESG) performance. Amidst the various frameworks and guidelines available, the Global Reporting Initiative (GRI) standards have emerged as a leading tool for transparent and comprehensive sustainability reporting.
According to a 2022 brochure on the GRI website, 73% of the largest 250 companies in the world reporting on sustainability used GRI, and 67% of the largest 100 companies in 52 countries reporting on sustainability used GRI. Hence, GRI has become the leading global standard for organisations to report their economic, environmental, and social impact.
GRI was established in 1997 as an independent, international organisation that helps businesses and other organisations globally take responsibility for their impacts. It provides them with a global common language to communicate those impacts. The headquarters of the GRI secretariat is in Amsterdam, the Netherlands, and it has seven regional offices, ensuring strategic support for stakeholders and organisations worldwide.
The GRI Sustainability Reporting Standards (GRI Standards) help organisations increase their transparency, communicate their contributions, and make sustainable decisions. By providing a structured and standardised way for organisations to report their ESG impacts, stakeholders can assess their sustainability performance effectively. This enables companies to demonstrate their contributions towards environmental stewardship and societal well-being.
The GRI standards are divided into three sections: Universal, Sector, and Topic standards. It is an interconnected, modular system. The three universal standards are used by all organisations, but they choose the sector and topic standards that are most applicable to their circumstances.
This introduces the purpose, system, requirements, and reporting principles of GRI Standards and explains key concepts for sustainability reporting such as impact, materiality, stakeholder engagement, and due diligence.
The Reporting Principles of the GRI Standards are:
● Accuracy
● Balance
● Clarity
● Comparability
● Completeness
● Sustainability Context
● Timeliness
● Verifiability
GRI 2-General Disclosures 2021
It contains disclosures about the reporting practices and other organisational details, such as its activities, governance, and policies. It gives insight into the profile and scale of the organisation and provides a context for understanding the organisation’s impacts.
The disclosures are:
1. The organisation and its reporting practices: Disclosures 2-1 to 2-5
2. Activities and workers: Disclosures 2-6 to 2-8
3. Governance: Disclosures 2-9 to 2-21
4. Strategy, policies, and practices: Disclosures 2-22 to 2-28
5. Stakeholder engagement: Disclosures 2-29 and 2-30
It provides information on the list of material topics, how an organisation manages each topic, and guidance on how to determine material topics.
Guidance to determine material topics:
1. Understand the organisation’s context.
2. Identify actual and potential impacts.
3. Assess the significance of the impacts.
4. Prioritize the most significant impacts of reporting.
Disclosures on material topics:
1. Process to determine material topics: Disclosure 3-1
2. List of material topics: Disclosure 3-2
3. Management of material topics: Disclosure 3-3
The organisation uses the sector standards that apply to its sectors. It provides information to the organisations about their likely material topics and what information to report on the material topics. If a sector standard is not available for any industry, then the industry should select a topic standard relevant to their organisation.
Currently, the sector disclosures are available for:
● GRI 11: Oil and Gas Sector 2021
● GRI 12: Coal Sector 2022
● GRI 13: Agriculture, Aquaculture, and Fishing Sectors 2022
It contains disclosures on specific topics to report information about the impacts. A wide range of topics is covered by topic standards. They are used according to the list of material topics determined by the organisation using GRI 3.
Examples of topic standards are:
● GRI 201: Economic Performance 2016
● GRI 207: Tax
● GRI 301: Materials 2016
● GRI 305: Emissions 2016
● GRI 401: Employment 2016
● GRI 418: Customer Privacy 2016
● Consistent performance measurement
● Improved risk management
● Higher motivation and employee engagement
● Strategic decision-making
● Enhanced reputation
● Enhanced brand name and product image
● Higher capital attraction
● Higher stakeholder engagement
● Ensured regulatory compliance
Why Does the GRI Stand Out Among Other ESG Reporting Frameworks?
GRI focuses on the importance of identifying and reporting material topics which helps organisations to report on issues that are relevant to their business and stakeholders. This ensures that sustainability reporting is meaningful and actionable.
2. Disclosing KPIs for Each Material Issue
GRI provides guidance on disclosing Key Performance Indicators (KPIs) for each material issue identified through the materiality assessment process. It helps companies provide meaningful metrics and data and track their progress over time.
3. Mapping with Other Frameworks
GRI is compatible with other reporting frameworks, allowing companies to map their reporting to multiple standards and initiatives. GRI’s flexibility in mapping with other frameworks enhances its utility and relevance in the broader landscape of ESG reporting and helps in benchmarking against industry peers.
4. Alignment with Intergovernmental Targets
GRI aligns with intergovernmental targets such as the UN Sustainable Development Goals (SDGs), the Paris Agreement on climate change, the Convention on Biological Diversity, and the Universal Declaration of Human Rights.
While GRI Standards have gained widespread recognition and adoption, challenges remain. These include the complexity of reporting requirements, data management issues, and the need for greater alignment with other reporting frameworks.
Looking ahead, future trends in sustainability reporting may include increased emphasis on climate-related disclosure, alignment with the Sustainable Development Goals (SDGs), and the integration of emerging topics.
As the landscape of sustainability reporting continues to evolve, staying informed about GRI standards and best practices will be essential for organisations seeking to navigate the complex terrain of sustainability with integrity and impact. As businesses face growing pressure to address sustainability challenges and demonstrate accountability to stakeholders, the importance of transparent and comprehensive reporting cannot be overstated.
By embracing GRI reporting principles and practices, organisations can play a vital role in advancing global sustainability goals. Whether a company is approaching a sustainability report for the first time or wants to improve the quality of its reporting, these standards provide a robust framework for organisations to effectively communicate their sustainability performance, drive positive change, and contribute to a more sustainable future.