What are GRI Standards?

The Global Reporting Initiative (GRI) is an international, independent, not-for-profit organization that provides widely adopted sustainability reporting standards. More than 10,000 companies in more than 100 countries participate in GRI reporting. Since launching its reporting standards in 1999, GRI's mission has been to advocate for the broad adoption of high-quality sustainability reporting. GRI reporting is voluntary but allows various companies to be more transparent about their economic, environmental and social impacts. Reporting under GRI Standards helps organizations understand and communicate their impact on a wide range of sustainability issues such as climate change, resource use, human rights, occupational safety, data privacy, community development and more.

GRI was founded by Ceres and the Tellus Institute in 1997 following the Exxon Valdez oil spill, with later involvement of the United Nations Environment Program (UNEP). Today, GRI reporting is a sustainability and transparency tool for business partnerships under the UN Global Compact. It allows companies to use GRI reports for the UN Global Compact's annual reports on progress  (CoP) . As one of the first disclosure tools, it is compatible with many new disclosure mechanisms, such as the Task Force on Climate-related Financial Disclosures  (TCFD) and many other business-focused sustainability reporting guidelines  . GRI Standards also support companies making progress towards the UN Sustainable Development Goals. In fact, GRI partnered with the UNGC to develop the Sustainable Development Goals Action Platform.

Sustainability and GRI

GRI sustainability reporting helps companies become self-aware and better communicate their sustainability performance. As sustainability reporting evolves from a “nice to have” to a “must have,” companies using GRI standards have the opportunity to review and evaluate sustainability and transparency for investors, customers and B2B partners in their annual risk assessments.

GRI provides a modular reporting system with criteria for different sectors and topics   . It requires companies to focus their reporting on specific priority issues and allows them to compare their performance with other companies in their industry. In short, GRI helps companies measure whether their sustainability goals are aligned with their practices.

Three GRI reporting standards

GRI publishes verifiable and comparable sustainability reporting standards. Companies usually make disclosures annually, some every two years. Disclosure of reporting frequency is required by GRI, but companies have the option to share their reports on the GRI website. This allows companies in the same industry to compare their performance and increases corporate transparency.

GRI reporting begins with General Disclosures. It summarizes a company's reporting principles and sets the stage for three reporting standards: Universal, Industry and Subject Matter Standards. In all companies, Universal Standards, Subject and Sector standards are used as additional reporting criteria. Universal Standards include key sustainability considerations regarding a company's impact on the economy, society and the environment. These standards  contain all the essential content. All participating companies report on Universal Standards. Companies then have the option to report on their own industry or on different topics. GRI provides companies with composable, modular, interconnected standards, allowing companies to focus on the areas they are most concerned about.

GRI currently focuses on sectors with the highest environmental impact, such as fossil fuels. Topic standards represent all potential priority topics compiled by GRI. Companies select disclosures from the Subject Matter Standards based on their Material Assessments. Once the reports are completed, companies can make the reports publicly available on the GRI website or opt for third-party review. Third-party assurance is becoming a mandatory reporting step for companies that sign up. GRI Standards and reporting criteria are reviewed every three years by the Global Sustainability Standards Board (GSSB), an independent body established by GRI.

Who can use GRI Standards?

Any organization or company, private or public, of any size or geography can participate in GRI reporting, and the standards are available in twelve languages.

GRI Standards are the reporting tool overwhelmingly preferred among leading companies. It emerged as i. A  KPMG report on sustainability reporting tools in 2022 showed that 78% of the world's 250 largest companies published a GRI report; this rate was 73% in 2020. 96% of the top 250 companies on the list report on their ESG and sustainability activities. Recent years have seen an increase in GRI reporting in Saudi Arabia, the UAE and India.

80% of companies using GRI Standards disclosed their emissions in scope 1, scope 2 and scope 3 categories. While a variety of sustainability reporting tools exist, GRI and other reporting mechanisms now allow companies to link GRI reports to CDP and SASB disclosures, increasing the uniformity of sustainability disclosures for companies.

GRI reporting can be used as a way to evaluate various company activities. The EU requires sustainability reporting across financial and non-financial indicators through the SFDR and CSRD, which covers most large and medium-sized EU-based companies. These regulatory requirements include comprehensive GRI-compliant sustainability disclosures such as economic, social and environmental indicators. Additionally, scope 1-3 emissions criteria are now a reporting obligation under these EU policies. The US  SEC  recently proposed a rule for publicly traded US companies to report scope 1 and 2, and possibly scope 3 emissions, along with disclosures about climate risk exposure.

Steps in GRI reporting

All sustainability reporting, whether GRI or another reporting tool, is the result of months, sometimes years, of work. Sustainability reporting requires deep reflection on corporate strategy and operating practices; Therefore, it is important to allocate sufficient time for information gathering and interaction across your organization and with key external stakeholders. Before embarking on a GRI reporting assessment, companies should consider and review all GRI reporting criteria and requirements, including the overall GRI reporting system.

If you don't have a lot of time and data, start small. GRI has a basic reporting option that requires companies to disclose only one KPI for each material topic. First, it is vital that priority issues are identified through a prioritization assessment; these are the areas where a company's activities have the most significant impact on the environment, economy and people. After identifying these materiality topics, companies   determine their sustainability priorities with stakeholders to better determine which priority topics to include or exclude from their reports.

All companies start the reporting phase with Universal GRI Standards. Where appropriate, companies can contribute to sector-specific GRI reports and subsequently to optional Topic reporting criteria. Topics include disclosures on climate change, water, taxes, business practices and waste, among others. It's important to think ahead about what modular options your company will use. This will help you determine your overall scope, timeline, the stage at which stakeholders will be involved, and decide whether you need to outsource it.

Once the reports are completed, companies can make their reports public and submit them for review. All reports must include a searchable index. If a reporter chooses not to disclose certain criteria, he or she may state why. Reports with such exclusions are still considered complete. All can be published on the GRI website and undergo third-party assurance and review.

Three GRI Standards

GRI Standards  consist of three series of standards: Universal, Industry and Subject Matter Standards. The Universal Standards contain a set of general disclosures that are mandatory for all reporters. Industry Standards contain additional explanations for specific industries. GRI has prioritized sector-specific standards primarily for the highest impact industries  : oil and gas, coal, as well as agriculture, aquaculture and fisheries. Sector standards for the mining industry are currently being developed, with the financial and textile industries to follow later in 2023. Although the topic standards list disclosures on a wide range of potential material topics, companies that identify topics not listed by GRI are required to report on those topics as well. .

In GRI reporting, Universal Standards are the starting point of all reporting. These standards will be adopted in 2021 to better develop reporting criteria and reflect new sustainability reporting requirements in the EU. updated. These standards include key indicators of environmental, social and economic impacts. Industry standards are made if applicable to the business in question. Subject-specific reporting is optional.

Benefits and shortcomings of GRI

Although it may seem paradoxical, GRI offers companies adaptable standards for unique circumstances and impacts while also requiring a standardized set of disclosures from all companies. Sustainability reporting is increasingly becoming a regulatory requirement rather than a voluntary expression of a company's sustainability performance. With new regulatory requirements from the EU and the US, GRI reporting allows companies to meet stakeholder expectations and be prepared for mandatory reporting.

Although GRI is appreciated as an adaptable reporting mechanism, reports are not standardized beyond the Universal Standards. This means that reports from different sectors may not be completely comparable. Industry and Subject standards are based on specific industry or material evaluations. Therefore, the entire impact of a company on different indicators may not be fully assessed or fully compared across companies, even companies in the same industry.

Why is GRI important for business?

GRI provides a common language and approaches for organizations to report their sustainability performance, enabling easier comparisons and benchmarks, as well as a set of adaptable and modular reporting standards.

Additionally, many sustainability-centered certification bodies, such as B Corp, have begun working with GRI to collaborate on standards and sustainability. Companies that report in accordance with GRI Standards benefit from numerous reputational, governance and regulatory requirements, such as increased reputation, sustainability-focused decision-making, investor interest, (potential) regulatory compliance and improved stakeholder relationships.

As sustainability reporting across both financial and non-financial indicators increasingly becomes a requirement for businesses, it is important to consider voluntary reporting in line with GRI Standards to improve sustainability, minimize risk and establish sustainability policies and practices before they become mandatory.