The GRI is the Global Reporting Initiative, an independent organization leading in the development of sustainability reporting standards. It provides a robust methodology to measure and report on material topics specific to organizations’ activities. While the use of GRI standards is not mandatory, stakeholders value the accuracy and reliability it provides.
What is GRI?
The acronym GRI stands for Global Reporting Initiative, a non-governmental organization headquartered in Amsterdam, Netherlands. GRI develops and disseminates globally recognized sustainability reporting frameworks. According to their website, the GRI Standards aim “to deliver the highest level of transparency for organizational impacts on the economy, the environment, and people”. The GRI Standards are elaborated using a multi-stakeholder process that includes representatives from corporations, academia, labor organizations and sustainability experts.
What are Global Reporting Initiative guidelines?
The first set of GRI Guidelines (G1) was published in 2000 with the aim of creating the first mechanism to ensure companies’ responsible environmental conduct. Through GRI Guidelines G2-G4, it was then broadened to include social, economic and governance aspects. GRI Standards established in 2016 moved beyond providing guidelines towards setting a standard and leading framework for sustainability reporting. Companies can now get a GRI designation if they follow the comprehensive methodology.
The GRI Standard help users identify, measure and report on their material issues. GRI defines an issue to be material for an organization if:
- reflect the reporting organization’s significant economic, environmental, and social impacts; or
- substantively influence the assessments and decisions of stakeholders.
Materiality assessment is an essential first step to identifying the scope of the reporting exercise. GRI provides users with three sets of standards to dive into the particularities of their business models and sector of activity:
- The Universal Standards start by helping the company express its general disclosures and management approach to material topics identified.
- Topic-specific Standards help users report on specific topic issues related to their materiality assessment elaborated in the early stages. The topic-specific GRI Standards are organized into three series: 200 (Economic topics), 300 (Environmental topics), and 400 (Social topics).
- 40 Sector Standards guide users through the main material topics based on the sector’s most significant impacts, and list disclosures that are relevant for the sector to report on.
Source: GRI website
To keep its neutrality, GRI does not certify the content of the sustainability reports published using its standards. Companies must self-declare that the reports was prepared following GRI standards. They can also enhance the credibility of the report by obtaining external assurance although it is not mandatory.
Why is GRI important ?
GRI is leading the efforts towards standardization of ESG disclosures. The GRI Standards help organizations measure and report on their material impacts on the economy, environment, and society, including those on human rights. It’s important because it leads to accountability, transparency and improved decision-making in terms of corporate sustainability.
In addition, GRI standards can contribute to improving the triple bottom line. The National Center for Sustainability Reporting highlights the following main benefits of using GRI standards:
– Improvement of sustainability performance year-over-year
– Enhanced reputational value
– Increased employee and customer loyalty
– Improved internal data management, measurement and reporting processes
Is Global Reporting Initiative compulsory?
Companies are not required to use a specific framework to report on their non-financial performance. As a result, there are notable discrepancies in the scope of reporting, quality of data reported which makes assessments impossible to compare sustainability disclosures. For markets where disclosure remains voluntary, companies who adopt GRI standards commit to excellence in reporting on environmental and social performance. Investors and other stakeholders gain confidence that the non-financial information disclosed is accurate and reliable.
As mentioned in our “ESG disclosure – What is it and why is it important?” article, many jurisdictions are moving to mandate sustainability reporting like the EU with the CSRD and its own reporting framework. Companies that adopted the GRI reporting standard will be able to leverage the strong environment management practices as well as reliable governance processes. This will facilitate the transition to the new CSRD reporting framework, which it is set to build upon the success and approach of GRI.
Discover the top ESG and sustainability software providers