What is GRI? Understanding sustainability reporting

What is the GRI (Global Reporting Initiative)?

The history of the Global Reporting Initiative

The Global Reporting Initiative (GRI) is an international organization created in 1997 on the initiative of CERES (Coalition for Environmentally Responsible Economies) and the Tellus Institute, in close collaboration with UNEP, the United Nations Environment Programme.

It was the first major global initiative to create standards for the disclosure of CSR information by companies, and was subsequently followed by the CDP, the European Union with the CSRD and more recently the IFRS S with theISSB, which meet the specific needs of certain stakeholders.

Today, this standard is used by over 10,000 organizations in 100 countries, and remains the most widely used non-financial reporting standard in the world.

What is the purpose of GRI?

Following the example of the major non-financial reporting standards, this organization, which is widely recognized internationally, aims to provide a framework for corporate CSR reporting standards, to facilitate the production of reports and make them easier to read and compare.

To this end, it has developed a list of guidelines and then standards designed to support companies in their ESG reporting. The guidelines it has provided since 2000 became disclosure standards in 2016. They are regularly updated, and are based on the United Nations' Sustainable Development Goals (SDGs).

The Global Reporting Initiative's main aim is to increase the transparency of organizations in terms of environmental, social and governance issues. Its particularly broad scope makes it one of the most comprehensive standards currently available on an international scale.

How do the GRI standards work?

GRI reporting is a voluntary procedure that does not require an audit to validate the methodology used and the data disclosed, although such an audit remains advisable and is the key to having one's results certified by the Global Reporting Initiative.

The GRI non-financial reporting standard is made up of 3 main sets of standards.

• Universal standards
• Thematic standards
• Sector-specific standards

Universal standards

As their name suggests, the universal standards are aimed at all companies that have decided to embark on a GRI reporting process.

They comprise 3 documents:

• GRI 1: Requirements and principles for using GRI standards
• GRI 2: Information about the communicating organization
• GRI 3: Information and advice on relevant organizational themes

The first two provide a context for understanding the issues involved in reporting, as well as a guide for formalizing its implementation.

The 3rd is designed to enable organizations to subsequently identify the impact-related themes on which they will have to report within the framework of the thematic standards. To do this, they must carry out a materiality analysis. 

On this subject, like the CSRD and unlike the ISSB, the GRI is in favor of double-materiality. In other words, to identify the issues to be reported on, the organization must analyze both the impact of the issue in question on its activities AND the impact of its activities on the issue in question.

Sector-specific standards

Sector standards are specific to certain sectors identified by the GRI as requiring particular analysis in view of their singularity or the major ESG challenges they face. 

GRI has identified 40 priority sectors to be covered by sector standards. To date, standards have been published for four of them:

• GRI 11: Oil & Gas
• GRI 12: Coal
• GRI 13: Agriculture, aquaculture and fisheries
• GRI 14: Mining

Two other sets of sector-specific standards are currently being compiled and should be published shortly:

• Financial Services
• Textiles and clothing

Thematic standards

Following the materiality analysis carried out as part of GRI 3, organizations will have to define which impact themes concern them, and which they will have to report on within the GRI framework.

The thematic standards are part of this framework. They detail the normative framework for each reporting theme. 

They are grouped into several categories

• biodiversity (GRI 101)
• economic standards (GRI 201 to 207)
• environmental standards (GRI 301 to 308)
• social standards (GRI 401 to 418)

GHG emissions are included in the GRI 305 thematic standard and include emissions generated by scope 1, 2 and 3, in line with the definition given in ISO 14 064.

The diversity of these thematic standards makes GRI the extra-financial reporting standard standard to date, and the only one, along with the CSRD, to cover subjects other than the environment.

How are GRI reports structured?

GRI reporting principles

The methodology established by the Global Reporting Initiative is based on a list of principles considered essential for guaranteeing the transparency and credibility of organizations' extra-financial reports. Adherence to these principles establishes the legitimacy of the report for stakeholders, and facilitates its consultation and understanding.

According to the GRI, they "guide the organization to ensure the quality and correct presentation of the information communicated. Its high-quality information enables information users to make informed assessments and decisions about the organization's impacts and contribution to sustainable development."

There are 8 principles.

1. Precision

The information provided must be precise and detailed. 

2. Balance‍

Information must be disclosed impartially, without overlooking the organization's negative impacts.

3. Clarity

Information must be accessible and comprehensible to all stakeholders.

4. Comparability

Information must be transmitted in such a way that it can be compared over time and with that provided by other organizations. 

5. Completeness

The information provided must be sufficiently complete to enable an in-depth analysis of the organization's impact during the reporting period. 

6. Sustainability context

The organization must place its reporting in the broadest possible context, taking into account the potential impact of its activities on the various GRI indicators.

7. Punctuality

Information must be disclosed according to a precise timetable, enabling stakeholders to take cognizance of it in advance of their decision-making.

8. Verifiability

Information must be recorded and sufficiently complete to enable its quality to be verified and analyzed by third-party organizations.

What is the GRI reporting process?

The GRI reporting process is made up of 9 main stages, which must be scrupulously followed by organizations. They help to better understand the disclosure framework and identify the most significant impacts for the company.

If these 9 requirements are not met, the organization will not be able to claim that its reporting is in line with GRI standards.

1.  Applying reporting principles

The company must commit to respecting the principles set out in the GRI1 throughout the reporting process.

2.  Communicating general information (GRI 2)

The company must submit the general information requested under GRI2, including details of the organization, the entities covered by the sustainability report, and the reporting periods and frequencies.

3.  Identify relevant themes

The organization must determine its relevant themes and whether it is directly concerned by one of the GRI sector standards.

4.  Communicating relevant themes in GRI3

The organization must detail in the GRI3 the process by which it has determined its relevant themes, list them and indicate how it intends to address them.

5. Provide the information requested in the thematic standards for each of these relevant themes

The company must complete the various thematic standards by transmitting the requested data and indicating the reasons why it is unable to complete certain data points.

6. Provide reasons for omitting requirements and information that the company was unable to track or transmit

For each data point that cannot be completed, the company must indicate the reason for the omission from a list of 4 reasons: not applicable, legal prohibitions, confidentiality constraints, unavailable or incomplete information.

7. Publish a GRI content index

The company must provide an index of its sustainability report to make it easier for stakeholders to read and understand.

8. Submit a declaration of use

The company must publish a statement attesting that it has completed and published its sustainability report in accordance with GRI standards.

9. Notify GRI

The final step is to inform GRI of the use of its sustainability standards, and to forward the declaration of use.

By following this process, organizations will be able to certify that their reports comply with GRI standards.

This process is summarized in the diagram below:

Why use GRI standards in your sustainability reporting?

The benefits of GRI standards and guidelines

The GRI standards enjoy wide international recognition, and are used by a large number of players around the world. They offer a number of advantages for organizations that decide to adopt them.

Greater transparency and accountability: The publication of a GRI report demonstrates an organization's commitment to transparency and accountability with regard to its environmental, social and governance impacts. This commitment strengthens the trust of stakeholders, including customers, investors and employees.

Improving ESG performance: The GRI reporting process encourages organizations to assess their performance on ESG indicators. This can lead to the identification of areas for improvement and the implementation of corrective measures, ultimately strengthening their resilience to the consequences of climate change and their competitiveness.

International benchmarking: GRI standards provide a common reporting framework for ESG information, enabling organizations to benchmark themselves against their international peers and even build a competitive advantage in this area, at a time when corporate ESG performance is under scrutiny by consumers and investors alike.

Harmonization with regulatory requirements: GRI standards are increasingly aligned with regulatory requirements for ESG reporting. The process is particularly advanced with CSRD ESRS and ISSB IFRS. This can make it easier for organizations to comply with new regulations, and avoid the risk of having to carry out double reporting depending on the requirements to which they are subject.

The limits of GRI standards

Despite its many advantages, GRI reporting also has certain limitations.

Voluntary: Compliance with GRI standards remains voluntary, meaning that there is no legal obligation to do so. This may limit widespread adoption of the standards, and encourage organizations to prefer new non-financial reporting standards required by certain countries or groups of countries, such as the CSRD in the EU or the ISSB.

Costs and resources: The GRI report is particularly dense, given the wide variety of subjects it covers. Writing a GRI report can therefore be costly and time-consuming. This need for significant resources can be an obstacle for smaller organizations.

Complexity: The GRI framework is relatively complex, and can be difficult to grasp and implement for organizations that are not experts in sustainable development. Once again, it will require the support of additional resources, both internal and external, and therefore incur costs.

Lack of independent verification: While auditing of GRI reports remains recommended by the Global Reporting Initiative, there is no requirement for independent verification unlike, for example, CSRD. The reliability of the information communicated may therefore be called into question by certain stakeholders, who will prefer audited reports.

Interoperability with reporting standards?

The emergence of new reporting standards around the world, and in particular mandatory standards in certain countries, has prompted GRI to strengthen the interoperability of its standards with these.

While GRI and CDP have long worked on the interoperability of their two standards in the areas they share, the ISSB's IFRS standard is currently being aligned.

Concerning CSRD, GRI has declared that a company reporting under ESRS is deemed to have reported under GRI. This avoids double reporting by a European company in a country where GRI has been made mandatory. An initial mapping showing the correspondences between the data points of each standard has already been published.

Conclusion

In conclusion, the Global Reporting Initiative (GRI) has established itself as an essential benchmark for non-financial reporting worldwide. The GRI standards provide a solid framework for ESG reporting, and can help organizations improve their sustainability performance.

The GRI remains a valuable tool for companies seeking to demonstrate their commitment to sustainable development and meet the expectations of their stakeholders. Its use helps to strengthen the credibility of ESG reporting and promote more sustainable practices worldwide.

The recent emergence of new mandatory reporting formats in some countries may potentially compete with it, but the GRI standards' strong interoperability with these formats means it retains its appeal.

Sources : 

• "Global Reporting Initiative (GRI): applying the standards in business"Big Média (BPI France), 05/14/2024
• "GRI-ESRS Interoperability IndexGlobal Reporting Initiative, 30/11/2023
• "Interoperability between ESRS and GRI Standards - EFRAG-GRI JOINT STATEMENT OF INTEROPERABILITY"EFRAG, 23/08/2023
• "Global Reporting Initiative (GRI): definition, indicators, guidelines"Youmatter, 31/10/2016
• "GRI standards by languageGlobal Reporting Initiative
• "Linking GRI reporting to other requirementsGlobal Reporting Initiative
• "GRI - Global Reporting InitiativeIAS Plus (Deloitte)