Staying Current on GRI Guidance
In the ever- evolving world of sustainability reporting standards, it’s tough to keep track of the new guidance emerging and changes to previously established standards. We’ve written before about the consolidation of frameworks and shared our recommendations for preparing reporting indices to help demystify the potentially confusing space. In this blog, we summarize changes to the Global Reporting Initiative (GRI) Standards that went into effect in early 2023 to help clients and others understand how to align with the most current GRI guidance.
At the end of 2021, the Global Reporting Initiative (GRI) released an updated set of standards – GRI Standards 2021 – which included both minor as well as more significant changes to GRI reporting guidance. According to a recent KPMG study, the GRI Standards are the most commonly used sustainability standards for the largest companies in the world. In 2021, 54% of Russell 1000® companies published reports aligned with the GRI Standards.
So what do you need to know about the updated reporting standards? First of all, they apply to those reporting after January 1, 2023.
Below are some of the major changes.
Core vs Comprehensive reporting levels have been removed
Previously, if companies chose to report “in accordance” with GRI Standards, they either reported following the Core or Comprehensive Standards, with more disclosures required for the Comprehensive Standard. The updated guidelines have removed the Core and Comprehensive levels of reporting and companies now disclose either “in accordance” or “with reference to” the new Standards. Choosing “in accordance” means adhering to a higher level of disclosure.
All General Disclosures are now required if reporting “in accordance”
GRI has significantly edited and consolidated the General Disclosures from 56 disclosures to 30 and companies need to align with all 30 of them to claim they are reporting “in accordance”with the Standards. Significant changes to the General Disclosures include:
More information is required about employees and contractors
A description of policy commitments and how they are embedded through the company’s activities and business relationships is required
Companies must describe the process and frequency of reporting back on topics related to economy, environment, and people to the highest governance body
Companies must disclose their approach to determine working conditions and terms of employment for those workers not covered by collective bargaining agreements
An expanded explanation of the purpose of the stakeholder engagement and how the organization ensures meaningful engagement
Description of the process followed to determine material topics including how they were identified and prioritized along with a list of which stakeholders and experts helped inform the process and impacts
Reporting on compliance with laws and regulations were previously two separate material topics which a company could elect to report on but this has been combined and moved into the required General Disclosures
Note that many of the governance disclosures that were previously not required are now required.
“Human rights impacts cross a threshold as compared to other types of impacts, in that they affect basic human dignity and equality. Human rights impacts by businesses are also prevalent to date and will likely continue to be in the future. As a result, this makes human rights impacts one of the most vital types of impacts for the GRI Standards to address.” - GRI
Required human rights reporting
The updated standards introduce a minimum requirement for all organizations. The new guidance aligns with regional and global principles related to business and human rights such as the UN Guiding Principles on Business and Human Rights and the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises.reporting to GRI Standards to report on their Human Rights impact.
Revised approach to determining material topics
GRI has revised its approach to materiality. The new definition states:
Material topics are topics that represent an organization’s most significant impacts on the economy, environment, and people, including impacts on their human rights.
This differs from the 2016 definition which stated that material topics are topics that:
a) reflect the reporting organization’s significant economic, environmental, and social impacts; or
b) substantively influence the assessments and decisions of stakeholders.
The older definition had been interpreted by reporters to require two independent ways of looking at materiality: where the company had an impact and what their stakeholders cared about. Many reporters felt the need to use a materiality matrix to plot these two parameters against each other. GRI has attempted to simplify and clarify the approach to materiality in the revised guidance and to deemphasize stakeholders’ input to influence the prioritization of material topics (see FAQ for further explanation). In addition, there is emphasis in the revised guidance on identifying both actual and potential impacts and then prioritizing impacts in two separate buckets - negative impacts and positive impacts.
Updated definition of “stakeholder”
Lastly, GRI’s definition of “stakeholder” has been tweaked slightly in the updated Standards. Previously, the definition of stakeholder included those whose actions can affect the ability of the organization to implement its strategies and achieve its objectives. This portion of the definition has been removed. The current definition is solely focused on those who have “an interest that is affected or could be affected by the organization’s activities”. This is intended to keep the focus on the reporting entity’s impacts on economy, environment, and people, including impacts on their human rights.
The bottom line about the updated Standards is that they should help simplify the reporting process but also provide companies guidance on how to go deeper into certain topics such as human rights and governance issues.
Whether you are a long-time GRI reporter or considering using the GRI Standards for the first time, we welcome your questions and look forward to working with you to transition to the updated Standards.