There are a ton of sustainability reporting frameworks out there, so how can companies decide which one to use? Our Trust Geek Glossary blog series is here to help clear things up. We covered CDP and SASB in the first two articles, and here we’re exploring one of the most popular ESG reporting standards – the Global Reporting Initiative, or GRI. 

What’s GRI? What’s the history of the Global Reporting Initiative?

The Global Reporting Initiative (GRI) was founded in 1997, following public outrage over the Exxon Valdez oil spill. Still one of the largest environmental disasters of all time, it spilled 11 million gallons of oil into the Gulf of Alaska in the spring of 1989. In response, a group of socially responsible investors, environmental groups, and nonprofits came together in 1990 to form the Coalition for Environmentally Responsible Economies (Ceres). Ceres established the Valdez Principles (later renamed as the Ceres Principles), a voluntary code of conduct for companies to support the protection of the environment.

At that time, sustainability reporting was virtually unheard of – very few companies provided non-financial disclosures. Ceres founder, Joan Bavaria, realized that the principles would need to have an accountability mechanism in place to have any real impact. For the next several years, she collaborated with Dr. Allen White, the VP of Tellus Institute, to develop a reporting framework for the Ceres Principles. This became the basis for the initial GRI guidelines (G1), released in 2000, the first global framework for ESG reporting. As GRI grew, the reporting system was broadened to include a global scope and social, economic, and governance issues. And, in 2002, GRI relocated to Amsterdam as an independent global institution and collaborating center of the United Nations Environment Program (UNEP).

Today, GRI is one of the most widely-used systems available for disclosing ESG performance with more than 10,000 reporters in 100 countries.

What is GRI infographic

The infographic that follows provides a quick overview of GRI:

• Founded: 1997
• Number of companies reporting: 10k+
• Typical audience: Broad stakeholder base
• Purpose: Help organizations be transparent and take responsibility for their impacts by creating common global standards for reporting that include an independent, multi-stakeholder process.
• Focus: External environmental, societal, and economic impacts.
• What is reported: All three ESG pillars. General disclosures, sector-specific disclosures, and topic-specific disclosures.
• Who reports: Most large companies globally use the GRI standards.
• Industry-specific versions: 40 industry-specific standards coming, starting with high impact sectors.
• Output used for: Company’s public ESG report and other (sustainability indices, awards, etc.)

What are GRI standards? How are GRI standards organized?

In 2016, GRI transitioned from providing guidelines to setting global standards for ESG reporting. The Global Sustainability Standards Board (GSSB), an independent governance entity, is responsible for setting the GRI standards according to a formally defined due process. The GRI standards provide a consistent, comparable interconnected system that organizations can use for their impact reporting and/or decision-making. Companies can use the GRI standards to transparently disclose and manage their impacts on the environment, society, and the economy. Investors, analysts, policymakers, and other stakeholders can use the information reported to assess risks, benchmark performance, and make decisions. The GRI standards are organized as follows:

• GRI Universal Standards: Apply to all organizations. Requirements and principles for using the GRI Standards (GRI 1). Disclosures about the reporting organization (GRI 2). Disclosures and guidance about the organization’s material topics (GRI 3). In 2021, the Universal Standards were revised to integrate human rights disclosures and due diligence into the standards, provide greater clarity on key concepts and principles, and improve the overall usability of the standards.
• GRI Sector Standards: Standards will be developed for 40 sectors, starting with high impact sectors, such as oil and gas, agriculture, and fishing. Currently standards are available for the coal and oil & gas industries.
• GRI Topic Standards: Disclosure guidance for specific topics such as waste, health and safety, and tax.

Source: GRI

Are GRI standards mandatory?

Governments around the world are instituting new disclosure regulations based on the GRI Standards. Currently more than 160 policies in over 60 countries reference or require GRI reporting, and GRI has been appointed as co-constructor for new sustainability reporting standards in the European Union. Sustainability reporting also improves transparency around ESG-related financial risks and value creation, helping markets function more efficiently. As a result, a growing number of capital market regulators and stock exchanges reference or require use of the GRI standards as well.

How does GRI reporting work?

Given the increasing number of policies referencing GRI standards, businesses will need to know how to leverage them in their reporting. Organizations can use the standards to report on all material topics and related impacts (“in accordance with the GRI standards”), or just specific topics such as climate change (“with reference to the GRI standards”). While reports using the GRI Standards can be published in different formats (standalone report, website, etc.), they must contain a GRI content index. The content index provides an overview of the reported information making it easier for stakeholders to navigate the report. The basic steps for GRI reporting are:

1. (GRI 1) Understand the GRI Standards system and key elements
2. (GRI 2-3, GRI Sector Standards) Identify and assess impacts
3. (GRI 3, GRI Sector Standards) Determine material topics
4. (GRI 2-3, GRI Sector Standards, GRI Topic Standards) Report disclosures

Who uses the GRI reporting standards?

With more than 10,000 reporters in over 100 countries, GRI Standards are the most widely used for disclosing comprehensive ESG performance. A KPMG survey found nearly three-quarters (73%) of the world’s largest 250 companies (the G250) use the GRI Standards. And two-thirds (67%) of the N100 (the largest 100 firms in 52 countries) use GRI. In Europe, 54% of companies use GRI, more than any other reporting framework, according to a report by the European Financial Reporting Advisory Group (EFRAG).

How does GRI differ from other ESG reporting frameworks?

GRI may be the most common ESG reporting standard, but it can easily be used in conjunction with other sustainability frameworks and standards such as SASB, CDP, TCFD, and more. GRI has also announced support for various initiatives working toward a globally consistent, comparable, and integrated set of disclosure guidelines and standards. There are a few ways GRI is unique, including:

• It follows an independent, multi-stakeholder process for standard setting, governed by the GSSB
• International advisory bodies ensure neutrality from any specific industry or stakeholder group
• It has strong support from policymakers and market regulators around the world
• It is outwardly focused on the economic, environmental, and social impacts of a company’s activities
• It provides comprehensive sustainability reporting standards that address all ESG impacts, meet the needs of multiple stakeholders, and can be used by any organization

GRI offers the following diagram as a helpful illustration of the difference between ESG standards, reporting frameworks, and rankings/ratings:

• Standards: Specific and detailed criteria on what should be reported.
• Frameworks: A set of guiding principles to frame, or contextualize, information.
• Rankings and ratings: A score of ESG performance based on information that companies disclose using reporting standards or frameworks. It is typically comprised of a quantitative score and a risk category.

Source: GRI

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