The number of ESG disclosure and reporting guidelines, frameworks and standards continues to expand – here comes the GRI Universal Standards, the SASB XRBL Taxonomy, and much more. The range of available transparency tools is making it more challenging for corporate management and investors to navigate.
The ESG / Sustainability / Sustainable Investing lexicon for both publicly-traded companies and their providers of capital is today chock-a-block with acronyms and initials. GRI, SASB, TCFD, OECD, IIRC, SDG, PRI, UNGC, GRESB, WEF, IFRS, EFRAG, EC’s NFRD – you get the picture! And there are a host of industry-focused standards (RBA, once EICC), IEPC, LEED).
The venerable player is the Global Reporting Initiative (GRI), a comprehensive, ever-expanding, stakeholder-focused reporting framework created by global stakeholders over two decades ago with roots in Boston, in the Ceres Pledge of the early-1990s. That pledge was created by SRI investors after the Exxon Valdez oil tanker disaster in Alaska and was intended to invite corporate managements to promise to do better in what is now ESG performance. The first two signatories of significant size were General Motors and Sun Oil. G&A team members were involved in encouraging firms to sign on to the pledge in those early years.
By 1999-2000 the first corporate environmental, responsibility, et al reports were being published in the United States and Europe (a few dozen appeared in the first round with the first generation of the GRI framework, G1). Over the ensuing years the GRI framework evolved and matured on through G3, G4 and finally in recent years to a more formal standards-based approach. And those modular standards for ESG reporting are continuing to evolve as GRI enters its third decade.
The news today about GRI is focused on the launch of what are called “Universal Standards”, which in modular form will be in place for corporate and institutional reports to use if they are going to report in accordance with the GRI Standards. The now-familiar Core and Comprehensive will go away; it will still be OK to use “GRI-Referenced” (a less strict version which references parts of the GRI reporting standard) in reporting following the Universal Standards, which will go into effect in January 2023.
The new GRI Universal Standards align with the United Nations Guiding Principles on Human Rights, the OECD Governance Standards, and the International Corporate Governance Network (ICGN).
The elements of the Universal Standards to keep in mind are these: what is the impact of the corporation on society, and society on the corporation; materiality of disclosures; due diligence on the part of reporters. Keep in mind the standards are broad and focused on stakeholder disclosure, of course including providers of capital as stakeholders. All companies can use the Universal Standards to communicate the firm’s impact on the broader society. (Think: how does your firm connect with people?)
Supply chain operations are an important part of GRI reporting going forward. Consider, as one expert recently explained, that of the large, multi-national enterprises of the developed world, more than 90 percent of production is beyond the company’s walls, out there in the world of non-company producers (many in less-developed nations as well as in China).
The European Union is considering adopting corporate sustainability reporting that would use the GRI Universal Standards for mandated disclosure by all companies operating in the 27 EU states (with certain qualifications as to size and other considerations).
GRI standards-focused disclosure is expected to include story-telling and metrics about corporate sustainability actions and activities, governance, strategies, planning, practices, engagements, and more. Materiality assessment activities are critical elements of GRI standards reporting, notes the GRI team.
In addition, GRI is launching a series of Sector Specific guidance, beginning with the new “Sector Standard for Oil and Gas.” The sector standards address “how decision and actions of companies address widespread stakeholder concerns about their climate change-related impacts, while ensuring a just transition for workers, communities and the environment.
We are sharing details of the above developments at GRI with you in the Top Stories this issue. The G&A Institute team has been focused intently on GRI reporting since 2000 and was designated as the GRI Data Partner for the U.S., and then the U.K. and Republic of Ireland more than a decade ago. We’ve gathered and analyzed in depth thousands of GRI reports since then. G&A Institute is a Community Member of GRI, and we watch the work of GRI very closely.
Whether you are a corporate manager, executive or board member, or provider of capital to the corporate sector, you should also keep a close watch on GRI, and the G&A team is available to help answer any questions you have.
This is just the introduction of G&A's Sustainability Highlights newsletter this week. Click here to view the full issue.