Business relationships in difficult times
Global Reporting Initiative (GRI)
May 2022 update
Introduction: Comprehensive sustainability reporting
As highlighted in the Sustainability and business — the call to action; build back better report, we started a programme of thought leadership to explore accountancy and sustainability. This is part of a series of briefs exploring the topic of sustainability, business and the finance professional’s key role. These briefs will help organisations consider the sustainability issues, how to integrate them into their long-term decision-making, and how to incorporate these issues into internal and external reporting.
This paper is designed as a summary of a specific standard or framework. It is written from the management accounting perspective. As a finance professional, you are likely to encounter one or many of the sustainability frameworks and standards. It is a crowded and fragmented landscape, with slightly different terms, inconsistent language and various measures between the numerous methodologies. Adding to the confusion is whether adoption is voluntary or mandatory and that some organisations work with combinations of standards and frameworks at the same time. Finally, the approaches to reporting also differ. They range from annual reports, integrated reports, sections on an organisation’s website aimed at a specific audience or a stand-alone sustainability report.
Fortunately, there are several initiatives underway to address this fragmented accounting and reporting landscape. They will build a coherent global approach to corporate reporting that encompasses financial and non-financial reporting.1
A framework or a set of standards? The difference
A framework is a set of principles-based guidance for how information can be structured and prepared, and what broad topics should be covered. A set of standards are specific, replicable and detailed requirements for what should be reported for each topic. They are rules-based requirements.
The GRI (Global Reporting Initiative) is an independent international organisation that provides the most widely used standards for sustainability reporting. The GRI was founded in 1997 in the wake of the Exxon Valdez oil spill and the first set of GRI reporting guidelines was published in 2000. In 2016, the GRI transitioned from providing guidelines to having global standards for sustainability reporting, developed by the Global Sustainability Standards Board (GSSB), an independent operating body under the auspices of the GRI. The GRI also assists organisations on their sustainability reporting journey.
In July 2021, GRI announced it was working with the European Financial Reporting Advisory Group (EFRAG) in the role of ‘co-constructor’ of new EU sustainability reporting standards; the Corporate Sustainability Reporting Directive (CSRD) proposal.2
A joint announcement from the International Financial Reporting Standards (IFRS) Foundation and GRI, in March 2022, revealed a collaboration agreement, in the form of a Memorandum of Understanding (MoU). This agreement seeks to align standard-setting activities between the Global Sustainability Standards Board (GSSB) at GRI and the International Sustainability Board (ISSB) at IFRS.3
This paper summarizes the most recent versions of the GRI Sustainability Reporting Standards (GRI Standards) as of October 2021, which have an effective date of 1 January 2023.4
What are the
The GRI Standards are designed to enable organisations to report publicly on their most significant impacts on the economy, the environment and people, including human rights. Reporting using the GRI Sustainability Reporting Standards enhances transparency, increasing organisational accountability for these impacts and plans the organisation has to contribute to sustainable development.
The GRI system of interrelated standards includes GRI Universal Standards, GRI Sector Standards, and GRI Topic Standards. Universal Standards apply to all users; the industry sectors in which an organisation operates determines the use of relevant Sector Standards; use of Topic Standards is determined by a materiality assessment.
GRI Universal standards
GRI 101: Foundation — Introduces the Standards, explains key concepts and specifies the principles for compliance for reporting in accordance with the GRI Standards.
GRI 102: General disclosures — Provides contextual information about the organisation, its reporting practices and governance that are necessary for understanding organisational impacts
GRI 103: Material Topics 2021 — Provides step-by-step guidance on determining material topics, disclosures about its process for determining those topics and how it manages each topic
GRI Sector Standards
GRI Sector Standards provide information about likely material topics and what information to report for those topics. The GRI Sector Program has plans to develop standards for 40 sectors, prioritized by highest impact. At the time of the launch of the revised GRI Standards, only the Oil and Gas Sector Standard had been made available for public use; standards for coal and agriculture, aquaculture and fishing have been open for public comment; a mining sector standard is underway.
GRI Topic Standards
The GRI Topic Standards, which are summarized below, have remained essentially consistent. While a selection of these carries 2018, 2019 and 2020 dates, the majority of these topic standards were developed in 2016.
How are the GRI standards developed?
The previous iteration of the GRI Standards provided an option for reporting more limited or more extensive information. The Core reporting option provided the minimum information necessary to understand an organisation, its material impacts and how they are managed. The comprehensive reporting option required additional disclosures on strategy, ethics and integrity, and governance, along with more extensive reporting on impacts
The 2021 version requires companies reporting in accordance with the GRI Standards to determine material topics following a four-step process as summarized in Figure 1.
Material topics are defined as “topics that represent the organization’s most significant impacts on the economy, environment, and people, including impacts on their human rights.”5
These steps involve using the Sector Standards and engaging with relevant stakeholders and experts to first identify actual and potential impacts, then assess their significance. This is followed by testing and prioritising the most significant impacts for reporting.
In addition to reporting on how the organisation manages each material topic, and the extent to which actions taken have been effective, reporting requirements include identifying stakeholders, the organisation’s engagement with them, and the process used for identifying material topics.
The GRI Standards recommend that organisations align sustainability reporting with other reporting, to the extent possible. Also, to enhance the credibility of reporting, the use of internal controls, internal audits, and external assurance are encouraged.
Section 4 of GRI 1: Foundation 2021 includes reporting principles to help organisations ensure the quality and proper presentation of the reported information. These principles are:
Accuracy: Information that is correct and sufficiently detailed to allow an assessment of the organization’s impacts
Balance: Information in an unbiased way and provide a fair representation of the organization’s negative and positive impacts
Clarity: Present information in a way that is accessible and understandable.
Comparability: Select, compile, and report information consistently to enable an analysis of changes in the organization’s impacts over time and an analysis of these impacts relative to those of other organizations.
Completeness: Provide sufficient information to enable an assessment of the organization’s impacts during the reporting period.
Sustainability context: Report information about its impacts in the wider context of sustainable development.
Timeliness: Report information on a regular schedule and make it available in time for information users to make decisions.
Verifiability: Gather, record, compile, and analyze information in such a way that the information can be examined to establish its quality.7
Why are the GRI standards needed?
The GRI standards encompass a wide range of sustainability topics geared to meet the needs of a broad and diverse group of stakeholders.
Citing the 1987 World Commission on Environment and Development aspirational goal for sustainable development — ‘development which meets the needs of the present without compromising the ability of future generations to meet their own needs’. GRI states that its raison d’etre is, ‘to help organizations be transparent and take responsibility for their impacts so that we can create a sustainable future’.8
To that end, sustainability reporting using GRI standards creates the opportunity for an organisation to identify its impacts on the economy, the environment, and/or society, and disclose those impacts publicly in a common language that lends itself to greater comparability, quality, transparency and accountability. This reporting provides stakeholders, both internal and external, key input for identifying financial risks and opportunities, whether for decisions related to financial statement recognition or for longer-term considerations of value creation or financial valuation.
Who will encounter
the GRI standards?
Finance professionals working for corporate entities are more likely to encounter the GRI standards. As noted above, the potential audience for a sustainability report or specific sustainability information based on GRI standards is wide and diverse.
For a host of reasons, ranging from consumer expectations to investor demands, an increasing number of companies are reporting publicly on their most significant economic, environmental and social impacts, and hence their contributions — positive or negative — toward the goal of sustainable development.
If your organisation is using or contemplating using the GRI Standards, the 2019 CIMA® professional qualification syllabus and CGMA competency framework (2019 edition) can help you ask the right questions to identify your potential knowledge and skills gaps.
What’s next from
the AICPA & CIMA?
We will continue to watch the sustainability space and play a central role in its development. We will ensure that the journey towards the development of global standardised comparable ESG metrics and non-financial reporting is not at the expense of closing any future sustainability debate and innovation. We aim to achieve a balance of sustainability reporting and assurance alongside data-driven insights so that resilient organisations and finance professionals can address prosperity, planet and people challenges.
'We believe that we will see profound changes in the next few years in the work of management accounting and public accounting to embed new practices and standards relating to sustainability. The Association will continue to provide education and guidance to all areas of the profession, ensuring that it is ahead of this transformation. It’s truly an exciting time to be an accounting and finance professional’.
Andrew Harding, FCMA, CGMA,
Chief Executive, Management Accounting Association of International Certified Professional Accountants
In September 2020, GRI and four other sustainability framework and standards organisations announced their intention to work together to create a comprehensive approach to corporate reporting. The five bodies were, CDP (Carbon Disclosure Project), the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards Board (SASB). (Accessed 7 February 2022).
In November 2021, the Trustees of the IFRS Foundation announced the formation of the International Sustainability Accounting Standards Board (ISSB). The new ISSB will complete consolidation of the Climate Disclosure Standards Board (CDSB—an initiative of CDP) and the Value Reporting Foundation (VRF—which houses the Integrated Reporting Framework and the SASB Standards) by June 2022. (Accessed 7 February 2022).
GRI, GRI Welcomes Role as ‘Co-constructor’ of New EU Sustainability Reporting Standards (9 July 2021). (Accessed 7 February 2022).
GRI, IFRS Foundation and GRI to Align Capital Market and Multi-Stakeholder Standards (24 March 2022). (Accessed 5 April 2022).
GRI, Consolidated Set of the GRI Standards 2021 (GRI, Amsterdam: 2021) (Accessed 7 February 2022).
GRI, Consolidated Set of the GRI Standards. p. 121.
GRI, Consolidated Set of the GRI Standards. p.102.
GRI, Consolidated Set of the GRI Standards. p.22-25.
GRI, Our Mission and History. (Accessed 7 February 2022).
Kenneth W. Witt
Associate Technical Director
Research and Development – Management Accounting
Association of International Certified
The American Institute of CPAs® (AICPA)
The AICPA is the world’s largest member association representing the accounting profession, with more than 418,000 members in 143 countries and a 129-year heritage of serving the public interest. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.
The AICPA sets ethical standards for the profession and U.S. auditing standards for audits of private companies, not-for-profit organisations, federal, state and local governments. It develops and grades the Uniform CPA Examination and offers specialty credentials for CPAs who concentrate on personal financial planning; fraud and forensics; business valuation; and information technology. Through a joint venture with The Chartered Institute of Management Accountants® (CIMA), it established the Chartered Global Management Accountant® (CGMA®) designation to elevate management accounting globally. The AICPA maintains offices in New York, Washington, DC, Durham, NC, and
Ewing, NJ. aicpa.org
The Chartered Institute of Management Accountants (CIMA)
CIMA founded in 1919, is the world’s leading and largest professional body of management accountants, with members and students operating in 177 countries, working at the heart of business. CIMA members and students work in industry, commerce, the public sector and not-for-profit organisations. CIMA works closely with employers and sponsors leading-edge research, constantly updating its qualification, professional experience requirements and continuing professional development to ensure it remains the employers’ choice when recruiting financially trained business leaders. cimaglobal.com
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