SASB_GRI
Business relationships in difficult times
Sustainability frameworks
and standards
Global Reporting Initiative (GRI)
May 2021
Introduction: Comprehensive sustainability reporting
As highlighted in the Sustainability and business — the call to action; build back better report, we started on 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.
Background
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.
What are the
GRI standards?
The GRI standards consist of Universal standards and Topic standards. Each of the standards not only provides requirements, which are mandatory instructions, but also recommendations. They include where a course of action is recommended but not required and guidance, which includes information, explanations and examples for better understanding.
Universal standards
GRI 101: Foundation — Sets out the reporting principles, which include stakeholder inclusiveness, context, materiality and completeness, along with guidelines for preparing a sustainability report under the GRI standards
GRI 102: General disclosures — Cover
the provision of contextual information about the entity including strategy, governance, stakeholder engagement and reporting process
GRI 103: Management approach — Designed to use with each material topic in a sustainability report, providing a narrative report into why the topic is material, where impacts may occur and how the organisation is managing those impacts
How are the GRI standards developed?
Companies may use the GRI standards to prepare a sustainability report, or they may use selected standards to report specific information. There are two options for providing a sustainability report under the standards: core and comprehensive.
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Core — Contains the minimum information necessary to understand the organisation, its material impacts and how they are managed
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Comprehensive — Requires additional disclosures on strategy, ethics and integrity, and governance, along with more extensive reporting on impacts
Section 3 of GRI 101 outlines the requirements for making claims related to using the GRI standards and requirements related to reasons for the omission of any disclosures. Section 3 also specifies that reporting organisations notify GRI of the use of their standards and the claims made concerning that use.
GRI 101 also includes 10 Reporting Principles for defining an organisation’s reporting content and quality. Principles 1 to 4 relate to content, and principles 6 to 10 focus on quality. These principles help an organisation understand what to include in a report and realise the expectations of its stakeholders.
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Stakeholder inclusiveness
1.1. Stakeholders are identified and reporting responds to their expectations and interests.
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Sustainability context
1.2. Performance is reported in the wider context of sustainability.
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Materiality
1.3. Reporting covers an organisation’s significant economic, environmental, and social impacts.
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Completeness
1.4. Reporting includes material topics to enable stakeholders to assess performance.
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Accuracy
1.5. Accurate and detailed information enables stakeholders to assess performance.
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Balance
1.6. Reporting reflects positive and negative aspects of performance.
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Clarity
1.7. Reporting is understandable and accessible to stakeholders.
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Comparability
1.8. Consistent reporting over time
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Reliability
1.9. Reporting includes the processes used in the preparation so it can be subject to examination.
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Timeliness
1.10. Regular, scheduled reporting2
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 organisations be transparent and take responsibility for their impacts so that we can create a sustainable future.”3
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 enables stakeholders, both internal and external, to make informed decisions about the organisation’s contributions — both positive and negative, to the goal of sustainable development.
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. Our aim is to achieve a balance of sustainability reporting and assurance alongside data-driven insights so that resilient organisations and finance professionals can address future 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,
Executive, Management Accounting Association of International Certified Professional Accountants
Endnotes
1 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 are, 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 12 March 2021).
The statement of intent providing a summary of alignment between the organisations was facilitated by the Impact Management Project, World Economic Forum and Deloitte. (Accessed 12 March 2021).
In March 2021, the Trustees of the IFRS Foundation announced their strategic direction to the establishment of an international sustainability reporting standards board with the existing governance structure of the Foundation. (Accessed 12 March 2021).
2 GSSB, GRI Standards – GRI 101: Foundation (2016). p. 7.
3 GRI: Our mission and history. (Accessed 12 March 2021).
Report author:
Kenneth W. Witt
Senior Manager,
Management Accounting & Member Engagement
Association of International Certified
Professional Accountants
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
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