Companies:GRI
Once described as 'fragmented' into an 'alphabet soup' of voluntary initiatives, the landscape of non-financial disclosures is consolidating, and fast. Yet the oldest non-financial standard setter, the GRI, seems to be finding its feet as sustainability disclosures move from voluntary to mandatory.
Richard Howitt, former MEP who was the rapporteur of the Non-Financial Reporting Directive (NFRD) and the former CEO of the International Integrated Reporting Council, describes the GRI as "undoubtedly the leader" and "pioneer" in voluntary reporting of non-financial information.
The oldest sustainability reporting initiative, set up in 1997, the GRI today has 10,000 companies globally voluntarily using its standards to report on their activities' impact on society and the environment.
Although it has signed a Memorandum of Understanding with the ISSB and is working closely with EFRAG on the European sustainability standards, Howitt says: "It's uncertain to me what the future vision of the GRI is."
Eelco van der Enden only became the GRI's CEO in January this year, and will need time to develop a vision as to where the GRI is going, Howitt continues.
At the GRI however, the direction of travel seems crystal clear. Peter Paul van de Wijs, chief external affairs officer, says the GRI remains the only impact reporting standard-setter. Working closely with EFRAG it has informed the development of the European sustainability reporting standards (ESRS), in particular on the impact reporting side of things. And it will develop "almost like a mapping tool" to help companies translate their GRI reporting into the ESRS reporting.
At the global level, Van de Wijs says: "We'll end up with a global reporting regime based on two pillars: strengthened financial reporting and impact or sustainability reporting."
The strengthened financial reporting will be made up of the IFRS and the standards developed by the ISSB, while impact reporting will be provided by the GRI. This is, in part, the objective of the MoU signed with the ISSB, but another aspect of the MoU is to align terminologies and definitions used by the ISSB and the GRI.
"The IFRS and the ISSB have a very specific set of audiences that need specific information to advise their decision-making, but as much as possible, the underlying data should be the same when looking at impact or financial materiality," Van de Wijs says. "So the first step is to align definitions and terminology. For example, our definition of 'emission' should be the same as the one of the ISSB. There is no reason for having different terminology, it just confuses companies and increases unnecessary reporting."
Another challenge will be to create an overlap between financial and impact reporting, Van de Wijs says. "Because at some point impact might become financially material."
And here he admits more work needs to be done.
But there is no doubt in his mind the GRI will remain relevant as there is no mandate on the horizon for the IFRS foundation to explore impact reporting.