Environmental, social, and governance (ESG) efforts have gone mainstream. According to a recent PWC report, almost 80 percent of investors surveyed said that ESG was “an important factor in their decision-making”. Additionally, 50 percent said they would be willing to divest from companies that didn’t effectively implement ESG policies. Despite this increasing commitment to ESG, however, investors don’t want to risk any significant losses as companies pursue ESG goals. This creates a paradox for organizations. Even as demand for effective ESG increases, there’s little tolerance for any loss of revenue. GRI standards collection and reporting can help — here’s how.
What are GRI Standards?
According to the Global Reporting Initiative, “GRI standards enable any organization — large, small, private or public — to understand and report on their impacts on the economy, environment and people in a comparable and credible way, thereby increasing transparency on their contribution to sustainable development.” These standards are set by the Global Sustainability Standards Board (GSSB). They help define specific reporting practices that clearly communicate both the direct and indirect economic impacts of organizational efforts. GRI reports help stakeholders effectively evaluate a company’s:
- economic performance
- supply chain sustainability
- customer privacy frameworks
- anti-corruption efforts,
- work to improve occupational health and safety
- impact of their operations on local communities.
In other words, these standards offer a way for companies to collect and record data about ESG initiatives and then share this data with relevant stakeholders such as investors, policymakers, regulatory bodies, and civil society at large. This could include data on emissions, biodiversity, climate change, human rights, or even child labor.
GRI standards are subdivided into three broad categories: Universal Standards, Sector Standards, and Topic Standards. The Universal Standards, such as GRI 101: Foundation, GRI 102, and GRI 103 — apply to all businesses and define the key components of good ESG reporting. These key components include accuracy, balance, and verifiability. Sector Standards focus on industries such as oil and gas, agriculture, or manufacturing. Finally, Topic Standards such as GRI 303, GRI 305, and GRI 415 address specific ESG issues including health and safety, waste management, and taxation.
These standards are also modular, meaning companies can use whatever combination of universal, sector and topic standards best align with current operations.
What are GRI Objectives and Targets?
The objective of GRI standards data collection and reporting is to create an overarching sustainability report which can then be presented to stakeholders as evidence that companies are meeting ESG objectives. By ensuring that data is collected in line with Universal, Sector, and Topic Standards guidelines, organizations can ensure that reports are both accurate and verifiable. This in turn lends credence to their ESG initiatives to help increase stakeholder confidence.
GRI targets can be customized to meet company needs. For example, a food processing organization could apply Universal Standards with food-specific Sector Standards and even more detailed Target Standards which address concerns such as food handling, protective equipment, cross-contamination, and packaging.
When Should Companies Use GRI Standards Reporting?
The use of the GRI standards makes sense in several scenarios. First is the evaluation of companies by outside agencies such as regulatory bodies or investors — rather than taking the company’s word for it, GRI Standards reliability and transparency around ESG outcomes. GRI reporting can also help companies identify challenges with current ESG objectives. In the case of a manufacturing firm, for example, while GRI production reporting might show a sustained focus on staff safety, it might also reveal issues with waste management that could negatively impact investor valuations or regulatory compliance.
How to Collect and Report GRI Standards Data
The GRI standards collection and reporting process has three key components:
- Identifying and assessing impacts
Here, companies assess the significant impacts of existing policies and practices on ESG impacts. This is based on both Universal and Sector standards to create a broad overview of current conditions.
- Determining the organization’s material topics
Next, businesses must prioritize the topics most relevant to their ESG objectives. Ultimately, they must decide which to make part of their report.
- Reporting disclosures
Organizations must finally gather and disclose relevant information on ESG efforts highlighting their success — or struggle — in achieving specific goals.
GRI reporting frameworks also follow a standard format. Reports must contain a GRI content index that provides an overview of the information collected, along with the applicable GRI Universal, Sector, and Topic Standard numbers. The report may be published electronically or on paper and be made accessible as a standalone asset, as part of a larger annual report, or made publicly available on company web pages.
Before getting started with GRI data collection and reporting, it’s worth laying reporting requirements groundwork with ISO 9001 and ESG checklists. This will pinpoint operations that are working as intended and identify areas of concern.
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