Anyone using the GRI Standards for sustainability reporting should take note that the Universal Standards have been completely revamped to improve the quality and consistency of sustainability reporting as well as to provide clarity on how organizations should use the Standards.
These welcomed changes are a reflection of comments and feedback from a global consultation that started in 2020. A drawback of the previous version was a lack of emphasis on the impact of the reporting company across its value chain as well as little-to-no genuine engagement and accountability from executives.
What are the major improvements?
They now consist of three sets of Standards to be used together, depending on your organization's respective sector(s):
As explained in the GRI leaflet, the main adjustments and additions are:
What had been the Universal Standards consisting of GRI 101: Foundation 2016, GRI 102: General Disclosures 2016, and GRI 103: Management Approach 2016 is now GRI 1, 2, and 3. It’s the same approach but a bit more consolidated and the requirements have been revised.
The new-ish addition is the Sector-Specific Standards which identify and describe the main economic, environmental and social impacts of a given sector. The first Sector-Specific Standard is for the oil and gas industry, and a second standard for the agriculture sector should follow soon.
The Topic Standards, apart from some choice revisions, remain the same.
The Sector-Specific Standards form a new part of the system and the Topic Standards have been adapted from the 2016 version to be used together with the revised Universal Standards.
What do these changes mean for reporters?
Beyond the fact that many of the disclosures themselves have been adjusted, there are three significant shifts in the approach to reporting:
Core and Comprehensive are gone
What was once three distinct reporting ‘in accordance’ options is now an either/or situation – either an organization complies with all nine accordance requirements OR it may claim that it has prepared the reported information with reference to the GRI Standards. All material topics will need to report appropriate disclosures from the Topic Standards, instead of reporting at least one or all disclosures as per the existing Core and Comprehensive options. Since an organization can still ‘reference’ the Standards, and it is the route most of my clients have been taking in recent years, I expect most will continue to do so.
Impact takes center stage
When it comes to materiality, the definition has been revised to now be a “topic that reflects the organization’s most significant impacts on the economy, environment, and people, including impacts on human rights”. So, reporting organizations need to understand and share their actual and potential impacts on the economy, the environment and society. Stakeholder engagement is still vital for gathering insights, but not to gauge what their priorities are, but rather to get a better understanding of the impact of the organization on each material topic.
A practically new component is the emphasis on due diligence, defined as “the process through which an organization identifies, prevents, mitigates, and accounts for how it addresses its actual and potential negative impacts on the economy, environment, and people.” Reporting organizations have always needed to share their process(es) for identifying and managing their impacts, and now they need to report on it using a due diligence lens. How an organization addresses its human rights impacts has become an aspect of this, and this update creates a closer alignment with the UN Guiding Principles on Business and Human Rights.
This focus on impact may seem daunting at first, but I welcome this shift as sustainability reports have had a tendency to lack this and haven’t been giving readers a clear understanding of both the impacts on the organization and by the organization.
Sector-Specific Standards are coming back
In addition to the universal and the Topic Standards, GRI will be growing a set of Sector-Specific Standards. These will not necessarily contain new disclosures but will help companies better determine their material topics. So, keep an eye out for announcements as the new Sector-Specific Standards get rolled out.
This new order to the GRI Standards goes into effect in January 2023 – so there is time for us all to adjust and get started making changes sooner rather than later. Further details can be found on the GRI website.
If you would like to learn more about specific revisions to the Standards, or how these changes might affect your sustainability reporting, feel free to reach out.