Global Reporting Initiative (“GRI”) Standards
It is generally acknowledged that the standards developed by the Global Initiative (GRI) ( www.globalreporting.org) are the world’s most widely used with respect to sustainability reporting and disclosure. The latest version of the GRI’s sustainability reporting framework, generally referred to as the “GRI Standards,” were published, following extensive consultation, in October 2016 and formally went into effect for reports and other materials published on or after July 1, 2018.1 The Global Sustainability Standards Board (GSSB) issues and maintains the GRI Standards for organizations to use in their “sustainability reporting,” described by the GSSB as “an organization’s practice of reporting publicly on its economic, environmental, and/or social impacts, and hence its contributions—positive or negative—towards the goal of sustainable development.”2 The GSSB has explained:
Through this process, an organization identifies its significant impacts on the economy, the environment, and/or society and discloses them in accordance with a globally-accepted standard. The GRI Standards create a common language for organizations and stakeholders, with which the economic, environmental, and social impacts of organizations can be communicated and understood. The Standards are designed to enhance the global comparability and quality of information on these impacts, thereby enabling greater transparency and accountability of organizations. 3
Each of the GRI Standards includes requirements (i.e., mandatory instructions presented in bold font and indicated with the word “shall”); recommendations (i.e., a particular course of action which is encouraged, but not required, and indicated with the word “should”); and guidance (i.e., background information, explanations and examples). The GRI Standards are divided into four Series4:
100 Series: The 100 Series includes three universal Standards:
• GRI 101: Foundation is the starting point for using the set of GRI Standards. GRI 101 sets out the Reporting Principles for defining report content and quality. It includes the requirements for preparing a sustainability report in accordance with the GRI Standards and describes how the GRI Standards can be used and referenced. GRI 101 also includes the specific claims that are required for organizations preparing a sustainability report in accordance with the Standards, and for those using selected GRI Standards to report specific information.
• GRI 102: General Disclosures provide guidance on reporting contextual information about an organization and its sustainability reporting practices. This includes information about an organization’s profile, strategy, ethics and integrity, governance, stakeholder engagement practices, and reporting process.
• GRI 103: Management Approach is used to report information about how an organization manages a material topic. It is designed to be used for each material topic in a sustainability report, including those covered by the topic-specific GRI Standards (Series 200, 300, and 400) and other material topics.
Topic-specific Standards: The GRI Standards include three series of topic-specific standards: the 200 series for economic topics; the 300 series for environmental topics, and the 400 series for social topics. These topic-specific standards can be used by organizations to report information on their impacts relating to a wide range of economic, environmental, and social topics (e.g., indirect economic impacts, water, or employment).5
When organizations set out to prepare a sustainability report in accordance with the GRI Standards, they begin by applying the reporting principles for defining report content from “GRI 101: Foundation” to identify its material economic, environmental, and/or social topics. These material topics determine which topic-specific Standards the organization uses to prepare its sustainability report.
GRI 101 (Foundation)
GRI 101, referred to as the “Foundation,” is intended to be the starting point for an organization to use the GRI Standards to report about its economic, environmental, and/or social impacts.6 There are three sections to GRI 101:
• Section 1 presents the “reporting principles” for defining report content and report quality and must be used by organizations to help them decide what information to include in a sustainability report and how to ensure the quality of the information.
• Section 2 explains the basic process for using the GRI Standards for sustainability reporting and includes fundamental requirements for applying the reporting principles, and for identifying and reporting on material topics.
• Section 3 sets out ways that the GRI Standards can be used and the specific claims, or statements of use, which are required for organizations using the GRI Standards.
The reporting principles are considered to be fundamental to achieving high-quality sustainability reporting and are required to be applied by any organization seeking to claim that its sustainability report has been prepared in accordance with the GRI Standards. The reporting principles, which are presented with guidance that includes tests that organizations can reference to gauge compliance with a particular principle, are divided into two groups, the first one of which includes the following principles for defining report content following consideration of the organization’s activities, impacts, and the substantive expectations and interests of its stakeholders:
• Stakeholder Inclusiveness: The reporting organization shall identify its stakeholders and explain how it has responded to their reasonable expectations and interests.
• Sustainability Context: The report shall present the reporting organization’s performance in the wider context of sustainability.
•Materiality: The report shall cover topics that reflect the reporting organization’s significant economic, environmental, and social impacts; or substantively influence the assessments and decisions of stakeholders.
•Completeness: The report shall include coverage of material topics and their boundaries,7 sufficient to reflect significant economic, environmental, and social impacts, and to enable stakeholders to assess the reporting organization’s performance in the reporting period.8
The second group of reporting principles includes the following principles for defining and ensuring report quality, including the proper presentation of information:
• Accuracy: The reported information shall be sufficiently accurate and detailed for stakeholders to assess the reporting organization’s performance.
• Balance: The reported information shall reflect positive and negative aspects of the reporting organization’s performance to enable a reasoned assessment of overall performance.
• Clarity: The reporting organization shall make information available in a manner that is understandable and accessible to stakeholders using that information.
• Comparability: The reporting organization shall select, compile, and report information consistently. The reported information shall be presented in a manner that enables stakeholders to analyze changes in the organization’s performance over time, and that could support analysis relative to other organizations.
• Reliability: The reporting organization shall gather, record, compile, analyze, and report information and processes used in the preparation of the report in a way that they can be subject to examination, and that establishes the quality and materiality of the information.
• Timeliness: The reporting organization shall report on a regular schedule so that information is available in time for stakeholders to make informed decisions.
Section 2 of GRI 101 sets out the following basic requirements for organizations wishing to use the GRI Standards for their sustainability reporting 9:
• Applying the Reporting Principles: The reporting organization shall apply all reporting principles from Section 1 to define report content and quality.
• Reporting General Disclosures: The reporting organization shall report the required disclosures from GRI 102: General Disclosures (see as follows).
• Identifying Material Topics and Their Boundaries: The reporting organization shall identify its material topics using the reporting principles for defining report content. The reporting organization should consult the GRI Sector Disclosures that relate to its sector, if available, to assist with identifying its material topics. In addition, the reporting organization shall identify the boundary for each material topic.
• Reporting on Material Topics: For each material topic, the reporting organization shall report the management approach disclosures for that topic, using GRI 103: Management Approach (see the following); and either (1) shall report the topic-specific disclosures in the corresponding GRI Standard, if the material topic is covered by an existing GRI Standard (i.e., Series 200, 300, and 400), or (2) should report other appropriate disclosures, if the material topic is not covered by an existing GRI Standard.
• Presenting Information: If the reporting organization reports a required disclosure using a reference to another source where the information is located, the organization shall ensure that the reference includes the specific location of the required disclosure and that the referenced information is publicly available and readily accessible.
• Compiling and Presenting Information in the Report: When preparing a sustainability report, the reporting organization should: present information for the current reporting period and at least two previous periods as well as future short and medium-term targets if they have been established; compile and report information using generally accepted international metrics (such as kilograms or liters) and standard conversion factors, and explain the basis of measurement/calculation where not otherwise apparent; provide absolute data and explanatory notes when using ratios or normalized data; and define a consistent reporting period for issuing a report.
Section 3 of GRI 101 sets out the conditions that must be satisfied by an organization in order for it to properly claim its sustainability report has been prepared in accordance with the GRI Standards.10 Organizations can choose between two options for preparing a sustainability report in accordance with the GRI Standards. The first option, referred to as “Core,” indicates that a report contains the minimum information needed to understand the nature of the organization, its material topics, and related impacts and how they are managed. The second option, referred to as “Comprehensive,” builds on the Core option by requiring additional disclosures on the organization’s strategy, ethics and integrity, and governance. In addition, an organization using the Comprehensive option must report more extensively on its impacts by reporting all of the topic-specific disclosures for each material topic covered by the GRI Standards (i.e., Series 200, 300, and 400).11 Specific guidelines in Section 3 include the following12:
• To claim that a sustainability report has been prepared in accordance with the GRI Standards, the reporting organization must meet all criteria for the respective option (Core or Comprehensive) from Table 4.1 in GRI 101.13
• If, in exceptional cases, an organization preparing a sustainability report in accordance with the GRI Standards cannot report a required disclosure, the organization must provide in the report a reason for omission that describes the specific information that has been omitted; and specifies one of several reasons for omission recognized in GRI 101, including the required explanation for that reason.14
• If the reporting organization uses selected GRI Standards, or parts of their content, to report specific information, but has not met the afore-referenced criteria to prepare a report in accordance with the GRI Standards, the organization: shall include in any published material with disclosures based on the GRI Standards a statement that (i) contains the following text: “This material references [title and publication year of the Standard],” for each Standard used; and (ii) indicates which specific content from the Standard has been applied, if the Standard has not been used in full; shall comply with all reporting requirements that correspond to the disclosures reported; shall notify GRI of the use of the Standards; should apply the Reporting Principles for defining report quality from Section 1 of GRI 101 (as mentioned earlier); and should report its management approach by applying GRI 103: Management Approach (see the following) together with any topic-specific Standard (i.e., Series 200, 300, or 400) used.
• The reporting organization shall notify GRI of its use of the GRI Standards, and the claim it has made in the report or published material, by either sending a copy to GRI at [email protected]; or registering the report or published material at www.globalreporting.org/standards.
GRI 102 (General Disclosures)
GRI 102 includes the “general disclosures” that organizations are expected to use to report contextual information about their activities and operations and their sustainability reporting practices.15 This includes information about an organization’s profile, strategy, ethics and integrity, governance, stakeholder engagement practices, and reporting process. Contextual information regarding an organization (e.g., its size, geographic location, and activities) is important to assist stakeholders in understanding the nature of the organization and its economic, environmental, and social impacts. Specific topics within the overall framework for these general disclosures include the following:
Organizational Profile
• Name of the organization
• Activities, brands, products, and services
• Location of headquarters
• Location of operations
• Ownership and legal form
• Markets served
• Scale of the organization
• Information on employees and other workers
• Supply chain
• Significant changes to the organization and its supply chain
• Precautionary Principle or approach
• External initiatives
• Membership of associations
Strategy
• Statement from senior decision maker
• Key impacts, risks, and opportunities
Ethics and Integrity
• Values, principles, standards, and norms of behavior
Governance
• Governance structure
• Delegating authority
• Executive-level responsibility for economic, environmental, and social topics
• Consulting stakeholders on economic, environmental, and social topics
• Composition of the highest governance body and its committees
• Chair of the highest governance body
• Nominating and selecting the highest governance body
• Conflicts of interest
• Role of highest governance body in setting purpose, values, and strategy
• Collective knowledge of highest governance body
• Evaluating the highest governance body’s performance
• Identifying and managing economic, environmental, and social impacts
• Effectiveness of risk management processes
• Review of economic, environmental, and social topics
• Highest governance body’s role in sustainability reporting
• Communicating critical concerns
• Nature and total number of critical concerns
• Remuneration policies
• Process for determining remuneration
• Stakeholders’ involvement in remuneration
• Annual total compensation ratio
• Percentage increase in annual total compensation ratio
Stakeholder Engagement
• List of stakeholder groups
• Collective bargaining agreements
• Identifying and selecting stakeholders
• Approach to stakeholder engagement
• Key topics and concerns raised
Reporting Practice
• Entities included in the consolidated financial statements
• Defining report content and topic
• Boundaries
• List of material topics
• Restatements of information
• Changes in reporting
• Reporting period
• Date of most recent report
• Reporting cycle
• Contact point for questions regarding the report
• Claims of reporting in accordance with the GRI Standards
• GRI content index
• External assurance.
GRI 103 (“Management Approach”)
GRI 103, referred to as the “Management Approach,” sets out reporting requirements about the approach an organization uses to manage a material topic.16 Disclosures relating to the management approach enable organizations to explain how they manage the economic, environmental, and social impacts related to their specific material topics by providing readers with narrative information about how the organization identifies, analyzes, and responds to its actual and potential impacts. Importantly, the disclosures about the organization’s management approach provide context for the information reported using topic-specific Standards in Series 200, 300, and 400.
An organization preparing a report in accordance with the GRI Standards is required to report its management approach for each material topic using GRI 103 and this requires an explanation of the material topic and its boundary, the management approach used for the topic and its components and an evaluation of the management approach. Topic-specific Standards can also contain additional reporting requirements, reporting recommendations, and/ or guidance for reporting management approach information about the topic in question. Reporting requirements come in the form of “disclosures” for each topic-specific Standard. For example, the Disclosure 401–1 in GRI 401 (“Employment”) relates to “new employee hires and employee turnover” and requires reporting organizations to report both the total number and rate of new employee hires during the reporting period by age group, gender, and region and the total number and rate of employee turnover during the reporting period by age group, gender, and region. The purpose and context of these quantitative measures is to assess the organization’s strategy and ability to attract diverse, qualified employees and the degree to which there may be uncertainty and dissatisfaction among employees.17
GRI 200 Series (Economic Topics)
The 200 series of the GRI Standards include topic-specific Standards used to report information on an organization’s material impacts related to the following economic topics18:
• 201: Economic Performance
• 202: Market Presence
• 203: Indirect Economic Impacts
• 204: Procurement Practices
• 205: Anti-Corruption
• 206: Anti-Competitive Behavior
GRI 300 Series (“Environmental Topics”)
The 300 series of the GRI Standards include topic-specific Standards used to report information on an organization’s material impacts related to the following environmental topics19:
• 301: Materials
• 302: Energy
• 303: Water
• 304: Biodiversity
• 305: Emissions
• 306: Effluents and Waste
• 307: Environmental Compliance
• 308: Supplier Environmental Assessment
GRI 400 Series (“Social Topics”)
The 400 series of the GRI Standards include topic-specific Standards used to report information on an organization’s material impacts related to the following social topics20:
• 401: Employment
• 402: Labor/Management Relations
• 403: Occupational Health and Safety
• 404: Training and Education
• 405: Diversity and Equal Opportunity
• 406: Non-Discrimination
• 407: Freedom of Association and Collective Bargaining
• 408: Child Labor
• 409: Forced or Compulsory Labor
• 410: Security Practices
• 411: Rights of Indigenous Peoples
• 413: Local Communities
• 414: Supplier Social Assessment
• 415: Public Policy
• 416: Customer Health and Safety
• 417: Marketing and Labeling
• 418: Customer Privacy
• 419: Socioeconomic Compliance
1 The GRI Standards replaced the G4 guidelines; however, the GRI explained that the transition for organizations that had previously used the G4 guidelines should be smooth since the main content, concepts, and requirements did not change and the most significant changes occurred with respect to structure and format. For more information, see the “Transition to Standards” page on the GRI website and “From Guidelines to Standards: Implication of the GRI Transition” (BSR Sustainability Matters Webinar, December 2016).
2 GRI 101: Foundation 2016 (Amsterdam: Stichting Global Reporting Initiative, 2016), 3.
3 Id.
4 Id. at 4.
5 Each topic-specific Standard follows a standardized format that begins with an overview of the disclosures in the Standard, continues with the specific management approach disclosures for the Standard, and then moves to the reporting requirements, recommendations and/or guidance associated with each of the topic-specific disclosures for the Standard. For example, GRI 401 (Employment) provides that reporting organizations must report its management approach for employment using GRI 103 (Management Approach) and then includes three topic-specific disclosures based on the Standard number: 401-1 New employee hires and employee turnover; 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees; and 401-3 Parental leave.
6 The information in this section on GRI 101 is adapted from GRI 101: Foundation 2016 (Amsterdam: Stichting Global Reporting Initiative, 2016), which is available for download at www.globalreporting.org.
7 A topic “boundary” is a description of where the impacts occur for a material topic, and the organization’s involvement with those impacts. Organizations might be involved with impacts either through their own activities or as a result of their business relationships with other entities. GRI 101: Foundation 2016 (Amsterdam: Stichting Global Reporting Initiative, 2016), 12.
8 Many organizations simply organize their sustainability reports by reference to the particular Standards that are materially applicable to their operations and thus necessary in order to provide readers with a picture of the organization’s significant economic, environmental, and/or social impacts. In some cases, however, organizations will combine reporting on several different Standards into a broader material topic (e.g., several of the Standards in Series 400 may be grouped together and reported as “Human Rights” or indirect impacts of the organization’s activities, which are covered in Series 200, and impacts of those activities on local communities, which are covered in Series 400, may be reported together as “Community Impact and Development”).
9 GRI 101: Foundation 2016 (Amsterdam: Global Reporting Initiative, 2016), 17–20.
10 Id. at 21–26.
11 Id. at 21.
12 Id. at 22–26.
13 Table 4.1 of GRI 101 lists the criteria to claim a report has been prepared in accordance with either the Core or Comprehensive option. Id. at 23.
14 Table 4.2 of GRI 101 lists four acceptable reasons for omission (i.e., “not applicable,” “confidentiality constraints”, “specific legal prohibitions” and “information unavailable”) and described the required explanation that must be included in the sustainability report for each type of omission. Id. at 24.
15 GRI 102: General Disclosures 2016 (Amsterdam: Stichting Global Reporting Initiative, 2016). GRI 102 is available for download at www.globalreporting.org.
16 GRI 103: Management Approach 2016 (Amsterdam: Stichting Global Reporting Initiative, 2016). GRI 103 is available for download at www.globalreporting.org.
17 When complying with the specific GRI disclosure and reporting requirements, organizations can also include other performance measures such as the “fitness metrics” recommended in the Future-Fit Business Benchmark. The Benchmark calls for organizations to apply a variety of fitness measures with respect to their own employees and employees working for core suppliers including the proportion of employees who are covered by well-functioning health programs that seek to safeguard both physical and mental well-being; the proportion of employees who are paid at least a living wage; the proportion of employees who have formal employment contracts that protect their rights to collective bargaining, fair working hours and parental leave; the proportion of employees who are covered by nondiscrimination policies and well-functioning programs that monitor, identify, and eliminate discriminatory practices; and the proportion of employees who have ready access to well-functioning concerns mechanisms capable of addressing any issues quickly, fairly and transparently. For further information on the fitness measures used in Future-Fit Business Benchmark, see “Future-Fit Business Benchmark: Key Fitness Indicators (KFIs) Calculations and Aggregation Methodologies” available at FutureFitBusiness.org. See also the discussion of the Future-Fit Business Benchmark in A. Gutterman, Strategic Planning for Sustainability (Oakland, CA: Sustainable Entrepreneurship Project, 2019) available at www.seproject.org.
18 Each of the Standards in the GRI 200 Series is available for download at www.globalreporting.org.
19 Each of the Standards in the GRI 300 Series is available for download at www.globalreporting.org
20 Each of the Standards in the GRI 400 Series is available for download at www.globalreporting.org