A brief introduction to the GRI reporting framework
A brief introduction to the GRI reporting framework
The global sustainability landscape is shifting rapidly as climate change upends communities and businesses, disrupts supply chains, and governments begin to tighten regulations. Through all of this, investors and business stakeholders want to ensure a return on investment while minimizing risk. In turn, the demand for sustainability reporting and disclosures is becoming an imperative.
ESG (Environmental, Social, Governance) and sustainability reporting standards are transitioning from voluntary to mandatory as companies begin to compete for sustainability-focused investment capital. According to the Governance & Accountability Institute, 90% of companies in the S&P 500 Index issued sustainability reports in 2019.
Through reporting, an organization can better understand and manage its impacts on people and the planet while identifying and reducing risks, seizing new opportunities, and taking action towards becoming a responsible, trusted organization. However, while many companies are likely to boast about the ESG goals they are achieving, clear and uniform reporting standards are still in their infancy stage as regulations and investor preferences evolve.
The 2019 ESG Global Survey published by BNP Paribas found that 66% of asset owners and asset managers cited data and reporting issues as the biggest barrier to greater adoption of ESG across their portfolios. As the need for data requirements grows, certain reporting standards are beginning to shine as industry leaders and support the creation of standardized frameworks.
One of these leading reporting frameworks is the Global Reporting Initiative (GRI), a non-profit organization that provides businesses with a framework for comprehensive corporate sustainability reporting. The 2020 KPMG Survey of Sustainability Reporting found 96% of the world’s largest 250 companies (G250) report on their sustainability performance. And around three-quarters (73%) of the G250 now use GRI.
What is GRI reporting?
GRI reporting is becoming widely accepted around the world as a leader in standardizing sustainability reporting in part because of the Triple Bottom Line approach. The GRI Standards help organizations understand their outward impacts on the economy, environment, and society.
GRI was founded in 1997 following the public outcry over the environmental damage of the Exxon Valdez oil spill. With roots in CERES and the Tellus Institute, as well as involvement in the UN Environment Programme, the goal of GRI was to create an accountability mechanism that would ensure companies adhere to responsible environmental conduct. As GRI grew, the reporting system was broadened to include social, economic, and governance issues.
An overview of the GRI framework
Today, GRI reporting increases company accountability and provides transparency surrounding their sustainability goals, efforts, and outcomes. The GRI reporting framework consists of universal standards and topic standards that organizations can use to prepare and report information that showcases significant sustainability impacts.
GRI reporting is broken down into a five-step process:
- Step 1: Prepare – Organizations define a vision for the report, create a report team, develop a plan of action, and set a kickoff meeting.
- Step 2: Connect – Companies identify, hold meetings, and set priorities with key stakeholders in order to determine reporting priorities and define scope.
- Step 3: Define – The reporting team selects issues for action and reporting as well as decides on the report content.
- Step 4: Monitor – The reporting team monitors activities and records data, checks processes and systems, ensures quality of information, and follows up as needed.
- Step 5: Report – Companies choose the best way to communicate, write, finalize, and launch the report publicly.
GRI also offers a variety of services, tools, and training to guide report teams through different stages of the reporting process, including their materiality assessment.
What does GRI reporting cover?
GRI reporting protocols aim to cover a wide range of ESG issues, from employee safety and human rights to environmental management. With the world currently focused on reaching the Paris Agreement goal of net-zero emissions by 2050, environmental management sustainability reporting has become particularly important to companies, investors, and customers around the world.
In order to determine the weight of greenhouse gas emissions (GHG) generated on-site, companies must carefully track their product usage, chemical inventory, and control technologies. This is also true for water consumption and waste tracking as well as hazardous waste generation. These are all part of the GRI reporting framework that will require a deeper knowledge of company processes and supply chains, as well as comprehensive data inputs.
The GRI offers 30 environmental performance indicators that should be used as part of your environmental sustainability report. These performance indicators are divided into nine primary categories:
- Materials: Includes raw materials (natural resources, manufactured chemicals, and materials needed for manufacturing) as well as packaging materials and recycled product content.
- Energy: Includes direct and indirect energy consumption, renewable energy amounts used, such as wind, solar, and geothermal, and efforts made to reduce energy requirements through more energy efficient processes.
- Water: Covers the total amount of water withdrawn from water sources and company impact on those water sources, as well as the percentage and total volume of water that is recycled or reused.
- Biodiversity: Provides information regarding company impact on the biodiversity of adjacent/nearby protected areas and/or areas considered to have high biodiversity, as well as company strategies for managing impacts on biodiversity.
- Emissions, Effluents, Waste: Includes total weight of direct and indirect emission of GHGs, ozone-depleting emissions, and NOx, SOx, and other air emissions by type; total water discharge by quality and destination; total weight of waste generated by type and disposal method; total weight of treated, transported, or imported hazardous waste either as well as the percentage of waste shipped internationally; total volume and number of spills on and off-site.
- Products and Services: Provides the percentage of products sold and packaging materials that are reclaimed/recycled.
- Compliance: Provides the total monetary value of noncompliance fines and number of noncompliance sanctions.
- Transport: Describes the impact of transporting your materials and finished products.
- Overall: Provides the total values of environmental protection expenses and investments.
In order to provide information on all of these performance indicators, the GRI reporting framework requires clear and concise data. It takes a team of specialists working with the right tools just to collect and calculate this type of data. This data is a large reason why GRI reporting is held in such high global regard and produced some real results.
Getting started with GRI reporting
To get started, many companies are turning to sustainability management platforms that help businesses monitor non-renewable energy sources, minimize harmful emissions and waste, reduce operational costs, and ensure regulatory compliance, compile critical data, and support GRI reporting and other reporting platforms.
Utilizing ESG reporting software and expert ESG consultants can help companies gain a solid understanding of GRI Standards, choose material aspects to report on, conduct interviews, report on from the variety of available KPIs, aggregate and analyze sustainability performance data, draft or improve your sustainability report, as well as support organizational transparency and communication.
ESG materiality assessments
With investors inquiring more and more frequently about what your company is doing in regard to responsible investment, how you treat employees and vendors, your dedication to sustainability initiatives, and other activities that fall under the ESG umbrella, it’s important to have answers to these questions.
An ESG materiality assessment empowers you to easily report on your current state and outline future initiatives while taking into consideration your business goals and risks. Download our guide to creating and extracting the maximum strategic value from an ESG materiality assessment.