If you have a business or an organization, one of the emerging needs that you need to carefully focus on is sustainability reporting. This is a process of entrenching sustainability into an organization and telling your stakeholders about it. Sustainability reporting is the disclosure of the environmental, social and governance impacts of a company’s operations.
To do this, there are a number of frameworks that you can use, including GRI (Global Reporting Initiative),SASB (the Sustainability Accounting Standards Board), and TCFD (the Task Force on Climate-Related Financial Disclosures).
One of the earliest of these frameworks is GRI, which was developed in 1997, about five years after the first UN Conference on Environment and Development (UNCED).
GRI is a comprehensive framework that outlines core standards to help organizations understand and report their outward impacts on the environment, society, and economy. This post digs deeper into the GRI framework to highlight its standards and provide a step-by-step guide on how to apply them in your organization.
Before looking at the GRI sustainability reporting standards, it is prudent to understand where concerns for the planet are coming from. Reports of massive loss of forest cover, massive pollution, oil spills, bomb attacks, child labor, human trafficking, and civil conflicts, among others, hit the news every other day.
Some of the latest, perhaps most disturbing, were the images of Afghans climbing on a plane about to take off if only to get a chance to run away from their motherland. What about 80,000 acres of land that are cleared every day? It appears that the planet is racing towards self-destruction.
GRI Framework was developed through a multi-stakeholder process and in line with internationally recognized studies. Its standards are aimed at helping to ensure that businesses do not just take responsibility for their operations but internalize the core idea of making the planet a better place for all.
This is why the standards are anchored on core principles to ensure that the reports generated by companies are accurate and reliable.
As we are going to demonstrate shortly, all the GRI standards are issued by the Global Sustainability Standards Board (GSSB) and can be applied in a wide range of organizations. Besides, they are not immobile. With time, they are adjusted to reflect the emerging realities for sustainability considerations. For example, the standards were updated recently to reflect the sustainable development goals (SDGs).
The sustainability reporting based on the GRI framework is expected to provide a balanced representation of an organization so that the positive and negative contributions towards the global sustainable goals become clear. As a result, both internal and external stakeholders, such as shareholders, potential investors, and customers, can make their decisions about the organization.
The GRI sustainability standards are crafted as a set of interrelated standards to help your organization correctly report its impacts on the environment, social, and governance impacts.
Therefore, preparing a sustainability report based on GRI framework standards means that a stakeholder can easily see the organization and visualize it in the wider neighbourhood and the planet. Is this organization making a positive impact on the planet or damaging it?
Reports generated using GRI framework standards can be created either as standalone reports or referenced from data gathered in various locations of the organization. However, the report must include the GRI context index. As an organization, your goal is to demonstrate to stakeholders that you are moving towards helping make the world a better place.
GRI sustainability standards are structured into four series, from the 100 series to 400 series:
These standards are further categorized into three, GRI 101, GRI 102, and GRI 103.
GRI 101, also referred to as the Foundation, is considered the starting point for applying the GRI framework in your organization. They outline the core principles that define the actual report content and the quality expectation. For example, the foundation standards explain how you should prepare the ESG sustainability report and referencing the standards.
GRI 102, also called the General Disclosures, is the standard for reporting contextual information on an organization and its practices for reporting sustainability-related practices.
Therefore, it includes data about a business's profile, including strategy, ethics, integrity, reporting process, and stakeholder engagement practices.
GRI 103, also called the Management Approach, is very important because it helps organizations report how they manage material topics. This standard is meant to be applied for every material topic in the sustainability report. Indeed, GRI 103 is crafted to be used in relation to material topics, even those that are covered in the latter standards, 200, 300, and 400.
These standards are used for reporting information about an organization’s operations in relation to its environmental, social, and economic impacts. The 200 series standards are for economic topics, 300 series for environmental topics, and 400 series for social-related topics.
For 200-400 series standards, it is crucial to appreciate that the standards and structure of your organization will also determine how you apply them.
Let’s demonstrate with the 200 series standards for economic-related topics. If your organization is an insurance firm, the focus might be creating new policies or enhancing the current ones, while a manufacturer might want to rethink the overall efficiency through the installation of new machinery.
Now that you understand the GRI framework standards, how do you implement it? Indeed, this has been a challenge for many organizations. First, we need to indicate that you can implement ESG reporting using the GRI framework alone or in combination with others, such as SASB or TCFD, depending on your preference. To use the GRI framework, here are the main steps to follow:
To use GRI for ESG sustainability reporting, it is important to understand and apply all the principles outlined in its guidelines. One of these is materiality.
Materiality is a term used to mean targeting the reporting areas that have the largest impacts. Because there are so many things that you can report on, the focus should be on those with the biggest impacts. Other principles that you should focus on include completeness, stakeholder inclusiveness, sustainability context, clarity, accuracy, and comparability.
As we highlighted earlier, the ESG sustainability report you create is designed for stakeholders. Therefore, the report needs to clearly identify the actual stakeholder in materiality assessment. So, it will be a good idea to connect with them and establish what they prefer. For example, they might want you to start by cutting down emissions, reducing water use, or relooking at the welfare of the staff.
This stage involves a comprehensive review of the company's operations to establish key opportunities and risks. Try to be as thorough as possible.
Also, check for key control gaps and set clear targets. Depending on your organization, it is paramount to check what will have the most impact on both the internal and external stakeholders. For example, increasing the efficiency of your system might be preferred because it makes it possible to cut down emission rates, improves the production &quality of products, and profitability.
Now that you have set the target, it is time to implement your ESG sustainability reporting strategy. Remember that every detail plus its context should be captured well because stakeholders want information they can verify. For example, if you indicate that your company was able to remove so much volume of carbon dioxide, it is important to indicate how the calculations were made.
To make reporting even easier, it will be a good idea to automate the process. For example, you might want to use sustainability reporting software to progressively capture information at specific intervals and tabulate it for further analysis. You might also want to work with a team of professionals to make the process more effective.
When you finally get all the data, based on the targeted frequency of sustainability reporting, it should be used to demonstrate how the organization has fared on. If your organization is in an area where regulatory policies require specific pieces of information to be included, ensure to comply before the report is released. For example, all companies listed or expecting to get listed in the Hong Kong Stock Exchange are required to show their environmental, social, and governance impacts, and further how to overcome future sustainability challenges.
Remember that the report you will create next time will be a continuation of what you have generated. Therefore, the report should provide a reliable sense of continuity for stakeholders to easily see the direction of the company.
As you can see, GRI is an excellent framework with a wide range of applications. To apply it correctly, it is prudent to comprehend the principles well and follow the stages we have listed in this post. Furthermore, you should adopt appropriate sustainability management software, such as Diginex, to help you integrate with the rest of your management system. Do not be left behind: get counted by using the GRI framework for ESG sustainability reporting.
Hong Kong Stock Exchange (HKEX) has introduced new requirements for all listed companies and new stock issuers.
After years and decades of searching, researching, and testing, a solution for most planetary problems has been found: ESG sustainability reporting.