ABSTRACT

The Global Reporting Initiative (GRI) is a global non-profit institution with the mission to help companies and other organizations report significant impacts on the economy, environment, and surrounding society, including impacts on human rights. GRI was founded in 1997 in Boston, USA, in response to the environmental damage caused by the Exxon Valdez oil spill. GRI’s purpose was to create an accountability mechanism to ensure that companies adhere to the principles of responsible business. In 2020, three-quarters of the G250 (the world’s largest companies by revenue) reported the application of the GRI Universal Standards. Over 10,000 companies disclosed sustainability information following GRI guidance, representing organizations from multiple sectors, sizes, and regions in the world (Threlfall et al., 2020), which positions GRI as a leading global standard setter in sustainable finance. The GRI Universal Standards are structured into three series: (1) GRI Universal Standards, (2) GRI Sector Standards, and (3) GRI Topic Standards. The GRI Universal Standards (GRI, 2021a) detail requirements and principles of sustainability reporting, disclosure about the organization, and guidance on how to conduct materiality assessment. Organizations must adhere to eight reporting principles that ensure high-quality sustainability reporting and proper presentation of the disclosed information: accuracy, balance, clarity, comparability, completeness, sustainability context, timeliness, and verifiability. The GRI Sector Standards (GRI, 2021b) aim to develop specific guidelines for 40 high-impact sectors and will cover disclosure requirements particular to the context of agriculture, fishing, oil and gas, and the coal sector. As of 2022, GRI has launched GRI 11: Oil & Gas, while other guides are underway. Finally, the GRI Topic Standards (GRI, 2021c) help companies conduct a materiality assessment using a four-step approach: (1) Understand the organization’s context, (2) Identify actual and potential economic, environmental, and social impacts of the organization, (3) Assess the significance of these impacts, and (4) Prioritize the most significant impacts for reporting. For each significant impact (also referred to as a material topic), GRI has developed disclosure requirements and metrics that organizations must report or explain why information is omitted. GRI covers approximately 30 material topics divided into economic (tax, market presence, anti-corruption), environmental (water and effluents, biodiversity, emissions), and social (child labor, local communities, and customer health and safety). Companies choose which topics to disclose based on the materiality assessment. For example, violating indigenous people’s rights is a material topic for a company operating in protected areas. Following GRI Topic Standards for sustainability reporting, the company should report on specific metrics that identify violations involving the rights of indigenous people, the status of the incidents, the review process, and remediation plans. Companies are trending toward an integrated reporting approach combining GRI and other sustainability standard setters such as the International Sustainability Standards Board (ISSB), Taskforce for Climate-Related Disclosure (TCFD), and CDP (formerly known as Carbon Disclosure Protocol). While GRI has focused on the impact of business on society (outward impact), SASB, TCFD, and CDP focus on the impact of social and environmental issues on the firm’s value creation (inward impact).