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In the dynamic world of sustainability reporting, the Global Reporting Initiative (GRI) Standards represent a widely recognized set of sustainability standards, providing a reliable framework and guidance for companies worldwide.

As the reporting landscape is evolving with the introduction of the European Sustainability Reporting Standards (ESRS), mandated by the Corporate Sustainability Reporting Directive (CSRD), companies operating in the EU may find themselves at the intersection of GRI and ESRS.

In a significant move towards harmonizing sustainability reporting standards, GRI and EFRAG (European Financial Reporting Advisory Group) recently signed . This agreement reassures companies already reporting according to GRI of their ability to leverage their current reporting processes for the ESRS.

Navigating the interplay between GRI and ESRS becomes important for a seamless transition. In this blog article, we will explain how you can build on your existing GRI reporting processes to prepare for the fulfillment of the forthcoming requirements of the ESRS.

GRI Standards: A Solid Foundation

GRI provides guidelines and standards for companies worldwide to report their sustainability-related information in a standardized and transparent manner.

The GRI framework consists of reporting guidelines and indicators for environmental, social, and governance (ESG) performance and impacts.

It helps organizations identify (1) material issues relevant to their operations and stakeholder concerns, (2) set targets and objectives, and (3) measure progress over time.

Companies worldwide have embraced GRI as the gold standard, incorporating its approach into their reporting practices, as GRI Standards consider the multifaceted aspects of sustainability, offering not just a framework but a narrative that resonates globally.

Concern of Double Reporting: Navigating Global and European Demands

One pressing question for you as a sustainability professional is whether the ESRS will impose 'double reporting' requirements. According to GRI, companies already reporting with GRI Standards can integrate ESRS requirements into their existing processes.

Acknowledging concerns about increased reporting burdens due to new requirements, GRI actively engages with the European Commission to minimize additional demands. The European Commission's strategy aligns with the idea of building on existing standards rather than reinventing the wheel. GRI practices are considered valuable assets that can be integrated into the ESRS framework reporting processes.

As a result, GRI Standards can serve as a useful preparatory tool for ESRS reporting. Companies applying the reporting standards of GRI can find assurance that their current processes align well for the requirements of ESRS.听

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The ESRS will gradually expand their requirements, and utilizing GRI reporting ensures companies are prepared for forthcoming obligations.

Collaborations between GRI and EFRAG or the IFRS Foundation aim to establish a core set of common disclosures and terminology, whether concentrated on evaluating external impacts or understanding how sustainability topics influence an organization, or both.

The collaborative approach seeks to reduce reporting burdens significantly while enhancing the transparency and availability of credible and comparable sustainability data. This partnership acknowledges the advantages for all stakeholders and information users, encompassing investors and reporting organizations.

A Closer Look at ESRS: Novelties and Differences

Notably, ESRS will be legally binding for the first group of organizations starting in 2024, providing an important milestone for data availability and comparability. Although the GRI is a globally applied standard, it is voluntary, companies are not legally obliged to report in accordance with the GRI Standards. In the EU, ESRS will become a fundamental part of systematic reporting routines for companies operating.

While EFRAG ensures alignment with GRI wherever possible, distinctions between the two standards are evident. Differences can refer to the granularity and data type, the scope or the definition between the standards.

For example, the ESRS introduce novelties compared to the impact-focused GRI Standards, such as a more extensive list of ESG data points following the double materiality assessment.听

In the following, we listed some examples of differences:听

ESRS 1 General Requirements听 馃攧 GRI 1 Foundation

• ESRS sustainability reporting is more prescriptive than GRI regarding the requirements for the reporting format
• ESRS require you to conduct a double materiality assessment, including the impact and financial perspective, while GRI are focused on impact materiality
• ESRS require you to use materiality on all levels, such as topics, sub-topics, sub-sub-topics, impacts and opportunities, while GRI refers to materiality at a topic-level

ESRS E1 Climate Change 馃攧 GRI 302 Energy

• The differences between ESRS E1-5 and GRI 302-1, both dealing with data on energy consumption, lie in the way in which the energy consumption data is aggregated and disaggregated

鈥�ESRS E1 Climate Change 馃攧 GRI 305 Emissions

• While ESRS E1-6 requires you to report the intensity ratio for total Greenhouse Gas Emissions (GHG) involving Scopes 1, 2 and 3, GRI 305-4 requires you to report the intensity ratio from Scope 1 and Scope 2 GHG Emissions separately from Scope 3

ESRS S1 Own Workforce听 馃攧 GRI 403 Occupational Health and Safety

• GRI 403-1a demands you to report on the legal requirements and management system standards which your system relies on, while such information is not demanded by the ESRS as this is aspect is regulated by the European Union

ESRS S3 Affected Communities 馃攧 GRI 411 Rights of Indigenous Peoples

• GRI 411-1 requires quantitative data on the number of incidents. ESRS S3 requires narrative disclosures

ESRS G1 Business Conduct 馃攧 GRI 414 Supplier Social Assessment

• While GRI 414-1 demands quantitative data on new supplier screening based on social criteria,听 ESRS G1-2 demands a disclosure in narrative format

Navigating Materiality Across Standards

Material topics, as defined by GRI, transcend the conventional financial materiality applied to businesses.

GRI focuses on impact materiality. This means GRI's interpretation identifies material topics as those representing the organization's most significant impacts on the environment and people, including their human rights. This impact perspective views materiality as the organization鈥檚 outward effects on the socioeconomic constructs it engages with.

GRI Sector Standards, when available, serve as a valuable reference for material topics pertinent to specific sectors. Each organization, guided by its unique context, refines its material topics through iterative collaboration with relevant stakeholders.

Impact materiality according to ESRS distinguishes between negative and positive impacts. Aligning with GRI guidance, it describes actual and potential negative impacts, emphasizing the severity determined by scale, scope, and irremediable character.

In addition, the ESRS involve the financial perspective of materiality, applying the IFRS Sustainability Disclosure Standards tailored to the needs of investors and capital markets. This encompasses the assessment of how the financial effects of sustainability topics shape your organization.

Both perspectives combined, impact and financial materiality, are referred to as double materiality in the context of CSRD.

The ESRS introduced a due diligence process informing the materiality assessment of impacts, risks, and opportunities. It references two international instruments: the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.

This due diligence process adds a layer of robustness to the materiality assessment within the ESRS framework, aligning with globally recognized principles and guidelines.

Mapping GRI and ESRS Reporting Requirements

Addressing the practical concerns of sustainability professionals, GRI and EFRAG aim to provide detailed technical guidance on mapping GRI Standards to ESRS requirements.

On November 30, 2023, they announced the public availability of the draft version of their , a mapping tool of the disclosures from both standards to offer clarity for reporting companies.

This Interoperability index sets out to:

• illustrate the interrelation between disclosure requirements and data points in each set of standards
• empower you to incorporate GRI standards as a reference in your ESRS reporting
• assist you in utilizing your ongoing reporting endeavors to craft your ESRS sustainability report
• establish robust groundwork for a mutual digital taxonomy

The mapping highlights the substantial commonality that has been already established between the two standards. Their interoperability eliminates the necessity for dual reporting, creating a user-friendly reporting system without unnecessary complexity.听

Entities reporting under ESRS can be considered as reporting 'with reference' to the GRI standards, allowing you to use ongoing GRI reporting efforts for crafting your ESRS sustainability report.

To continue to facilitate the reporting processes, EFRAG and GRI are working on a digital correspondence table to ensure digital compatibility for the ESRS and GRI standards.

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