The new CEO of GRI tells what every financial should know about sustainability reporting.
Is the ESG reporting landscape overloaded, or is that just a myth? Are the EU and IFRS plans on sustainability reporting competitive or do they have different goals? What is the GRI (Global Reporting Initiative) vision for a more effective – and transparent – global reporting system? And why should companies be responsible for the full range of their impact on people and the planet?
These are just some of the topics explored in ”A Business Case for Environment and Society”, the first publication of a new series that will provide the ‘GRI Perspective’. Further publications with current topics will be released regularly in 2022.
Eelco van der Enden started as CEO of GRI on 1 January. In a recent article, he shares why GRI is leading the global debate on corporate responsibility for sustainability impacts.
The landscape of sustainability reporting has been referred to as ‘the alphabet soup’. Is that correct? What is GRI’s perspective?
“The broader landscape can be confusing, but companies should not be distracted from meeting their transparency obligations by the myriad of ESG guidelines, evaluators, certifiers and others. The reality is that there are only two setters of sustainability reporting standards: the GRI, for economic, environmental and people impacts, and the SASB (Sustainability Accounting Standards Board, ed.) for disclosing corporate value to the investing public.
GRI is, I think, more relevant than ever before. Our standards build credibility with multiple stakeholders and challenge organizations to report in a way that reflects the full range of their impact. For example, a strong financial focus cannot fully clarify how a company safeguards human rights or mitigates climate change.”
The IFRS has launched an International Sustainability Standards Board (ISSB), while the European Union is developing its own European Sustainability Reporting Standards (ESRS). To what extent will this change the reporting landscape and how will they intersect?
“Logically, these two developments are currently receiving a lot of attention. However, it is important to understand their differences. Firstly, the EU standards will cover the full spectrum of sustainability aspects, while IFRS focuses solely on the financial impact of sustainability issues on the business.
Second, the ESRS standards will be mandatory for some 50,000 companies, while the ISSB standards are unenforceable. At GRI, we see these developments as complementary rather than competitive. We are already involved in the EU process, as a co-constructor of the ESRS, and look forward to working with the newly formed ISSB. What is important is that we are moving towards an enhanced two-pillar corporate reporting structure – both financial and sustainable – with each on an equal footing.”
What does GRI bring to the table that others do not? And why do companies have to report more than just their financial consequences and obligations?
GRI empowers companies, investors, policy makers, workers and civil society to engage in dialogue and make decisions that support inclusive sustainable development. We bring truly global, independent and freely accessible sustainability standards that any business – large or small – can use to understand and communicate their impact.
To date, more than 10,000 companies have chosen to voluntarily use the GRI standards because they understand that broad sustainability reporting, in addition to business value, is necessary to achieve socio-economic and environmental coherence. As more organizations accept that full openness and transparency is also good for business, I am convinced that GRI’s global role will continue to grow.”