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The first time I used the Global Reporting Initiative (GRI) framework to do annual Environmental, Social and Governance (ESG) reporting was in late 2010. At the beginning of that year, I had joined The New Forests Company, an East African forestry and value-added timber products business, that had woven sustainability and responsible investment principles throughout its DNA. My predecessor had completed the company’s first annual ESG report (2009) using GRI and I was to continue the annual process. From 2010 through 2012, I used GRI G3, which offered a set of indicators a company could select from and, depending on the number of indicators chosen and reported, the company could achieve a ‘grade’ A+, A, B-…etc. The point was to disclose as much as possible using as many indicators as possible. The premium was on quantity of disclosures or indicators and quality of data reported.

Under G3, with each year of sustainability reporting, we aimed to report on additional indicators while still reporting on those from years past. The desire to add more pieces of information to an already information-heavy report produced the undesired outcome of reader fatigue, wandering scope and ambiguous priorities. Stakeholders wanted to hear about information relevant to the business—information that reflected that which was important to us, that which would help or hinder our growth and that which would contribute to or detract from achieving our goals.

In 2013, GRI released G4, which took the framework and reporting guidance in a new and important direction and introduced the concept of materiality. We applied G4 for the next several years.

"The good news is that the new G4 guidelines are more flexible than previous iterations, focusing on what matters and where it matters. I’m sure we’ll now see more reports that capture the sentiment of their organization’s sustainability story, performance and achievements, and fewer ‘cookie cutter’ reports that have been all too prevalent of late."^[1]

With the introduction of the GRI G4 reporting guidelines in 2013, companies reporting according to the GRI standards were met with a new and thought-provoking task: instead of feverishly collecting data at the end of the year to satisfy a targeted number of indicators to earn the company an A or B or C grade, the shift was toward reporting according to the values of materiality and relevance. What is material to one company in a specific industry or sector may not be material for another. The process of assessing which indicators and which pieces of information were material to New Forests was both challenging and valuable.

"Materiality refers to an organization's significant economic, environmental and social impacts, or to issues that substantively influence the assessments and decisions of stakeholders."^[2]

Using the G4 framework, we were encouraged to consider the question: What was within and what was outside the boundaries of our materiality? That which was material to New Forests was that which mitigated risk to ourselves and our neighbors, added value to our business and ensured a sound ecological and investment climate for sustainable forestry in Africa. These were the guiding priorities we used to formulate our annual plans of action and to select our reporting indicators for the GRI G4 report.^[3]

G4 also introduced the reporting standards for Core vs. Comprehensive. Core effectively meant a reporter was disclosing the required standards as well as those most material to the business. Comprehensive reporting involved disclosing all required standards and all standards associated with the industry in which the business operated.

From 2015 through 2020, as an ESG consultant, I supported companies to conduct their annual ESG reporting using the GRI G4 framework, offering exposure to the ways that the principle of materiality pulls forth different kinds of information from different industries. That which is material to a mining company in Ghana is dramatically different from that which is material to a financial services company in Kenya. That which matters to a forestry operation in Colombia is different from that which matters to an insurance company in Botswana. The ability to report to shareholders and other stakeholders that which is most materially germane to a company’s operations, financials, and performance is the only way to engage in an authentic and compelling conversation about a company: its past, present, and future. It is the only way to disentangle real from perceived risk and the only way to determine strategy and tactics. 

In 2021, GRI published revised Universal Standards as well as several updates to the GRI framework, which are to become mandatory from January 2023. The universal standards have been renamed to:

• GRI 1: Foundation 2021
• GRI 2: General Disclosures 2021
• GRI 3: Material Topics 2021

Some of the changes include:

• Universal Standards: The Universal Standards have been revised to align with intergovernmental organizations like the UN and OECD and provide the first reporting standard and guidance to articulate expectations for due diligence and impact management
  • GRI 1: Foundation. Here, the revisions stress reporting in accordance with GRI Standards, thus replacing the ‘Core’ vs. ‘Comprehensive’ options used under G4. It also provides greater focus on anticipating the impacts of a business on economies and human beings. Finally, it underscores the importance of due diligence and stakeholder engagement
  • GRI 2: General Disclosures. Contains new and revised disclosures on policy commitments for responsible business conduct, covering human rights and due diligence
  • GRI 3: Material Topics. Offers a revised approach to materiality referencing due diligence and assistance with identifying material topics. This section also offers updated guidance on how to determine, manage and report material topics.

The 2021 updates also introduce, in addition to universal standards and topic standards, the arrival of sector-specific standards. In the visual framework, they are represented by a brown cover and a two-digit code. The sector-specific standards help with the identification of material topics. They cover the most relevant economic, environmental and social impacts of a sector, which helps guide reporting. The sector-specific standard for the oil and gas industry was released in October of 2021. A sector-specific standard for the agriculture, aquaculture, and fishing sectors is expected in early 2022.

As I write this piece, in early 2022, I’m struck by the ways in which the discourse and norms surrounding ESG reporting have evolved and developed over the last twelve years. What was once a niche practice of especially forward-thinking, responsible companies committed to sustainability disclosure has become table stakes for any company seeking outside investment, endorsement, presence in the public markets, and to be an employer of choice. And with the growing practice and popularity of ESG reporting have come the improvement of standards and frameworks to guide that process. 

GRI’s ESG reporting framework is now the most widely used by multinational organizations, governments, small and medium enterprises (SMEs), NGOs and industry groups in more than 90 countries. In 2017, 63 percent of the largest 100 companies, and 73 percent of the Global Fortune 250 reported applying the GRI reporting framework. And despite its widespread adoption, other standards have also been developed and adopted in important ways. The Sustainability Accounting Standards Board (SASB) is gaining rapid traction in the North American markets and offers yet another choice to those of us seeking not only to expose our companies to open, transparent review, but to say something meaningful about the social and environmental drivers of business value and ultimately, business success.

^[1] Perks, Jason. GRI G4: A step forward for sustainability or just too daunting? 2013

^[2] NYU Stern Center for Sustainable Business. Sustainability Materiality Matrices Explained. May 2019. https://www.stern.nyu.edu/sites/default/files/assets/documents/NYUSternCSBSustainabilityMateriality_2019_0.pdf

^[3] Sharum, Kate. The New Forests Company Sustainability Report FY13. 2013.  https://businessdocbox.com/82320173-Forestry/The-new-forests-company-sustainability-report-fy13.html