gssbsecretariat@globalreporting.org

Item 02 – Narrow-scope amendments
to GRI 1: Foundation 2021 and GRI 3:
Material Topics 2021 – Discussion
paper
For GSSB discussionDate

26 March 2024

Meeting

9-10 April 2024

Project

Narrow-scope amendments to GRI 1: Foundation 2021 and GRI 3: Material
Topics 2021

Description

This discussion paper outlines possible narrow-scope amendments to GRI 1:
Foundation 2021 and GRI 3: Material Topics 2021 as a result of changes to thereporting landscape, regulatory developments, and advances in digital reporting.
The GSSB is invited to provide feedback on these developments and to consider
the need to start a standard-setting project to implement these narrow-scope
amendments following the GSSB’s Due Process Protocol.

This document has been prepared by the GRI Standards Division and is made available to observers
at meetings of the Global Sustainability Standards Board (GSSB). It does not represent an official
position of the GSSB. Board positions are set out in the GRI Sustainability Reporting Standards. The
GSSB is the independent standard setting body of GRI. For more information visit
www.globalreporting.org.

© GRI 2024

Contents
Introduction.............................................................................................................................................. 3
Reporting landscape developments and the role of the GRI Standards ................................................ 3Context ................................................................................................................................................ 3
Possible amendments to GRI 1 and GRI 3 ......................................................................................... 3
Regulatory developments ....................................................................................................................... 6Context ................................................................................................................................................ 6
Possible amendments to GRI 1 ........................................................................................................... 7
Digital reporting ....................................................................................................................................... 8Context ................................................................................................................................................ 8
Possible amendments to GRI 1 ........................................................................................................... 8

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Introduction

2

The Global Sustainability Standards Board (GSSB) has, over the course of 2023, discussed the3changing reporting landscape and developed its position on how the GRI Standards relate to other4

reporting standards. This includes the International Sustainability Standards Board (ISSB) standards

5and the European Sustainability Reporting Standards (ESRS).

6This paper outlines the need for possible narrow-scope amendments to GRI 1: Foundation 2021 and7

GRI 3: Material Topics 2021 to clearly articulate the position of the GRI Standards in the reporting

8

landscape. It also proposes additional narrow-scope amendments to respond to recent regulatory9

developments and to account for digital reporting advances.

10

The GSSB is invited to provide feedback on the possible amendments to GRI 1 and GRI 3

11outlined in this paper, and on the need and timing to start a standard-setting project to12

implement them following the GSSB’s Due Process Protocol, including public exposure.

13

Reporting landscape developments

14

and the role of the GRI Standards

15

Context

16

Box 1 in GRI 1 explains the link between sustainability reporting and financial and value creation

17

reporting. Since the release of GRI 1 in 2021, the reporting landscape has significantly evolved. The

18

IFRS Foundation has set up the International Sustainability Standards Board (ISSB) with the mandate

19

to develop standards for reporting information about sustainability-related risks and opportunities to20

investors. In the European Union (EU), the Corporate Sustainability Reporting Directive (CSRD) has

21

been adopted and is underpinned by mandatory European Sustainability Reporting Standards

22(ESRS) based on double materiality. Currently, more mandatory regulatory developments are23

emerging.

24

The changing reporting landscape calls for assessing and explaining how the GRI Standards relate to25

these developments and identifying contents in GRI 1 that may require updating. To inform the

26

GSSB’s position on this matter, the Standards Division proposed a text based on the existing Box 1 in

27

GRI 1, which was discussed at the GSSB meetings on 20 April 2023 and 15 June 2023. The

28

proposed text was also shared with the ISSB and EFRAG for comment.

29

Possible amendments to GRI 1 and GRI 3

30

The evolving landscape requires the update of Box 1 in GRI 1 and possibly sections 1.1 ‘Purpose of31

the GRI Standards’, 1.2 ‘Users’, and 5.1 ‘Aligning sustainability reporting with other reporting’. The

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positioning and format of Box 1 within Section 2 of GRI 1 may also necessitate revision, for example,

33

by positioning its content more prominently in Section 1. A summarized version of Box 1 is also

34

included in GRI 3: Material Topics 2021, which would also necessitate updating accordingly.

35

The proposed text included in this paper incorporates the latest feedback from the GSSB provided

36

during the meeting on 15 June 2023 (shown in track changes) but does not constitute the final version

37

for insertion in the GRI Standards. Any proposed changes to the Standards must follow the GSSB

38

Due Process Protocol and will consider ongoing discussions with the ISSB, EFRAG, and other parties

39

the GSSB may deem appropriate before publishing the text for public exposure.

40

The GSSB is invited to provide feedback on:

41•

whether the latest proposed text (shown in track changes) adequately reflects the comments

42

from the GSSB made during the meeting on 15 June 2023 to clarify the meaning of ‘risk and43

opportunity’;44•

whether and, if so, which specific jurisdictional developments to reference in this text;

45•

which other sections of GRI 1 and GRI 3 may necessitate updating to clarify the role of the46

GRI Standards in the reporting landscape.

47

Proposed text based on Box 1 on page 9 of GRI 1: Foundation 2021

48

Box 1. Impact materiality, financial materiality and double materiality in sustainability reporting49

The GRI Standards enable organizations to report information about the most significant impacts of50

their activities and business relationships on the economy, environment, and people, including

51

impacts on their human rights. Such impacts are of importanceThese impacts are identified and52reported using GRI 3: Material Topics 2021. The reported impacts are important to sustainable53

development and to an organization’s stakeholders, such as investors, workers, customers, or local

54

communities. This perspective is also referred to as ‘impact materiality’. It has been adopted in the55

European Sustainability Reporting Standards as one of the two dimensions an undertaking needs to56report on and is expected to see more widespread adoption in regulatory approaches around the57

world.

58

The most significant impacts of an organization can also affect the availability, quality, and59

affordability of the resources and relationships it depends on. Thus, an organization’s impacts can60

result in its own risks and opportunities for the organization. In this context, ‘risks and opportunities’ is61

used to refer to the negative and positive effects on an organization’s prospects (e.g., financial risk,

62market risk, operational risk, reputational risk); it does not refer to the likelihood of a negative or63

positive impact (e.g., risk to society, risk to the environment).

64

TheseThe risks and opportunities that arise from an organization’s impacts can affect the65

organization’s business model or strategy and, consequently, its cash flows, access to finance, or66

cost of capital over the short, medium, or long term. For example, an organization’s high use of non-67

renewable energy contributes to climate change and could, at the same time, result in increased

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operating costs for the organization due to legislation that seeks to shift energy use toward renewable69

sources. Or, an organization’s track record of respecting human rights and promoting gender equality

70

at work helps attract skilled workers, increasing the organization’s reputation and thus helping

71

increaseboosting customers’ demand for its products and services.

72

An organization’s impacts can thus give rise to sustainability-related risks and opportunities in the73

short, medium, or long term. MostNearly all, if not all, of the most significant impacts of an

74

organization, will eventually translate into risks and opportunities. Therefore, understanding these75

impacts is a necessary first step in identifying risks and opportunities that result from an organization’s

76

impacts.

77

An organization’s dependencies on resources and relationships are also a source of risks and78

opportunities, independent of the organization’s impacts on those resources and relationships. For

79

example, when an organization’s business model depends on water and the quality of the water it

80

depends onthat is affected by the polluting activities of other organizations upstream in the river basin.

81

Information about the risks and opportunities that arise from an organization’s most significant

82

impacts and from the organization’s dependencies on resources and relationships are reported under83

the IFRS Sustainability Disclosure Standards. The material topics and related impacts determined

84

with the GRI Standards provide crucial input for identifying the risks and opportunities that arise from85

an organization’s impacts.

86

The IFRS Sustainability Disclosure Standards require disclosing material information about all

87

sustainability-related risks and opportunities that could reasonably be expected to affect an

88organization’s business model or strategy and consequently its cash flows, access to finance, or cost89

of capital over the short, medium, or long term. This includes the sustainability-related risks and90

opportunities arising from the impacts of the organization on the economy, environment, and people.

91

Information is material if omitting, misstating, or obscuring that information could reasonably be

92

expected to influence decisions of primary users of general purpose financial reports (that is, existing93

and potential investors, lenders, and other creditors).

94

The use of the GRI Standards and the IFRS Sustainability Disclosure Standards provideprovides a95

comprehensive overview of an organization’s sustainability-related impacts, risks, and opportunities.

96

The perspectives that each of these standards bring are relevant in their own right and complement

97

each other.

98

The European Sustainability Reporting Standards have adopted ‘financial materiality’ as the second

99

dimension an undertaking needs to report on. The combination of impact and financial materiality is100

referred to as ‘double materiality’ under the European Sustainability Reporting Standards.

101

While mostNearly all, if not all, of the most significant impacts of an organization will eventually102

translate into risks and opportunities, sustainability reporting with. As such, an organization using the103

GRI Standards is independentrequired to report on its most significant impacts regardless of104

considering sustainability-relatedwhether the organization identifies, or over which timeframe it

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identifies, that those impacts will lead to risks and opportunities. It is therefore for the organization.

106

Therefore, it is important for the organization to report on all the material topics that it has determined

107

using the GRI Standards. These material topics cannot be deprioritized on the basis that they dothe108organization identifies that they will not result in risks and opportunities for the organization or by

109

applying materiality definitions of other reporting standards.

110

Regulatory developments

111

Context

112

Over the past 25 years, companies and jurisdictions alike have become more conscious about the113

need to be transparent about corporate impacts. The number of companies voluntarily publishing a

114

sustainability report has been steadily rising. The recently published report by the International

115

Federation of Accountants (IFAC) on the state of play around sustainability disclosure and assurance

116

shows an increase in companies reporting in accordance with the GRI Standards of almost 10% in

1172022 compared to 20191.

118

Similarly, jurisdictions and market regulators around the world have increasingly included reporting in

119

their mandatory and voluntary policies. According to the Carrots & Sticks database2, the most active

120

policy issuers are in Europe (31.5%), followed by Asia Pacific (22.5%). For countries in the Middle

121

East, this represents 2.5%, and in Africa 6%. While North America (7.3%) and South America (9.5%)

122

show slower growth trends in policies, this is expected to grow. This is not least because most of123

these policies now include forms of value chain reporting that impact companies outside the124jurisdictions issuing the policy.

125

In this context, the GRI Standards are the world’s most widely referenced set of standards for126

sustainability reporting. The Carrots & Sticks database shows that 512 policies in 92 countries

127

reference or require the use of the GRI Standards. For example, all listed companies in Taiwan are

128

mandated to publish a GRI report. The same holds true for banks in Egypt.

129

Following the yearslong collaboration on the development of the European Sustainability Reporting

130

Standards, the ESRS have achieved a high level of interoperability with the GRI Standards. This

131

achievement is acknowledged in the joint interoperability statement published by GRI and EFRAG in

132

September 2023. GRI has a strong base of reporters in the EU who will now be subject to the EU

133

mandatory regime and will be able to leverage their existing GRI reporting to comply with it. Many134

new reporters subject to the EU requirements will also be reporting GRI-aligned disclosures as a

135

result of applying the ESRS.

1 The state of play: sustainability disclosure and assurance, IFAC, AICPA & CIMA, February 2024.
2 https://www.carrotsandsticks.net

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Thanks to the high level of interoperability achieved, entities reporting under the ESRS are considered137

as reporting with reference to the GRI Standards. GRI and EFRAG published a draft joint

138

interoperability index in November 2023 to show which GRI requirements are complied with by virtue

139

of applying the ESRS to facilitate a straightforward claim of reporting with reference to the GRI

140

Standards. In addition, as acknowledged in the joint statement and in the interoperability index, EU

141

reporters can also use the GRI Standards to report on additional material topics not covered by the142

ESRS, such as tax, for which organizations can use GRI 207: Tax 2019.

143

Following EU development, more jurisdictions are adopting mandatory reporting regimes that align144

with the GRI Standards, some starting with climate standards. Governments in the Asia Pacific region

145

have indicated that they are looking to develop a full set of impact or double materiality reporting

146

standards that will adopt or be based on global standards but will also consider the national context

147

and political ambitions. Examples include New Zealand, India, Singapore, and three Chinese Stock148

Exchanges. GRI is engaging with these jurisdictions and regulators to ideally adopt the GRI

149

Standards for impact reporting or at least align them to the highest extent possible. In the case of the

150

Indian Business Responsibility and Sustainability Report (BRSR) Framework, GRI has already151

created a linkage document showing the interoperability.

152

With more jurisdictions using the GRI Standards as a key reference for the development of mandatory

153

sustainability reporting requirements, more and more organizations will be applying the contents of154

the GRI Standards through these jurisdictional requirements. These organizations can claim to report155with reference to the GRI Standards. As a result, the interest from jurisdictions in facilitating reporting156

with reference to the GRI Standards through mechanisms such as joint interoperability indices or157

automatic compliance should be expected.

158

Possible amendments to GRI 1

159

The option to report with reference to the GRI Standards outlined in Section 3 of GRI 1 includes two160

use cases. The first use case is for organizations that cannot comply with all the requirements to161report in accordance with the GRI Standards. The second use case is for organizations using

162

selected GRI Standards or parts of their content to report information about specific topics for specific163

purposes, such as complying with a reporting regulation on climate change.

164

An additional use case could be acknowledged in this section to reflect the latest regulatory

165

developments outlined and the growing reality that many reporters will report GRI-aligned disclosures166

in responding to (national) mandatory reporting requirements.

167

This section could highlight that GRI will work with the respective (national) regulators to make the168

necessary authoritative guidance available, such as interoperability indices, and facilitate reporting169

with reference to the GRI Standards through digital means. This guidance should also explain how

170reporters can continue to report in accordance with the GRI Standards, including how they can use

171

the GRI Standards to report on additional material topics not covered by the respective (national)

172

requirements.

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Because there are no minimum disclosures that need to be reported in order to report with reference

174

to the GRI Standards, this section could also clarify that there is no minimum level of interoperability

175

required with (national) requirements for organizations to report with reference. Under this option, an

176

organization must comply with three requirements: publishing a GRI content index, providing a

177

statement of use, and notifying GRI.

178

The three requirements for reporting with reference to the GRI Standards could also be reviewed to179

assess how they could be further eased for reporters that fall under (national) mandatory reporting180

requirements. For example, the requirements for publishing a GRI content index (including the181

content index template included in Appendix 2 of GRI 1) could be reviewed to ensure they enable the182

publication of a joint content index that encompasses the GRI Standards alongside the respective

183(national) standards (to make clear that a separate standalone GRI content index is not required in184

order to report with reference).

185

In addition, an assessment could be made as to how the upcoming GRI Standards XBRL taxonomy

186

could more easily enable the GRI content index and notification process (see next section for more187

information).

188

Digital reporting

189

Context

190

The reporting landscape is experiencing rapid advances in the area of digital reporting. GRI is

191

currently developing an XBRL taxonomy for the GRI Standards, expected to be released in 2024. At

192

the same time, the filing of sustainability information through digital taxonomies is becoming193

mandatory by certain national jurisdictions, and other standard-setters developing their own

194

taxonomies. This calls for assessing the potential implications for GRI 1, including the requirements to

195

report in accordance with or with reference to the GRI Standards.

196

As noted in the previous section, the use of the GRI Standards XBRL taxonomy could also facilitate

197

interoperability with national sustainability reporting requirements.

198

Possible amendments to GRI 1

199

Possible amendments to GRI 1 could include changes to Section 1.4 on ‘Reporting format’ to200

acknowledge the possibility of digital reporting through the GRI Standards XBRL taxonomy.

201

In addition, Section 1.4 states that an organization can publish or make information accessible across202

one or more locations (e.g., a standalone sustainability report, web pages, an annual report). It also

203

states that if an organization intends to publish a standalone sustainability report, it does not need to204

repeat information it has already reported publicly elsewhere, such as on web pages or in its annual

205

report. In such a case, the organization can report a required disclosure by providing a reference inPage 8 of 9

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the GRI content index as to where this information can be found (e.g., by providing a link to the web

207page or citing the page in the annual report where the information has been published). The

208

implications of the XBRL taxonomy on publishing or making information accessible across one or209

more locations need to be investigated.

210

The requirements to publish a GRI content index and to notify GRI within Section 3 of GRI 1, for both211

options to report in accordance with and with reference to the GRI Standards, could also be reviewed

212

to assess how the use of the GRI Standards XBRL taxonomy could more easily enable the publishing213of the content index and the notification process.

214

For example, GRI 1 currently requires organizations to notify GRI of their use of the GRI Standards by215

sending an email to reportregistration@globalreporting.org. When organizations voluntarily file216

information with GRI through the use of the GRI Standards XBRL taxonomy, this could fulfill the217

requirement to notify GRI and forego the need to send an email to218

reportregistration@globalreporting.org.

219

At this stage, the Standards Division does not expect the use of the GRI Standards XBRL taxonomy

220

to become a requirement for reporting in accordance with or with reference to the GRI Standards, as

221

this is not common practice among global standard setters. However, it is left up to the discretion of222

each national jurisdiction that adopts global standards to decide whether to mandate digital filing223

through a taxonomy.

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