Barbara Strozzilaan 336
1083 HN Amsterdam
The Netherlands
gssbsecretariat@globalreporting.org

Item 03 – GRI Universal Standards
Project – Revised GRI 102: Section 4.
Governance
For GSSB discussion
Date

17 March 2021

Meeting

25 March 2021

Project

GRI Universal Standards Project

Description

This document presents the revised draft of Section 4. Governance in GRI 102:
About the Organization following the public comment feedback. Key changes arehighlighted in comment boxes within the document. Minor editorial changes havenot been highlighted, but a draft tracking all changes to the text has been includedin the Annex.
Please note that several changes are pending subject to feedback from ICGN andongoing internal review. These will be presented to the GSSB for review ahead ofits meeting in April 2021. In addition, the GSSB is requested to review theStandards Division’s research and proposals on annual total compensation ratio
on pages 24-27.
The public comments to this draft can be found here:
https://www.globalreporting.org/media/s0bbizo2/item-05-public-comments-torevisions-gri-102-in-the-universal-standards-exposure-draft.pdf

Page 1 of 27

Contents
Explanatory note ................................................................................................................... 3
Revised GRI 102: About the Organization ............................................................................. 4
Annex 1. Revisions with track changes ............................................................................... 13
Annex 2. Research on annual total compensation ratio ....................................................... 24

Page 2 of 27

1

Explanatory note

2
3
4
5

The following significant revisions below have been made in response to public comment feedback.
Additional revisions made in response to public comment feedback are explained in comment boxes.
Editorial revisions have been made to the text to improve clarity and consistency with the GRI Style
Guide and are flagged in comment boxes.

6

Section 4. Governance

7
8
9
10

•

Consolidated disclosures GOV-7 ‘Role of the highest governance body in setting purpose,values, and strategy’ and GOV-10 ‘Identification and management of impacts’ with GOV-4‘Responsibilities for sustainable development’, see lines 92-109, 336-360, 397-408 and 469489.

11
12
13
14

•

Moved requirements on delegation and internal resources into a separate disclosure to
distinguish between responsibilities of the highest governance body for sustainable
development and those existing in the rest of the organization, see lines 113-127 and 365389.

15
16
17
18
19

•

Replaced the term ‘sustainable development topics’ with ‘impacts on the economy,
environment, and people, including on their human rights’ for consistency with the terminology
used in the GRI Standards. A shorthand ‘impacts on the economy, environment, and people’has been used in the formulations of disclosures, for conciseness and feasibility oftranslations.

20
21
22

•

Revised sequence of disclosures to improve flow. Section starts with general disclosures on
structure and composition, followed by provisions in relation to governance of sustainability,and ends with provisions on evaluation and performance.

23
24
25

In addition, Disclosure GOV-14 ‘Annual total compensation ratio’ remains under development. The
Standards Division has included a summary of research conducted in response to public comment
feedback and proposals on how to address the feedback on pages 24-27.

Page 3 of 27

26

Revised GRI 102: About the27

Organization

28

Table of contents

Commented [SD1]: Type of change: editorial revision.

29

Disclosure GOV-1 Governance structure and composition ........................................................... 530

Disclosure GOV-2 Nomination and selection of the highest governance body ..................... 631

Disclosure GOV-3 Chair of the highest governance body .............................................................. 632

Disclosure GOV-4 Responsibilities for sustainable development .............................................. 633

Disclosure GOV-5 Delegation and internal resources for sustainable development ........... 734

Disclosure GOV-6 Role of the highest governance body in sustainability reporting ............ 735

Disclosure GOV-7 Stakeholder consultation with the highest governance body .................. 836

Disclosure GOV-8 Conflicts of interest ................................................................................................... 837

Disclosure GOV-9 Communication of critical concerns ................................................................... 838

Disclosure GOV-10 Collective knowledge of the highest governance body ........................... 939

Disclosure GOV-11 Evaluation of the performance of the highest governance body ......... 940

Disclosure GOV-12 Remuneration policies .......................................................................................... 941

Disclosure GOV-13 Process for determining remuneration ......................................................... 1042

Disclosure GOV-14 Annual total compensation ratio ..................................................................... 11

Page 4 of 27

Revised sequence of disclosures to improve flow.
Section starts with general disclosures on structure andcomposition, followed by provisions in relation to
governance of sustainability, and ends with provisions
on evaluation and performance.

43

Section 4. Governance

44
45
46
47
48

The disclosures in this section provide transparency on the governance structure,composition, roles, and remuneration. The information reported under these disclosures isimportant to ensure the accountability of governance bodies and senior executives withrespect to sustainable development and the organization’s impacts on the economy,
environment, and people, including impacts on their human rights.

49
50

The International Corporate Governance Network (ICGN) Global Governance Principles set
out expectations for organizations in relation to governance.

52

Disclosure GOV-1 Governance structure andcomposition

53

Requirements

54

The organization shall:

55
56

a. describe its governance structure, including committees of the highest
governance body;

57
58
59

b. list the committees of the highest governance body that are responsible fordecision-making on and overseeing the management of impacts on the economy,
environment, and people;

60

c. describe the composition of the highest governance body and its committees by:

51

61

i.

executive and non-executive members;

62

ii.

independence;

63

iii.

tenure of members on the governance body;

64
65

iv.

number of other significant positions and commitments held by eachmember, and the nature of the commitments;

66v.

gender;67

vi.

representation of under-represented social groups;

68
69

vii.

competencies relating to sustainable development that are relevant to theorganization and the sector in which it operates;

70

viii.

stakeholder representation.

71

Guidance

72
73

Placeholder text: See reference X in the Bibliography section for more information on
independence criteria for governance bodies.

Commented [SD2]: Type of change: editorial revision.
The term ‘sustainable development topics’ has been
replaced with ‘impacts on the economy, environment,
and people, including on their human rights’ forconsistency with the terminology used in the GRI
Standards. A shorthand ‘impacts on the economy,
environment, and people’ has been used in theformultations of disclosures, for conciseness andfeasibility of translations.

Commented [SD3]: Revision pending feedback from
ICGN: expansion of diversity criteria either in therequirement or guidance.
Respondents to the public comment suggested to
expand diversity criteria to age, disability, marriage andcivil partnership, civil registration gender, race, religion
or belief, sex and sexual orientation, geographicaldiversity.
Commented [SD4]: Revision pending feedback from
ICGN: clarification of the term ‘independence’.
Commented [SD5]: Revision pending feedback from
ICGN: clarification of the term ‘significant position.

Page 5 of 27

75

Disclosure GOV-2 Nomination and selection of thehighest governance body

76

Requirements

77

The organization shall:

78
79

a. describe the nomination and selection processes for the highest governancebody and its committees;

80
81

b. describe the criteria used for nominating and selecting highest governance bodymembers, including whether and how the following are taken into consideration:

74

82

i.

views of stakeholders (including shareholders);

83

ii.

diversity;

84

iii.

independence;

Commented [SD6]: Type of change: editorial revision.

85

iv.

expertise and experience relating to sustainable development.

Moved requirements on delegation and internal
resources into a separate disclosure to distinguishbetween responsibilities of the highest governance bodyand those existing in the rest of the organization. Seelines 114-128.

87

Disclosure GOV-3 Chair of the highest governance
body

88

Requirements

89

The organization shall:

90
91

a. report whether the chair of the highest governance body is also a senior
executive in the organization;

92
93
94

b. if the chair is also a senior executive, explain their function within theorganization’s management, the reasons for this arrangement, and how conflictsof interest are managed.

86

Deleted exposure draft requirement GOV-3-a ‘describe
the role and responsibilities of the highest governancebody with regard to decision-making for sustainable
development topics’ based on duplication with thefollowing disclosures:

96

Disclosure GOV-4 Responsibilities for sustainable
development

97

Requirements

98

The organization shall:

99
100
101

a. describe the role of the highest governance body and of senior executives indeveloping, approving, and updating the organization’s purpose, value or mission
statements, strategies, policies, and goals related to sustainable development;

102
103
104

b. describe the role of the highest governance body in overseeing the organization’s
due diligence processes to identify and manage impacts on the economy,
environment, and people, including:95

Commented [SD7]: Type of change: revision following
public comment feedback.

- Disclosure GOV-10-a requires information on the roleof the HGB to oversee processes to identify andmanage impacts;- Disclosure GOV-1-b in the exposure draft requires toreport committees responsible for decision-making forsustainable development.
Commented [SD8]: Type of change: revision following
public comment feedback.
Consolidated Disclosure GOV-7 ‘Role of the highest
governance body in setting purpose, values, andstrategy’ under this disclosure in response to public
feedback about duplication.
Commented [SD9]: Type of change: editorial revision.

Page 6 of 27

Consolidated sub-clause to report on the role of thehighest governance body to report on its role in due
diligence processes directly with the formulation ofrequirement GOV-4-b. See lines 348-351.
Commented [SD10]: Type of change: revision
following public comment feedback and editorial
revisions.
Consolidated Disclosure GOV-10 ‘Identification andmanagement of impacts’ under this disclosure in
response to public comment feedback about
duplication.

105
106

i.

the role of any committees of the highest governance body that havespecific responsibilities in relation to these processes;

107
108

ii.

how the highest governance body considers the outcomes of theseprocesses;

109
110
111

c. describe the role of the highest governance body in reviewing the effectiveness ofthe organization’s processes as described in GOV-4-b, and specify the frequencyof this review.

112

Guidance113

See references 13, 15, 17, and 18 in the Bibliography section.

115

Disclosure GOV-5 Delegation of responsibility for
managing impacts

116

Requirements

117

The organization shall:

118
119

a. describe how the highest governance body delegates responsibility for the
management of impacts on the economy, environment, and people, including:114

Moved requirements on delegation and internal
resources into a separate disclosure to distinguishbetween responsibilities of the highest governance bodyand those existing in the rest of the organization.

120
121

i.

whether it has appointed any senior executives with responsibility for the
management of impacts;

122
123

ii.

whether it has delegated responsibility for the management of impacts toother employees;

124
125
126

b. describe the process and frequency for senior executives or other employees toreport back to the highest governance body on the management of impacts on
the economy, environment, and people;

127
128

c. describe the internal resources that the organization has allocated for managing
impacts on the economy, environment, and people.

130

Disclosure GOV-6 Role of the highest governancebody in sustainability reporting

131

Requirements

132

The organization shall:

133
134
135

a. report the committee of the highest governance body or the senior executive
position that reviews and approves the organization’s sustainability reporting andensures that the organization reports on its material topics.

129

Commented [SD11]: Type of change: editorial
revision.

Page 7 of 27

Revised formulations for clarity.

137

Disclosure GOV-7 Stakeholder consultation with thehighest governance body

138

Requirements

139

The organization shall:

140
141
142

a. describe the processes and frequency for consultation between stakeholders andthe highest governance body in relation to the organization’s impacts on theeconomy, environment, and people;

143
144
145

b. if responsibility for stakeholder consultation is delegated, report to whom it isdelegated, and how the feedback received is provided to the highest governance
body.

146

Disclosure GOV-8 Conflicts of interest

147

Requirements

148

The organization shall:

149
150

a. describe the processes for the highest governance body to ensure that conflictsof interest are avoided and managed;

151
152

b. report whether conflicts of interest are disclosed to stakeholders, including, ast aminimum, the following conflicts of interest:

136

153

i.

Cross-board membership;

154

ii.

Cross-shareholding with suppliers and other stakeholders;

155

iii.

Existence of controlling shareholder;

156

iv.

Related parties, their relationships, transactions, and outstanding balances.

157

Guidance158

See reference 13 in the Bibliography section.

159

Guidance to GOV-8-b-iii

160
161

The organization should use the definition of controlling shareholder applied in theorganization’s consolidated financial statements or equivalent documents.

163

Disclosure GOV-9 Communication of criticalconcerns

164

Requirements

165

The organization shall:

162

Commented [SD12]: Revision pending feedback
from ICGN: whether disclosure of conflicts of interest
themselves is necessary or only of the process how
they are disclosed to stakeholders.

Commented [SD13]: Revision pending feedback
from ICGN: clarification of ‘related parties’.

Commented [SD14]: Revision pending feedback
from ICGN: inclusion of this disclosure given
duplication with other disclosures in the GRI Standards
that cover communication and resolution processes ofconcerns related to:- anti-corruption (GRI 205: Anti-corruption 2016);- tax (GRI 207: Tax 2019);- due diligence and conduct (RBC-5 Mechanisms forseeking advice and raising concerns and RBC-4
Grievance mechanisms and other remediation
processes);- impacts (MT-1 Identification of material topics andrelated impacts).

Page 8 of 27

166
167

a. describe the processes for communicating critical concerns to the highest
governance body;

168
169

b. report the total number and the nature of critical concerns that werecommunicated to the highest governance body during the reporting period;

170c. describe the mechanisms used to address and resolve critical concerns.

171

Guidance

172
173
174
175
176
177

Critical concerns include concerns about the organization’s impacts that are raised bystakeholders through grievance mechanisms. They also include concerns about responsible
business conduct in the operations of the organization and its business relationships, which
are identified through other mechanisms that the organization has set up for individuals toseek advice and raise concerns. See the Guidance sections in RBC-4 and RBC-5 for more
information.

179

Disclosure GOV-10 Collective knowledge of thehighest governance body

180

Requirements

181

The organization shall:

182
183

a. report measures taken to advance the collective knowledge, skills, andexperience of the highest governance body on sustainable development.

178

185

Disclosure GOV-11 Evaluation of the performance ofthe highest governance body

186

Requirements

187

The organization shall:

188
189
190

a. describe the processes for evaluating the performance of the highest governancebody in relation to the governance of impacts on the economy, environment, andpeople;191
192

b. report whether the evaluation is independent or not, and the frequency of theevaluations;

193
194

c. describe actions taken in response to the evaluation, such as changes to thecomposition of the highest governance body and organizational practices.

195

Disclosure GOV-12 Remuneration policies

196

Requirements

197

The organization shall:

184

Page 9 of 27

198
199

a. describe the remuneration policies for members of the highest governance bodyand senior executives, including:

200

i.

fixed pay and variable pay;

201

ii.

sign-on bonuses or recruitment incentive payments;

202

iii.

termination payments;

203

iv.

clawbacks;

204

v.

retirement benefits;

205
206
207

b. describe how the remuneration policies for members of the highest governancebody and senior executives relate to their objectives and performance in relation
to overseeing impacts on the economy, environment, and people.

208

Guidance

209

Guidance to GOV-12-a

210
211

Fixed pay and variable pay can include performance-based pay, equity-based pay, bonuses,and deferred and vested shares.

212
213
214
215

Termination payments are all payments and benefits given to a departing senior executive or
member of the highest governance body whose appointment is terminated. Termination
payments extend beyond monetary payments, from transferring property to automatic or
accelerated vesting of incentives.

216
217
218

Clawbacks are a repayment of previously received compensation that a senior
executive or highest governance body member is required to make to their employer in theevent that certain conditions of employment or goals are not met.

219
220

If the organization uses performance-based pay, it should describe how remuneration forsenior executives is designed to reward long-term performance.

221

If the organization uses termination payments, it should explain whether:

222
223

•

notice periods for highest governance body members and senior executives aredifferent from those for other employees;

224
225

•

termination payments for highest governance body members and senior executives
are different from those for other employees;

226
227

•

whether departing highest governance body members and senior executives receive
payments other than those related to the notice period;

228•

whether any mitigation clauses are included in the termination arrangements.

229
230
231

The organization should report the differences between the retirement benefit schemes andthe contribution rates for the highest governance body members, senior executives, ascompared to other employees.

233

Disclosure GOV-13 Process for determining
remuneration

234

Requirements

232

Page 10 of 27

235

The organization shall:

236
237

a. describe the process for designing its remuneration policies and for determining
remuneration;

238
239
240

b. report whether independent highest governance body members or an
independent remuneration committee oversees the process for determining
remuneration;

241
242

c. describe how the views of stakeholders (including shareholders) regarding
remuneration are sought and taken into consideration;243

d. report the results of votes on remuneration policies and proposals, if applicable;

244
245
246
247

e. report whether remuneration consultants are involved in determining
remuneration and, if so, report any relationships between the remuneration
consultants and the organization, its highest governance body, or senior
executives.

248

Disclosure GOV-14 Annual total compensation ratio

249

Requirements

250

The organization shall:

251
252
253
254

a. report the ratio of the annual total compensation for the organization’s highestpaid individual in each country of significant operations to the median annual
total compensation for all employees (excluding the highest-paid individual) in
the same country;

255
256
257
258

b. report the ratio of the percentage increase in annual total compensation for theorganization’s highest-paid individual in each country of significant operations to
the median percentage increase in annual total compensation for all employees(excluding the highest-paid individual) in the same country.

259

Guidance

260

Guidance to GOV-14

261
262
263

Annual total compensation includes salary, bonus, stock awards, option awards, non-equity
incentive plan compensation, change in pension value, and nonqualified deferredcompensation earnings provided over the course of a year.

264

When calculating the ratios, the organization should:

265•

for each country of significant operations:266-

list types of compensation included;267-

specify whether full-time and part-time employees are included;

268
269

-

specify whether full-time equivalent pay rates are used for each part-time
employee;

270
271

•

depending on the organization’s remuneration policies and availability of data,consider all of the following:

Page 11 of 27

Commented [SD15]: Revision pending feedback
from ICGN: clarification of ‘relationships withremuneration consultants’.

Commented [SD16]: Revision pending feedback
from ICGN: methodology for reporting annual totalcompensation ratio.

272
273

(i) base salary, which is the sum of guaranteed, short-term, and non-variable cash
compensation;

274
275
276

(ii) total cash compensation, which is the sum of the base salary and cash
allowances, bonuses, commissions, cash profit-sharing, and other forms ofvariable cash payments;

277
278
279
280

(iii) direct compensation, which is the sum of total cash compensation and total fairvalue of all annual long-term incentives, such as stock option awards, restricted
stock shares or units, performance stock shares or units, phantom stock shares,
stock appreciation rights, and long-term cash awards.

Page 12 of 27

281

Annex 1. Revisions with track

282

changes283

Section 4. Governance

284
285
286
287
288
289

The disclosures in this section provide Ttransparency on the governance structure,composition, roles, and remuneration. The information reported under these disclosures isimportant to ensure the accountability of the relevantgovernance bodies and individuals
senior executives with respect to the organization’s contribution to sustainable development.
and the organization’s impacts on the economy, environment, and people, including impacts
on their human rights.

290
291

The International Corporate Governance Network (ICGN) Global Governance Principles set
out expectations for organizations in relation to governance.

292
293
294

In the disclosures in this section the term ‘sustainable development topics’ refers to topics
that reflect the organization’s impacts on the economy, environment, and people, including
impacts on human rights.

296

Disclosure GOV-1 Governance structure andcomposition

297

Requirements

298

The organization shall:

299
300

a. describe its governance structure, including committees of the highest
governance body;

301
302
303
304

b. report list the committees of the highest governance body that are responsible fordecision-making on and overseeing the management of sustainable development
topicsimpacts on the economy, environment, and people, including on humanrights;305

c. describe the composition of the highest governance body and its committees by:

295

Commented [SD17]: Type of change: editorial
revision.

306

i.

executive and non-executive members;

307

ii.

independence;

308

iii.

tenure of members on the governance body;

309
310

iv.

number of each member’s other significant positions and commitments
held by each member, and the nature of the commitments;

311

v.

gender;312vi.

membership representation of under-represented social groups;
Page 13 of 27

The term ‘sustainable development topics’ has been
replaced with ‘impacts on the economy, environment,
and people, including on their human rights’ forconsistency with the terminology used in the GRI
Standards. A shorthand ‘impacts on the economy,
environment, and people’ has been used in theformultations of disclosures, for conciseness andfeasibility of translations.
Commented [SD18]: Revision pending feedback
from ICGN: expansion of diversity criteria either in therequirement or guidance.
Respondents to the public comment suggested to
expand diversity criteria to age, disability, marriage andcivil partnership, civil registration gender, race, religion
or belief, sex and sexual orientation, geographicaldiversity.
Commented [SD19]: Revision pending feedback
from ICGN: clarification of the term ‘independence’.
Commented [SD20]: Revision pending feedback
from ICGN: clarification of the term ‘significant position’.

313
314

vii.

competencies relating to sustainable development topics that are relevantto the organization and the sector in which it operates;

315

viii.

stakeholder representation.

317

Disclosure GOV-2 Nomination and selection of thehighest governance body318

Requirements

319

The organization shall:

320
321

a. describe the nomination and selection processes for the highest governancebody and its committees;

322
323

b. describe the criteria used for nominating and selecting highest governance bodymembers, including whether and how the following are taken into consideration:

316

324

i.

views of stakeholders (including shareholders) are involved;

325

ii.

diversity is considered;

326

iii.

independence is considered;

327
328

iv.

expertise and experience relating to sustainable development topics are
considered.

330

Disclosure GOV-53 Chair of the highest governance
body

331

Requirements

332

The organization shall:

333
334

a. report whether the chair of the highest governance body is also a senior
executive in the organization;

335
336
337

b. if the chair is also a senior executive, explain their function within theorganization’s management, the reasons for this arrangement, and how any
conflicts of interest are managed.

329

339

Disclosure GOV-43 Responsibilities for sustainable
development topics and delegation

340

Requirements

341

The organization shall:

338

Commented [SD21]: Type of change: editorial
revision.
Moved requirements on delegation and internal
resources into a separate disclosure to distinguishbetween responsibilities of the highest governance bodyand those existing in the rest of the organization. Seelines 366-390.

Page 14 of 27

342
343
344
345

a. describe the role of the highest governance body and of senior executives in thedevelopingment, approvingal, and updating of the organization’s purpose, value
or mission statements, strategies, policies, and goals related to sustainable
development.;

346
347

a. describe the role and responsibilities of the highest governance body with regard
to decision-making for sustainable development topics;

348
349
350

b. describe the role of the highest governance body in overseeing the organization’s
due diligence processes to identify and manage impacts on the economy,
environment, and people, including on human rights, including:

351

i.

the role of the highest governance body in due diligence processes;

352
353

ii.

the role of any committees of the highest governance body withthat havespecific responsibilities in relation tofor these processes;

354
355

iii.

how the highest governance body considers and reviews the outcomes ofthese processes;

Commented [SD22]: Type of change: revision
following public comment feedback.
Consolidated Disclosure GOV-7 ‘Role of the highest
governance body in setting purpose, values, andstrategy’ under this disclosure in response to public
feedback about duplication.
Commented [SD23]: Type of change: revision
following public comment feedback.
Deleted based on duplication with the following
disclosures:- Disclosure GOV-10-a requires information on the roleof the HGB to oversee processes to identify andmanage impacts;- Disclosure GOV-1-b in the exposure draft requires toreport committees responsible for decision-making forsustainable development.

356
357

c. report whether stakeholder consultation is used to support the role of the highest
governance body as described in GOV-4b-a;

358
359

d. specify the frequency of reporting to the highest governance body on theorganization’s processes as described in GOV-4-b;

360
361
362

e. describe the role of the highest governance body in reviewing the effectiveness ofthe organization’s processes as described in GOV-4-b, and specify the frequencyof this review.

363

Guidance

Consolidated under requirement GOV-4-b, see lines
102-108.

364

Background365

See references 13, 15, 17, and 18 in the RBibliographyeferences section.

Commented [SD26]: Type of change: editorial
revision.

Commented [SD24]: Type of change: revision
following public comment feedback and editorial
revisions.
Consolidated Disclosure GOV-10 ‘Identification andmanagement of impacts’ under this disclosure in
response to public comment feedback about
duplication.
Commented [SD25]: Type of change: editorial
revision.

Deleted as repetitive of Disclosure GOV-7, see lines
399-410.

368

Disclosure GOV-5 Delegation of responsibility andinternal resources for managing impacts forsustainable development

369

Requirements

370

The organization shall:

371
372
373
374

a. describe how the highest governance body delegates report whether theorganizationit has appointed any senior executives with responsibility forsustainable development topicsthe management of impacts on the economy,
environment, and people, including on human rights, including:;

366
367

375
376

i.

Commented [SD27]: Type of change: editorial
revision.
Deleted as repetitive of Disclosure GOV-5-d, see lines
388-390.
Commented [SD28]: Type of change: editorial
revision.

whether it has appointed any senior executives with responsibility for the
management of impacts;

Page 15 of 27

Moved requirements on delegation and internal
resources into a separate disclosure to distinguishbetween responsibilities of the highest governance bodyand those existing in the rest of the organization.
Revised formulations for clarity.

377
378

i.ii.

whether it has delegated responsibility for the management of impacts toother employees;

379
380
381

b. describe the process and frequency for senior executives or other employees toreport back for reporting to the highest governance body on the management of
impacts on the economy, environment, and people;

382
383
384

a. describe how management of sustainable development topicsimpacts isdelegated from the highest governance body to senior executives and other
employees;

385
386
387

b.c. describe the internal resources that the organization has allocated for
managing sustainable development topicsimpacts on the economy, environment,
and people, including on human rights;.

388
389
390

describe the process and specify the frequency for reporting to the highest
governance body on sustainable development topicsimpacts on the economy,
environment, and people, including on human rights.

392

Disclosure GOV-56 Role of the highest governancebody in sustainability reporting

393

Requirements

394

The organization shall:

395
396
397
398

a. report the committee of the highest governance body or the senior executive
position that formally reviews and approves the organization’s sustainability
reporting and ensures that the organization reports on all identified its material
topics.

391

401

Disclosure GOV-76 Stakeholder consultation onsustainable development topicswith the highest
governance body402

Requirements

403

The organization shall:

404
405
406
407

a. describe the processes and frequency for consultation between stakeholders andthe highest governance body on sustainable development topicswith regardin
relation to the organization’s impacts on the economy, environment, and people,
including on human rights;

408
409
410

b. if responsibility for stakeholder consultation is delegated, report to whom it isdelegated, and how the feedback received is provided to the highest governance
body.

399
400

Page 16 of 27

Commented [SD29]: Revision pending feedback
from ICGN: clarification of ‘internal resources’.

411Disclosure GOV-68 Conflicts of interest

412

Requirements

413

The organization shall:

414
415

a. describe the processes for the highest governance body to ensure that conflictsof interest are avoided and managed;

416
417

b. report whether conflicts of interest are disclosed to stakeholders, including, ast aminimum, the following conflicts of interest:

418

i.

Cross-board membership;

419

ii.

Cross-shareholding with suppliers and other stakeholders;

420

iii.

Existence of controlling shareholder;

421

iv.

Related parties, their relationships, transactions, and outstanding balances.

422

Guidance

423

Background424

See reference 13 in the RBibliographyeferences section.

425

Guidance to GOV-68-b-iii

426
427

The organization should use the definition of controlling shareholder applied in theorganization’s consolidated financial statements or equivalent documents.

429

Disclosure GOV-912 Communication of criticalconcerns

430

Requirements

431

The organization shall:

432
433

a. describe the processes for communicating critical concerns with regard tosustainable development topics to the highest governance body;

434
435

b. report the total number and the nature of critical concerns that werecommunicated to the highest governance body during the reporting period;436

c. describe the mechanisms used to address and resolve critical concerns.

437

Guidance

438
439
440
441
442
443

Critical concerns include concerns about the organization’s impacts that are raised bystakeholders through grievance mechanisms. They also include concerns about responsible
business conduct in the operations of the organization and its business relationships, which
are identified through other mechanisms that the organization has set up for individuals toseek advice and raise concerns. See the Guidance sections in RBC-4 and RBC-5 for more
information.

428

Page 17 of 27

Commented [SD30]: Revision pending feedback
from ICGN: whether disclosure of conflicts of interest
themselves is necessary or only of the process how
they are disclosed to stakeholders.

Commented [SD31]: Revision pending feedback
from ICGN: clarification of ‘related parties’.

Commented [SD32]: Revision pending feedback
from ICGN: inclusion of this disclosure given
duplication with other disclosures in the GRI Standards
that cover communication and resolution processes ofconcerns related to:- anti-corruption (GRI 205: Anti-corruption 2016);- tax (GRI 207: Tax 2019);- due diligence and conduct (RBC-5 Mechanisms forseeking advice and raising concerns and RBC-4
Grievance mechanisms and other remediation
processes);- impacts (MT-1 Identification of material topics andrelated impacts).

445

Disclosure GOV-7 Role of the highest governancebody in setting purpose, values, and strategy

446

Requirements

447

The organization shall:

448
449
450
451

a. describe the role of the highest governance body and of senior executives in thedevelopment, approval, and updating of the organization’s purpose, value or
mission statements, strategies, policies, and goals related to sustainable
development topics.

444

453

Disclosure GOV-108 Collective knowledge of thehighest governance body454

Requirements

455

The organization shall:

456
457

a. report measures taken to develop advance the collective knowledge, skills, andexperience of the highest governance body on sustainable development topics.

452

459

Disclosure GOV-911 Evaluation of the performanceof the highest governance body

460

Requirements

461

The organization shall:

462
463
464
465

a. describe the processes for evaluating the performance of the highest governancebody with respectin relation to the governance of sustainable development
topicsimpacts on the economy, environment, and people, including on humanrights;466
467

b. report whether the evaluation is independent or not, and the frequency of theevaluations;

468
469
470

c. describe actions taken in response to the evaluation, such as any including, as aminimum, changes toin membership the composition of the highest governancebody and organizational practices.

458

Page 18 of 27

Commented [SD33]: Type of change: revision
following public comment feedback.
Consolidated with GOV-4 ‘Responsibilities forsustainable development’ in response to publiccomment feedback about duplication.

472

Disclosure GOV-10 Identification and managementof impacts

Commented [SD34]: Type of change: revision
following public comment feedback.

473

Requirements

Consolidated with GOV-4 ‘Responsibilities forsustainable development’ in response to publiccomment feedback about duplication.

474

The organization shall:

475
476
477
478
479
480
481
482
483
484
485
486

a. describe the role of the highest governance body in overseeing the organization’s
processes to identify and manage sustainable development topics and theirrelated impacts, including:

487
488

c. specify the frequency of reporting to the highest governance body on theorganization’s processes as described in GOV-10-a;

489
490
491

d. describe the role of the highest governance body in reviewing the effectiveness ofthe organization’s processes as described in GOV-10-a, and specify the frequencyof this review.

492

Guidance493

Background494

See references 13, 15, 17, and 18 in the References section.

471

i.
ii.
iii.

the role of the highest governance body in due diligence processes;
the role of any committees of the highest governance body with specificresponsibilities for these processes;
how the highest governance body considers and reviews the outcomesof these processes;

b. report whether stakeholder consultation is used to support the role of the highest
governance body as described in GOV-10-a;496Disclosure GOV-11 Role of the highest governancebody in sustainability reporting

497

Requirements

498

The organization shall:

495

499
500
501
502

a. report the committee of the highest governance body or senior executive
position that formally reviews and approves the organization’s sustainability
reporting and ensures that the organization reports all identified material
topics.

503

Guidance

504

Guidance to GOV-11

505
506

The organization is also required to include in its sustainability reporting a statement by thehighest governance body or most senior executive position acknowledging theirPage 19 of 27

Commented [SD35]: Type of change: editorial
revision (moved disclosure).

507
508
509

responsibility that the reported information has been prepared in accordance with the GRI
Standards or with reference to the GRI Standards, depending on the case. See Sections 3.1
and 3.2 of GRI 101: Using the GRI Standards.

511

Disclosure GOV-12 Communication of criticalconcerns

512

Requirements

513

The organization shall:

514
515

a. describe the processes for communicating critical concerns with regard tosustainable development topics to the highest governance body;

516
517

b. report the total number and nature of critical concerns that were communicated tothe highest governance body during the reporting period;

518

c. describe the mechanisms used to address and resolve critical concerns.

519

Disclosure GOV-132 Remuneration policies

520

Requirements

521

The organization shall:

522
523

a. describe the remuneration policies for members of the highest governance bodymembers and senior executives, including:

510

Commented [SD36]: Type of change: editorial
revision (moved disclosure).

524
525

i.

fixed pay and variable pay, such as performance-based pay, equity-based
pay, bonuses, and deferred and vested shares;

526

ii.

sign-on bonuses or recruitment incentive payments;

527

iii.

termination payments;

528

iv.

clawbacks;

529
530
531

v.

retirement benefits, such as the difference between benefit schemes andcontribution rates for the highest governance body members, senior
executives, and all other employees;

532
533
534
535
536

b. describe how performance criteria in the remuneration policies for members of
the highest governance body members and senior executives relate to theirobjectives and performance in relation to for governance and management
ofoverseeing impacts on the economy, environment, and people, including on
human rightssustainable development topics.

537

Guidance538

Background

539

Guidance to GOV-123

Page 20 of 27

Commented [SD37]: Type of change: editorial
revision (moved to guidance), see lines 551-552.

Commented [SD38]: Type of change: editorial
revision (moved to guidance), see lines 571-581.

540
541

If the organization uses performance-related pay, it should describe how remuneration forsenior executives is designed to reward long-term performance.

542

If the organization uses termination payments, it should explain whether:

543
544
545
546
547
548
549

•
•
•

notice periods for highest governance body members and senior executives aredifferent from those for other employees;
termination payments for highest governance body members and senior executives
are different from those for other employees;
any payments other than those related to the notice period are paid to departing
highest governance body members and senior executives;
any mitigation clauses are included in the termination arrangements.

550

Guidance to GOV-12-a

551
552

Fixed pay and variable pay can include performance-based pay, equity-based pay, bonuses,and deferred and vested shares.

553
554

If the organization uses performance-related pay, it should describe how remuneration forsenior executives is designed to reward long-term performance.

555
556

Retirement benefits can include the difference between benefit schemes and contribution
rates for the highest governance body members, senior executives, and all other employees.

557
558
559
560

Termination payments are all payments and benefits given to a departing senior executive or
member of the highest governance body whose appointment is terminated. Termination
payments extend beyond monetary payments, from transferring property to automatic or
accelerated vesting of incentives.

561
562
563
564

Clawbacks are a repayment of previously received compensation that required to be madeby a senior executive or member of the highest governance body member is required tomake to their employer in the event that certain conditions of employment or goals are not
met.

565
566

If the organization uses performance-relatedbased pay, it should describe how remuneration
for senior executives is designed to reward long-term performance.

567

If the organization uses termination payments, it should explain whether:

568
569

•

notice periods for highest governance body members and senior executives aredifferent from those for other employees;

570
571

•

termination payments for highest governance body members and senior executives
are different from those for other employees;

572
573

•

whether departing highest governance body members and senior executives receive
payments other than those related to the notice period;574•

whether any mitigation clauses are included in the termination arrangements.

575
576
577
578
579
580
581

Clawbacks are a repayment of previously received compensation required to be made bya senior executive or member of the highest governance body to their employer in the event
certain conditions of employment or goals are not met.The organization should report thedifferences Retirement benefits can include the difference between the retirement benefit
schemes and benefit schemes andthe contribution rates for the highest governance bodymembers, senior executives, as compared to and all other employees.

Page 21 of 27

583

Disclosure GOV-143 Process for determining
remuneration

584

Requirements

585

The organization shall:

586
587
588

a. describe theits process for designing its remuneration policies and for
determining remuneration and for determining , including its remuneration
policies;

589
590
591

b. report whether independent members of the highest governance body members
or an independent remuneration committee oversees the process for determining
remuneration process;

592
593

c. describe how the views of stakeholders (including shareholders) regarding
remuneration are sought and taken into accountconsideration;594

d. report the results of votes on remuneration policies and proposals, if applicable;

595
596
597
598

e. report whether remuneration consultants are involved in determining
remuneration and, if so, report any relationships between the that the
remuneration consultants have withand the organization, its highest governancebody, or senior executives.

582

600

Disclosure GOV-154 Annual total compensation
ratio

601

Requirements

602

The organization shall:

603
604
605
606

a. report the ratio of the annual total compensation for the organization’s highestpaid individual in each country of significant operations to the median annual
total compensation for all employees (excluding the highest-paid individual) in
the same country;

607
608
609
610

b. report the ratio of the percentage increase in annual total compensation for theorganization’s highest-paid individual in each country of significant operations to
the median percentage increase in annual total compensation for all employees(excluding the highest-paid individual) in the same country.

611

Guidance

612

Guidance to GOV-145

613
614
615

Annual total compensation includes salary, bonus, stock awards, option awards, non-equity
incentive plan compensation, change in pension value, and nonqualified deferredcompensation earnings provided over the course of a year.

616

When calculating the ratios, the organization should:

599

617

•

Commented [SD39]: Revision pending feedback
from ICGN: clarification of ‘relationships withremuneration consultants’.

Commented [SD40]: Revision pending feedback
from ICGN and further internal discussion:
methodology for reporting annual total compensation
ratio.
Please see research on pages 24-27.

for each country of significant operations:Page 22 of 27

618

-

list types of compensation included;619-

specify whether full-time and part-time employees are included;

620
621

-

specify whether full-time equivalent pay rates are used for each part-time
employee;

622
623

•

depending on the organization’s remuneration policies and availability of data,consider all of the following components:

624
625

(iv) the base salary, which is the sum of guaranteed, short-term, and non-variable
cash compensation;

626
627
628

(v) total cash compensation, which is the sum of (i) the base salary and, together
with cash allowances, bonuses, commissions, cash profit-sharing, and otherforms of variable cash payments;

629
630
631
632
633

(vi) direct compensation, which is the sum of (ii) total cash compensation and,
together with total fair value of all annual long-term incentives, such as stock
option awards, restricted stock shares or units, performance stock shares orunits, phantom stock shares, stock appreciation rights, and long-term cash
awards.

Page 23 of 27

634

Annex 2. Research on annual total

635

compensation ratio

636
637
638

19 respondents made comments on Disclosure GOV-15 ‘Annual total compensation ratio’.
Respondents have raised concerns around feasibility of reporting the information, its meaningfulness
and relevance to sustainable development, clarity, and made alternative proposals.

639

Eight respondents commented on feasibility; they argued that reporting this information is:

640
641
642
643
644
645
646
647
648
649
650
651
652
653
654
655
656
657
658
659
660
661
662
663
664
665
666
667

•
•
•
•

Subject to confidentiality or security concerns;
Not feasible for every country of significant operation, especially for MNEs;
Not feasible for SMEs;
Not feasible due to absence of properly integrated HR systems.

Eight respondents commented on the meaningfulness; they argued that this information:•••

Is subject to limitations and does not provide an indication of unfair or inequitablecompensation. Consider situations, when:o A CEO oversees operations of multiple countries but is based in one country;o Companies due to the nature of work in their sector are set up to employ senior
manager staff with a number of low skilled staff leading to large salary differentiations(e.g., airport ‘outposts’ or banks);
Limits cross-sectoral comparability due to variability in the employer base;
Disclosure GOV-15-b (ratio of the percentage of increase) is not relevant if ratio of total
annual compensation is disclosed.

Two respondents commented on the clarity; they submitted that:••

The term ‘significant operations’ is unclear;
It is unclear whether to report a ‘lump sum’ amount when reporting compensation.

Seven respondents made alternative proposals; they suggested to require to report:
•
•
•
•
•
•

Gender pay parity for various levels of management roles;
Comparison of CEO's compensation to average employee's compensation;
Comparison of CEO’s compensation to the average median income of the country in which
the CEO is resident;
Changes in the ratio compared to the previous year, the rationale for changes, and any
observations on how this ratio compares with peer organizations in the same industry;
Require disclosure of actual salary with USD conversion applied to highlight regional
compensation disparages within the same organization;
Equal pay for equal work.

668

Standards Division’s assessment:

669
670

1) Feasibility concerns related to confidentiality are now addressed with the decision to permit
reasons for omission for GRI 102;6712) Please review the research on remuneration practice and its conclusions below.

Page 24 of 27

672

Table 1 presents an overview of requirements to report on remuneration in other instruments.

673

Table 1. Overview of requirements in other instruments
SourceRequirement

Highest paid
individual

Median or mean

US SEC1

One ratio, covering all global
operations

PEO (Principal
Executive Officer)

MedianUK Gov2

One ratio, covering UK
operations

Chief Executive
OfficerMedianDJSI3,4

One ratio, covering all global
operations

Chief Executive
OfficerMedian (preferred) ormean

Workforce
Disclosure
Initiative5

One ratio for HQ, global and/or
individual country level

Chief Executive
OfficerMedianCWC
Guidelines6

Unclear

Chief Executive
OfficerMedian674
675

Table 2 presents an overview of current remuneration reporting practice from a sample of eightcompanies with global operations.

676

Table 2. Reporting practiceCompany#
ratiosprovided

Global vscountry
ratiosCalculation
methodCalculation explanation provided

Coca Cola
EuropeanPartners7

1- Europe

Undisclosed

CEO to employee pay ratio

Nestle81- Global

Average(althoughthey use theterm median)

We have provided the ratio of the annual totalcompensation for the company’s highest paid
individual and the median annual compensation for
all employees globally. Median is an estimate basedon 2019 Company total worldwide salaries andwelfare expenses of CHF 15 794 million and average
number of 291 000 employees. [Omission provided in
the content index: We have not provided a countrylevel breakdown as that is outside the scope of ourglobal report.]

1

https://www.law.cornell.edu/cfr/text/17/229.402; https://www.sec.gov/corpfin/announcement/guidance-calculation-pay-ratiodisclosure2

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/755002/The_Companies__M
iscellaneous_Reporting__Regulations_2018_QA_-_Publication_Version_2__1_.pdf
3
https://portal.csa.spglobal.com/survey/documents/SAM_CSA_2020_Sample_Questionnaire_BNK.pdf
4
https://portal.csa.spglobal.com/survey/documents/SAM_CSA_Companion.pdf
5
https://shareaction.org/wp-content/uploads/2019/07/2019-WDI-Survey-Guidance.pdf
6https://www.workerscapital.org/IMG/pdf/cwc_guidelines-workers_human_rights_and_labour_standards_final_may17.pdf
7https://www.cocacolaep.com/assets/Sustainability/Documents/72426dd859/2018-Corporate-Data-Tables.pdf
8
https://www.nestle.com/sites/default/files/2020-03/creating-shared-value-nestle-gri-content-index-2019.pdf

Page 25 of 27

Company#ratiosprovided

Global vscountry
ratiosCalculation
methodCalculation explanation provided

Heineken9

1- Global

Average

These ratios are obtained by dividing the 2019 total
remuneration for the CEO and CFO by the 2019average total remuneration of all other employees
worldwide.

Philips10

1- Global

Average

The ratio between the annual total compensation for
the CEO and the average annual total compensation
for an employee (for all employees globally). Basedon Employee benefit expenses (EUR 6.3 billion)
divided by the average number of employees (72,228
FTE) as reported in the Income from operations. This
results in an average annual total compensation costof EUR 87,321 per employee.

DSM11

2

Netherlands- Global

Average

The ratio of total remuneration, including annual basesalary, Short-Term Incentive, Long-Term Incentive
and other benefits such as pension (as reported inthis Integrated Annual Report) versus the average of
total global employee (i.e. including Dutch)
remuneration is for the CEO 40:1 (2017: 32:1).

Storaenso12

6- One foreach country- No global
ratioMedianThe ratio shows how many times larger the highest
individual annual total compensation, including
incentives, is compared to median compensation.

Hudbay134- One foreach country- No global
ratio

Average

Ratio of annual compensation of highest paid
individual to mean total compensation (includes all
full-time employees and Peru contract employees).

Naturgy14

12- One foreach country- No global
ratio

Average

Relationship between the total annual remunerationof the best paid person of the organization in eachcountry where significant operations are carriedout with the average annual total remuneration of theentire staff (without counting the best paid person) of
the corresponding country.

9

https://www.theheinekencompany.com/sites/theheinekencompany/files/Investors/financial-information/results-reportspresentations/heineken-nv-hnv-2019-annual-report.pdf
10
https://www.results.philips.com/publications/ar19/downloads/pdf/en/PhilipsFullAnnualReport2019-English.pdf
11https://annualreport.dsm.com/ar2018/en_US/16-1-13-remuneration-of-managing-board-and-supervisory-board.html
12https://www.storaenso.com/-/media/Documents/Download-center/Documents/Annualreports/2018/STORAENSO_Annual_Report_2018.ashx#page=70
13
https://s23.q4cdn.com/405985100/files/doc_financials/annual_reports/2019/Hudbay-2019-Annual-and-SustainabilityReport.pdf
14
https://www.naturgy.com/en/files/IRC_ENG_ACC.pdf

Page 26 of 27

677

Research conclusions:

678
679
680
681
682
683
684

1) Most instruments reviewed require one ratio, covering all global operations, based on the mediansalary.
2) Very few companies report the ratio.
3) Company practice varies, but a majority of the companies in the sample provide a global ratio.
Half of the companies in the sample provide additional ratios.
4) Most companies use the average rather than the median, whereas all the instruments (and GRI)
require the median.

685

Standards Division’s proposal:

686
687
688
689
690
691
692
693
694
695
696
697

1) Clarify to report one ‘ratio’ covering all global operations and remove reference to ‘significant
operations’.
2) Retain the median.
3) Clarify in guidance that the identity and remuneration of the highest paid individual does not need
to be disclosed.
4) Permit the use of a different methodology, if the organization is subject to mandatory reporting ofa ratio under national legislation and add a requirement for the organization to explain how thedata has been calculated.
5) Clarify interaction between the definition of ‘annual total compensation’ and the recommendation
provided to consider base salary, total cash compensation and direct compensation.
6) Do not introduce requirements on gender pay parity as such requirements are covered in GRI
405: Diversity and Equal Opportunity 2016.

Page 27 of 27