gssbsecretariat@globalreporting.org

Item 03 – GRI Topic Standard Project
for Economic Impact – Projectproposal
For GSSB discussion and approval
Date

31 August 2023

Meeting14 September 2023

Project

GRI Topic Standard Project for Economic Impact – Project proposal

Description

This document sets out the final project proposal to review the GRI Topic
Standards portfolio on Economic Impact.
The Standards Division has incorporated all GRI Board and Stakeholder Council
feedback. The Standards Division will present this proposal to the GSSB fordiscussion and final approval in accordance with the 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 theGRI Sustainability Reporting Standards. The GSSB is the independent standard setting body of GRI. For more information visit
www.globalreporting.org.

© GRI 2023

Contents
Project background ................................................................................................................................. 3
Project objectives .................................................................................................................................... 4
Project approach ..................................................................................................................................... 6
Division of responsibilities ....................................................................................................................... 7Timeline ................................................................................................................................................... 8
Risks and assumptions ........................................................................................................................... 8

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Project backgroundAs part of the GSSB Work Program 2023-2025, the Global Sustainability Standards Board (GSSB)
has identified the review of GRI disclosures on economic impact, including, but not limited to, therevision of GRI 201: Economic Performance 2016, GRI 202: Market Presence 2016, and GRI 203:
Indirect Economic Impacts 2016 for commencement in 2023. The revision of these standards wasprioritized by the GSSB based on the feedback of reporters and other standards users. Feedback
indicated that the current disclosures are unclear and inconsistently interpreted and would benefit
from a thorough content review.
Since the disclosures in GRI 201, GRI 202, and GRI 203 were last updated in 2006 (with thepublication of the GRI G3 Guidelines), there have been a number of international developments
related to how organizations should identify, manage, and report on their impacts on the economy.
Economic growth and resilience are key themes in the UN’s 2030 Agenda for SustainableDevelopment. Both governments and private sector organizations are being called upon to realize
SDG 8 and SDG 9. SDG 8 focuses specifically on decent work and economic growth, and it aims topromote sustained, inclusive, and sustainable economic growth, full and productive employment, anddecent work for all.1 SDG 9 seeks to build resilient infrastructure, promote sustainableindustrialization, and foster innovation.2In addition, the UN Guiding Principles on Business and Human Rights3 and the OECD Guidelines forMultinational Enterprises on Responsible Business Conduct 4 set clear expectations for businesses totake responsibility for the impacts they cause and those they contribute to or are linked to theirbusiness relationships. In the context of GRI’s economic disclosures, organizations are expected toreport their impacts on the economic conditions of their stakeholders and economic systems andproductive capacity at local, national, and global levels.
Together, these developments suggest that the content in GRI’s economic standards would benefit
from a comprehensive review to ensure they align with key international instruments and reflectleading practices in disclosure.

1 https://www.un.org/sustainabledevelopment/economic-growth/
2 https://www.un.org/sustainabledevelopment/infrastructure-industrialization/
3 https://www.ohchr.org/sites/default/files/documents/publications/guidingprinciplesbusinesshr_en.pdf
4 https://www.oecd-ilibrary.org/docserver/81f92357-en.pdf?expires=1692877646&id=id&accname=guest&checksum=03CB6C5F6EED7122A36237FE35
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Project objectives

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The primary objective of this project is to review the existing portfolio of GRI economic impact
disclosures and develop a set of new disclosures and standards that represent internationally agreed
best practices. The revision must also align with the recent developments and relevant authoritativeintergovernmental instruments in the field of economic impact.

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It is also the right moment to start the revision of the economic impact-related disclosures to ensurealignment and consistency with the ongoing revision of the labor and climate change-related
disclosures.

The content and structure of the revised economic impact-related GRI Standards will be guided by thetechnical framework proposed by the GRI Standards Division (see Table 1). This overarchingframework has been designed as an organizing tool for accommodating current and future
disclosures related to economic impact.
In line with the stated objectives, the proposed project will consider the following GRI Standards forrevision:
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GRI 201: Economic Performance 2016
GRI 202: Market Presence 2016
GRI 203: Indirect Economic Impacts 2016
GRI 204: Procurement 2016
GRI 205: Anti-competitive Behavior 2016
GRI 206: Anti-corruption 2016
GRI 415: Public Policy 2016

The following series of economic disclosures and standards will not be considered for review orrevision as part of this project:•••

GRI 201: Economic Performance 2016 (Disclosure 201-2: Financial implications and otherrisks and opportunities due to climate change). This will be addressed as part of the ongoing
revision of the climate-related GRI Topic Standards.
GRI 202: Market Presence 2016 (Disclosure 202-1: Ratios of standard entry level wage bygender compared to local minimum wage). This will be addressed as part of the ongoing
revision of the labor-related GRI Topic Standards.
GRI 207: Tax 2019. This Standard was recently developed and published in 2019 and will
only form part of additional project phases.

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Table 1: Technical framework for economic impact disclosures

ThemeDescription

Impact channel

Distributedvalue

The economic impact ofmonetary and non-monetaryflows of value involving anorganization

The value created, received, and distributed byan organization can affect the public fiscus aswell as the ability of shareholders, workers,
suppliers, and local communities to operate
sustainably.

Impacts on
institutions

The impacts an organization
has on the mechanisms thatrule market relations andeconomic exchanges

Individual organizations operate under rules andregulations but can also influence them. This canbe through market mechanisms (anti-competitivebehavior) or through rules and regulations (publicpolicy, anti-corruption).

Economic
multiplier

Mechanisms through which
the organization may impact
the productive capacity ofother economic agents andwhich are generally notintended.

Indirect and long-term effects that anorganization’s operations have on the broader
economy beyond its direct impact. This can bethrough the creation and dissemination ofknowledge, human capital development,
research and development, infrastructure, andother general-purpose investments.

Job creation

The economic impact of thecreation of sustainableeconomic opportunities andlivelihoods

Goods andservices

Impact on the productive
capacity of economic actors
attributed to access to andconsumption of theorganization's goods andservices.

Link to GRIStandards

The type and quality of employment opportunities
created and supported by the organization, candirectly and indirectly affect the local economy.

GRI 201
GRI 207

GRI 205
GRI 206
GRI 415

GRI 203
GRI 204

GRI 202GRI 401
GRI 404

Goods and services produced by organizations
can add value to an economy by improving
people´s overall well-being and productivecapacity.

Not
currently
covered inGRIStandards

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Project approach

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Due to the project's scope and complexity, the Standards Division proposes a programmaticapproach. A programmatic approach groups the related topics and content areas into several
projects. This portfolio of discreet projects will be run sequentially, although at certain points, morethan one project will be simultaneously active. The configuration of the project sequencing will bebased on the content area, resource capacity, and strategic importance. In this way, the Standards
Division will deliver an aligned set of standards and disclosures as the outcome.

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As part of this approach, the Standards Division proposes reviewing and revising the current
Standards and disclosures across three distinct project phases. Each project phase will represent astandalone project with its focus area(s), timelines, and deliverables in accordance with GRI’s due
process. The prioritization of technical content to be revised across phases has been informed byinputs from the GSSB and engagement with key stakeholders, usage trends among practitioners ofGRI Standards, and research insights from authoritative intergovernmental instruments and initiatives.

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The following provides an overview of each project phase.

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Phase 1: Distributed value

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The Standards Division will review and, where appropriate, revise GRI 201: Economic Performance.
The first phase of the project will encompass the theme of Distributed value. This theme has priority
due to the Standard being one of the most widely reported GRI Standards, particularly Disclosure201-1 (Direct economic value generated and distributed), which suggests there is external demand
and usage by reporting organizations. This content area also has the advantage of the concepts
already being well-developed and self-contained, meaning revision to the disclosures can occur
without affecting other standards.

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Furthermore, revision of this Standard as part of the project's first phase will enable alignment with theongoing revision of the climate-related standard, which will substitute Disclosure 201-2 (Financialimplications and other risks and opportunities due to climate change).

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The Standards Division also envisions the GRI 201: Economic Performance Standard playing acentral role in linking financial information reported by organizations with material impacts reported inother standards, creating a comprehensive and holistic set of information on an organization’ssustainability impacts.

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Phase 2: Impacts on institutions

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The second phase of the project will explore the theme of Impacts on institutions. The need for therevision of GRI 205: Anti-corruption 2016 and GRI 415: Public Policy 2016 has been raised by severalstakeholders, suggesting a growing interest in revised disclosures focusing on an organization’s
operations and activities that impact the institutions governing economic exchanges.

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As part of this theme, the Standards Division will review and, where appropriate, revise GRI 205: Anticorruption, GRI 206: Anti-competitive Behavior, and GRI 415: Public Policy. The Standards Division
proposes maintaining these standards and others that could be developed in this space. Thesestandards are likely to be identified as distinct issues in organizations' materiality processes, so theyshould be developed as separate standards.

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Phase 3: Economic multiplier, Job creation and Goods and services

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The project's third phase will explore the Economic multiplier, Job creation, and Goods and services
themes.

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Stakeholder feedback points to a rise in interest by both organizations and report users related tosustainability impacts beyond organizations' boundaries, in particular, impacts on local communities
and along the organization’s value chain.

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As part of the Economic multiplier theme, the Standards Division will review and, where appropriate,
revise the existing GRI 203: Indirect Economic Impacts and GRI 204: Procurement standards. The
Standards Division will also consider, as part of the Economic multiplier theme, the addition of newtechnical content covering the sustainability impacts of an organization’s innovation and research anddevelopment activities on the economy. This is an important issue that will address the gap in the GRI
Standards.

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The Job creation theme is included in Phase 3 as it complements the Economic multiplier theme. The
impact of an organization’s operations and activities on local labor markets through the creation ofsustainable economic opportunities and livelihoods - both through its own operations and suppliers is noted as key for helping organizations understand their direct and indirect impacts on the economy.
Furthermore, including the Job creation theme as part of the project's third phase will enablealignment with the ongoing revision of GRI’s labor-related standards.

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The Goods and services theme is proposed to accommodate reporting on how the goods andservices produced by organizations impact the economy. The revised GRI Standards will focus on
impacts that derive directly and intentionally from the goods and services produced by organizations.
Through the production of raw materials and capital goods, organizations can enhance the economy's
productive capacity, while the final consumption of goods and services can impact the well-being ofpeople and could be considered a social impact. It is important to note that some restrictions onaccess to goods and services may border on GRI 406: Non-discrimination and some pricing practices
on GRI 206: Anti-competitive Behavior.

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Division of responsibilities

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The GSSB will appoint two working groups (WG) to review the economic impact-related TopicStandards.
The working groups will be formed in accordance with the GSSB Due Process Protocol to provide
technical advice across the project's three phases and inform the development of the new disclosuresand standards as stated in the project objectives.
The Standards Division proposes the formation of two working groups that will contribute to particularphases of the project as follows:••

WG 1 will be convened ahead of Phase 1 to support Phase 1 and Phase 2 of the project.
WG 2 will be convened ahead of Phase 3 to support Phase 3 of the project.

The Standards Division proposes this working group configuration for the following reasons:•The project scope would require extended time investment and engagement by WG members
if a single group was maintained across the entire project lifecycle. Two working groups withalternating members will ensure that the level of engagement by WG members is preserved
across each phase of the project.

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The nature of the content covered in Phase 1 and Phase 2 means that WG members'
technical expertise in similar areas can be effectively utilized. This approach will also allow forcontinuity across the project's first two phases.

The two working groups will provide recommendations in the following areas:••••

Informing the scope of the projects across each phase.
Developing new disclosures to broaden the scope to include new impact areas such as R&D,
innovation, living wage, and economic impact along the organization’s supply chain.
Revising or incorporating the existing economic impact-related disclosures: GRI 201:
Economic Performance 2016, GRI 202: Market Presence 2016, GRI 203: Indirect EconomicImpacts 2016, GRI 204: Procurement, GRI 205: Anti-competitive Behavior, GRI 206: Anticorruption and Disclosure 415-1: Political contributions (currently captured in GR 415: PublicPolicy) into the new set of economic standards and disclosures.
Ensuring new economic impact-related disclosures are revised and developed to align withthe most updated authoritative references and other global standard setters.

Economic impact is a broad topic and requires a broad range of expertise. Therefore, a public call forexperts will be launched, and based on GSSB approval, working groups will be formed to provide
technical advice for developing the Economic Impact-related Topic Standards.
In line with the due process protocol, the working groups should report to the GSSB and seek
guidance and advice whenever required to advance the revision program or when they cannot reacha consensus. When the working groups are satisfied that they have a proposed (set of) draft
standard(s) ready for public consultation, the draft(s) are to be presented to the GSSB for approval.
The working groups should support sustainability reporting as promoted by the GRI Sustainability
Reporting Standards (GRI Standards), which provide transparency on how an organization
contributes or aims to contribute to sustainable development. The Standards Division will draft theTopic Standards. The project will be conducted in accordance with the GSSB Due Process Protocol.

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Timeline

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This project will commence in September 2023 and run for 36 months. Table 2 outlines theanticipated project duration and milestones.

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The success of this project proposal is based on several assumptions and the management of key
risks that provide the foundation for its implementation. These assumptions and risks have shaped
the project's scope, timeline, and expected outcomes.
The Standards Division has made the following key assumption:•The timely recruitment and successful integration of key positions in the Standards Division
required to provide support in the implementation of project-related tasks (see Division ofresponsibilities, including project administration, research, development of technical content,and project management) and achievement of project objectives. Should it not be possible torecruit a sufficient number of qualified candidates within the desired timeframe to meet theproject’s staffing requirements, an amendment of the project's proposed timelines may benecessary.

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The Standards Division recognizes the importance of this assumption and its potential impact on
project timelines and deliverables. To mitigate risks associated with recruitment and the availability ofproject resources, the Standards Division has adopted a proactive recruitment strategy and isengaging reputable recruitment agencies to attract and onboard a diverse pool of qualified
candidates.
In addition to the above assumption, the Standards Division has identified a potential risk that may
impact the successful execution of the project. The following risks have been identified:••

Due to the proposed length of the project, there is a possibility of unforeseen shifts indemand by organizations for disclosures to report on their economic impacts. This may
necessitate a change in prioritizing certain themes for review and revision.
New authoritative intergovernmental instruments and frameworks may be emerging,necessitating adjustments to the planned revision and development of technical content or anextension of the research phase.

To mitigate this risk, the Standards Division will implement the following strategies:•••

Establish a flexible and adaptive project framework that allows for iterative development andaccommodates potential changes in technical content.
Maintain close collaboration with subject matter experts, stakeholders, and end-users to stay
updated on emerging developments and evolving needs.
Conduct periodic reviews and assessments of the technical content against the evolving
industry standards and best practices to ensure alignment. Incorporate feedback and insightsfrom relevant experts to ensure the proposed project content remains current and relevant.

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gssbsecretariat@globalreporting.org

Table 2: Estimated duration of GRI Topic Standard Project for Economic Impact