We need 2024 to be the year of transparency

Letter from Carol Adams, Chair of the GSSB

New year - new standards

With 2023 drawing to a close, I’m pleased to share some important decisions that were reached during the GSSB meeting last week. Two new GRI Standards received GSSB approval and will now progress to the Due Process Oversight Committee for a final assessment. That means you can expect the GRI Topic Standard for Biodiversity and GRI Sector Standard for Mining to publish in early 2024.

For both projects, this has been a substantial undertaking and will mark the conclusion of an intense period of multi-stakeholder engagement and collaboration. My thanks go to the staff in Standards Division, ably led by Chief Standards Officer, Bastian Buck, who have worked tirelessly to get to this final stage. A big thanks also goes  to the members of the Biodiversity Technical Committee and the Mining Working Group, without whose time and expertise these standards would never have been completed. I’m impressed with the calibre of people who take up such roles in a voluntary capacity.

The new year will also see two recently introduced GRI Standards come into effect; GRI 13: Agriculture, Aquaculture and Fishing Sectors and GRI 12: Coal Sector. This will mean that any organizations reporting in accordance with the GRI Standards, and operating in these sectors, will be required to use them from 1 January 2024.

Temperature rising on climate disclosure

The conclusion of COP28, and the debate on ‘phasing out’ fossil fuels, once again makes it abundantly clear why we need much greater transparency on the impacts of organizations related to climate change, and how they are managing them. To address this, the GSSB approved a proposed GRI Climate Change Standard, now out for public comment. This overview shows the Standard’s main elements and how they enable greater transparency on organizations’ targets to phase out fossil fuels as well as the impacts of transition and adaptation plans and GHG removals and carbon credit projects on people such as workers, and communities, and on the environment.

Harold Pauwels and Margherita Barbieri from the Standards Division were on the ground at COP to engage with stakeholders and communicate about the key role of the GRI Standards in climate reporting. I spoke at a COP28 side-event, hosted by EFRAG, on how latest developments in corporate sustainability reporting can support the goals of the Paris Agreement. With the ink barely dry on the COP28 declaration, this will be an increasingly important topic for 2024.

Steps towards global harmonization

Interoperability has been something of a buzz-word in 2023. But what does it actually mean? The way I see it, at the global level, it’s about minimizing duplication in global standards to avoid different requirements on the same topics.  At the jurisdictional and national levels, it’s about ensuring that new and emerging sustainability reporting requirements are aligned with global standards as much as possible, whilst also aligning with national priorities and existing national legislation. This approach builds on the existing disclosure practices of organizations, who mostly already use the GRI Standards. And to that end, there’s some very encouraging progress.

As you may have already seen, GRI and EFRAG announced a new cooperation agreement on 30 November, which will include further collaboration on standards and guidance development, including on sector standards. This follows confirmation of the high level of interoperability achieved between the GRI Standards and the new European Sustainability Reporting Standards (ESRS), through our technical work with EFRAG counterparts. A first tangible outcome under the new agreement is the publication of a draft GRI-ESRS interoperability index, to show the commonalities between the two sustainability reporting standards.

We are continuing to engage with the IFRS Foundation and the International Sustainability Standards Board (ISSB) and recently presented our work programme  in a meeting of their board. For example, the drafting of our Climate Standard has included dialogue with ISSB, EFRAG and some national standard setters. Laura Espinach from the Standards Division has been leading our work with the IFRS Foundation and ISSB to finalize a GRI-ISSB linkage document on GHG emissions reporting, set to be made available very soon.

We are also in discussions with the International Public Sector Accounting Standards Board (IPSASB) about how we can work together to increase sustainability reporting in the public sector where many organizations are already using GRI Standards. Miguel Perez Ludena from the Standards Division is on a small group of standard setters advising IPSASB on climate change reporting.

Global reporting requirements and alignment with the GRI Standards

Back in November, I was fortunate to take part in the 10-year anniversary celebrations of GRI South Asia in Mumbai, India, and to meet our fabulous team, led by Dr Aditi Haldar, along with members of India’s Securities and Exchange Board (SEBI) and the Council of the Institute of Cost Accountants. The breadth of sustainable development issues was readily apparent as I travelled, and so it seems entirely appropriate that SEBI has mandated reporting requirements that are aligned with the GRI Standards. This will allow investors and other stakeholders to track the most significant impacts of the country’s largest businesses.

Also in November, but on the opposite side of the world, the Superintendency of Corporations in Colombia that mandates GRI Standards for so-called 'for benefit corporations’, has issued a mandatory reporting announcement applicable from next year, which will be based on double materiality and internationally recognized standards. This decision will affect around 4,000 companies and GRI has been part of the decision-making process.

And finally…

I’m excited about upcoming developments...

The GSSB’s work programme sets out our plans with respect to sector standards, topic standards and guidance, and we will continue to engage with global and national standard setters.

While transparency is important and we encourage you to make a start, for those more advanced, assurance is critical to credibility. So, I am delighted to see the IAASB’s commitment to delivering a standards neutral assurance standard for use by different professions. We submitted a response to the IAASB’s consultation on ISSA 5000 and Bastian Buck and I spoke at their board meeting earlier this month. GRI 2 requires organizations to disclose what has been assured and which assurance standard has been used. I’d like to see an expansion of the scope of assurance engagements, and particularly to cover the GRI 3 process of identifying an organization’s most significant impacts. This process brings trust through stakeholder engagement and the assurance process gives organizations confidence that they are reporting and managing their most significant impacts.

Many thanks to all of you for your support during the year. I hope you have time for a holiday before the New Year and I wish you all the best for 2024.

Dr Carol Adams

Chair of the GSSB