With the National Sustainability Reporting Framework (NSRF) mandating disclosures aligned with the International Sustainability Standards Board (ISSB) standards, the key question is whether the Global Reporting Initiative (GRI) standards are still relevant in today’s reporting landscape.
On one hand, the ISSB primarily serves investors by focusing on financial materiality – sustainability-related risks and opportunities that could affect a company’s enterprise value.
On the other hand, GRI adopts an impact materiality approach, encouraging companies to disclose how a company affects people, the planet and the economy.
GRI chief executive officer Dr Robin Hodess said: “We have been very clear that we serve different parts of the overall global reporting system, and that it is complementary and sometimes, two sides of the same coin.”
“Study after study shows that those companies that do good impact reporting have better financial returns, so there is a strong business case around GRI.”
Hodess was responding to questions from the audience at a sharing session and panel discussion on “From Impact Reporting to Value Creation” hosted by Sunway Institute for Global Strategy and Competitiveness at Sunway University.
Noting that GRI pioneered the global standards for sustainability reporting, she said it has accompanied companies as they work on their disclosures for more than a decade. These companies are therefore in a strong position to continue with GRI, which also helps them with their ISSB reporting.
Earlier, in her keynote sharing, Hodess said GRI and the IFRS Foundation – under which the ISSB operates as an independent standard-setting body – have been working closely to optimise how the voluntary GRI standards fit together with the ISSB standards, which are increasingly being mandated through financial regulations.
“Here’s the good news – you do not need to choose. Using both together gets you to double materiality, which is increasingly growing and seen as a value.
“It creates a streamlined, efficient and comprehensive approach to disclosure,” she said.
Hodess added that common disclosures apply wherever the standards overlap, citing greenhouse gas emissions as an example.
“If you report on one, you’ve got the data for both, so it is a one and done approach.
“This alignment reduces duplication. It ensures that one set of emissions data can serve investors and other stakeholders. And this is the approach we are going to take. When we are working on standards of common themes, we will be looking for common disclosures.”
She added that GRI also conducts regular engagements with other standard setters, regulators and stock exchanges, including the European Financial Reporting Advisory Group, the Carbon Disclosure Project and the Taskforce on Nature-related Financial Disclosures, to advance a shared vision for sustainability reporting – one that goes beyond mere adoption of standards.
“It used to be just GRI, and it is much more complicated now.
So getting this clarity has been something that no single organisation, sector or jurisdiction can achieve alone.
“We have to work as a whole ecosystem towards a common goal, and what we want to do is to build a kind of gold standard of double materiality – impact reporting together with financial materiality reporting – and reporting that drives action, not just compliance.”
Turning to the Malaysian context, Hodess said as the regulators push forward the NSRF and ISSB adoption, GRI sees this as an important opportunity to strengthen the interoperability between financial and impact reporting.
While ISSB supports investor-focused decision making, GRI provides visibility on real-world impacts, she added.
GRI covers a whole range of topics that are not currently covered by the financial materiality approach, she said, citing labour, lobbying and tax as examples.
“So, why is impact reporting essential? Well, for one thing, impact shapes future financial performance. If you think about it, if you want to understand your risk and opportunities, you need to start with where you’re having an impact.
“Understanding impacts brings foresight, it helps build resilience. By using GRI standards to report on their impacts, companies can deliver decision-useful data to guide internal strategy, to inform investors and strengthen their regulatory compliance here in Malaysia and globally,” she said.
