Progress on corporate transparency in EU

The publication of the exposure drafts for the new European Sustainability Reporting Standards (ESRS) has been welcomed by GRI, the world’s leading provider of standards on sustainability impacts.

Since July 2021, GRI has worked with the European Financial Reporting
Advisory Group (EFRAG) to provide technical input to the development of the
ESRS, which is set to become mandatory for 50,000 EU companies from 2023.
The draft ESRS enshrines the principle of ‘double-materiality’ – reporting
on both the financial considerations of sustainability issues and external
impacts of a reporting entity – of which GRI is a strong advocate.

*Eelco van der Enden, GRI CEO, said:*

*“From the outset, we have strongly backed the moves towards
double-materiality disclosure requirements for companies in the EU. As
previously recognized by the European Commission, it is crucial that the
ESRS builds on the standards already widely used by companies. It is
encouraging, therefore, that these drafts signal an important step towards
aligning with the GRI Standards. We remain focused on working with EFRAG to
strengthen the alignment and help the thousands of GRI reporters to meet
the European requirements. *

*GRI has also entered into an MoU with the IFRS Foundation*

to ensure our respective sustainability-related standards are aligned. To
effectively achieve corporate0020transparency, duplication and unnecessary
reporting burden must be minimized. This is something that GRI, given our
bridging role between the IFRS’ International Sustainability Standards
Board and EFRAG, is uniquely placed to help achieve. *

*Going forward, GRI will continue to collaborate with both EFRAG and the
ISSB. Harmonizing these new standards as much as possible with our
standard is a prerequisite for building a comprehensive two-pillar
corporate reporting system, for sustainability and financial reporting,
with each pillar on an equal footing.”*

*Judy Kuszewski, Chair of the GRI Global Sustainability Standards Board
(GSSB) said:*

*“I welcome that these draft European standards include explicit
recognition of GRI’s position as the global standard-setter for addressing
impact-materiality, as reflected by the alignment achieved so far on
disclosures, guidance and definitions. While more effort is now needed to
deepen compatibility, this is a reassuring sign for the many reporting
companies and stakeholders in the EU that rely on the GRI Standards.*

*The consultation on the ESRS is an opportunity to ensure they are refined
and further aligned. As a next stage, the GSSB will provide detailed input
on the draft standards, and engage with EFRAG’s newly-formed Sustainability
Reporting Board and Technical Expert Group.*

*An added contribution will be a detailed mapping of the GRI Standards
against the proposed ESRS, which will help companies understand how they
interconnect, and make it easier to determine additional reporting
requirements.”*

Under the EFRAG-GRI cooperation agreement, the two organizations have joined each other’s technical expert groups and committed to sharing information, with standard-setting activities and timelines aligned as much as possible. This includes joint working on new
standards for biodiversity

In June 2020, EFRAG was mandated by the European Commission to prepare for
new EU sustainability reporting standards

The EU Corporate Sustainability Reporting Directive is
introducing legislation on sustainability disclosure that will expand and
replace the current Non-Financial Reporting Directive.

Research by the Alliance for Corporate Transparency (2020) indicated that 54% of EU companies use the GRI Standards (the most commonly cited framework) to meet their non-financial reporting requirements.

Global Reporting Initiative

(GRI) is the independent, international organization that helps businesses
and other organizations take responsibility for their impacts, by providing
the global common language to report those impacts. The GRI Standards
are developed through a multi-stakeholder process and provided as a free
public good.

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