The International Financial Reporting Standard (IFRS) and the Global Reporting Initiative (GRI) have announced a collaborative agreement under which their respective standard-setting boards, the International Sustainability Standards Board (ISSB) and the Global Sustainability Standards Board (GSSB), will seek to coordinate their work programmes and activities. They’ll also seek to create an interconnected approach to sustainability disclosures.
The IFRS Foundation, announced at COP26 the establishment of the ISSB to develop a comprehensive global basis for investor-focused sustainability disclosures for capital markets, and GRI, the world's leading global standard-setter for multi-stakeholder focused sustainability reporting. The Foundation further announced that they will join each other's advisory bodies related to sustainability reporting activities.
The agreement reflects the importance of ensuring compatibility and interconnectedness of investor-focused sustainability information that meets the needs of capital markets, with information intended to also meet the needs of a broader range of stakeholders.
The IFRS Foundation and GRI recognise the considerable public interest in aligning where possible their respective work programmes, terminology and guidance, helping to reduce the reporting burden for companies and further harmonise the sustainability reporting landscape internationally.
Working together, they provide two pillars of international sustainability reporting: A first pillar represents the investor-focused capital market standards of the IFRS Sustainability Disclosure Standards developed by ISSB. The second pillar of the GRI sustainability will report requirements established by the GSSB, compatible with the first, designed to meet the needs of multiple stakeholders.
Chair of the trustees of the IFRS, Erkki Liikanen, commented that the ISSB’s work and its global benchmarking concept will help achieve this goal for capital markets, while the agreement with GRI will help ensure that capital market standards are developed in a way that minimise the reporting burden for those companies that also use the GRI standards.
Echoing this sentiment, Executive Director of the GRI, Eelco van der Enden, mentioned that the agreement between the two foundations sends a strong message to capital markets and society that a comprehensive reporting system, combining financial and impact materiality for sustainability reporting, is possible on a global scale.
Aligning the established and widely adopted GRI standards for sustainability impacts with the investor-focused standards being developed by ISSB will benefit both companies and investors, as well as a wide range of stakeholders around the world.
The joint use of the standards set by ISSB and GSSB will provide a comprehensive and compatible set of sustainability disclosures. This agreement will see the two standards boards cooperate in pursuit of that goal.
Sustainability Reporting in the Fashion Industry
Using the GRI Standards, the Global Reporting Initiative has set out global criteria for best practices in preparing Sustainability Reports. With one of the main outlines of the agreement being improved transparency, Sustainability Reporting will become the fashion industry’s main means of communication, regardless of whether it is a legal obligation or not.
Similar to IFRS standards, the GRI standards have outlined a clear, approach to be set out. Companies in the fashion industry will have to rearticulate standards for their own individual and sectoral realities and confront critical issues such as:
- Defining which sustainability issues have the greatest impact throughout the value chain.
- Prioritising the most relevant chapters of the GRI Standards and setting out materiality assessments.
- Mapping the organizational structure assigning tasks by function.
- Designing, implementing and monitoring data and information collection processes.
- Elaborating reports that are capable of influencing a broad range of stakeholders.
Standard owners such as GoodWeave International, Fairtrade International, and B Corporation not only trace supply chains but also verify that manufacturing processes and working conditions are ethical and responsible.
The Alignment of Multiple International Initiatives
The agreement, in the form of a Memorandum of Understanding (MoU), represents the latest development in efforts to consolidate or align multiple international initiatives covering sustainability reporting into a more cohesive approach for the benefit of companies, investors and society at large.
The IFRS Foundation previously announced consolidation with the Climate Disclosure Standards Board and the Value Reporting Foundation (which houses the Integrated Reporting Standards and SASB).
The ISSB intends to publish the next week’s proposed climate-related and general sustainability disclosure requirements that, once finalised, will form the global baseline for climate-related disclosures. The global benchmark concept has been welcomed by G20 leaders, the International Organisation of Securities Commissions (IOSCO) and others.
As the leading global standard-setter for sustainability reporting that addresses an organisation's impact on the economy, environment and people for a multi-stakeholder audience, the GRI Standards are widely adopted by companies around the world.
Many jurisdictions turn to the GRI Standards when developing their own multi-stakeholder sustainability reporting requirements. The GRI Standards are continually revised, with current developments including new Sectoral Standards and an updated Biodiversity Standard.
About the IRFS
With its central offices based in London, the IFRS Foundation is a nonprofit accounting organisation. It seeks to enforce the development and promotion of the International Financial Reporting Standards through the International Accounting Standards Board, and works to serves the public interest by cultivating trust, growth and long-term financial stability in the global economy.
About the GRI
The GRI, with its main offices based in the Netherlands, is an organisation whose purpose is to promote sustainability reporting in all types of organisations. The GRI produces a comprehensive Sustainability Reporting Framework, which is widely used around the world.
The Framework, which includes the Reporting Guidelines, sets out the principles and indicators that organisations can use to measure and report their economic, environmental and social performance. GRI is committed to the continuous improvement and increased use of these Guidelines, which are available to the public free of charge.