The Global Reporting Initiative has called on the European Financial Reporting Advisory Group (EFRAG) to to deliver the consistent and relevant corporate information in the European Sustainability Reporting Standards (ESRS) that would be material for stakeholders to regarding impacts, risks and opportunities.
Following the election of U.S. President Donald Trump and responding to reports on Europe’s market competitiveness, the EU worked to simplify and streamline reporting requirements for companies and financial institutions regarding their environmental impacts. Responding to EFRAG’s public consultation on amendments to the ESRS, GRI outlines changes to ensure high-quality reporting while delivering on the simplification agenda. It warns that the weakening of impact disclosures, as reflected in the current draft, goes against EFRAG’s mandate to achieve interoperability with globally adopted standards, such as those set by GRI, and maintain double materiality reporting.
GRI emphasizes that misalignment creates unnecessary costs for companies, leaves investors, civil society and other stakeholders without comparable information – and ultimately hinders business competitiveness. Key elements of the submission, which provide key recommendations alongside detailed feedback, include calls to:
- Align the definition of impact materiality with the GRI Standards: Eliminate ambiguity for companies and stakeholders by reflecting GRI’s widely used definition that material topics are an organization’s most significant impacts.
- Enhance interoperability with global standards: Achieving alignment with GRI’s established and multistakeholder-validated standards should be the basis for determining the mandatory impact datapoints to be retained.
- Address the reduced ESRS coverage by using GRI Standards to fill the gaps: Expand the existing reference to GRI to include Topic as well as Sector Standards as reliable sources of disclosure on impacts, to ensure quality and consistent reporting.
- Reconsider the application of a net-based approach to impact assessment: This new proposal risks undermining impact reporting, as companies can obscure potential harm simply by pointing to mitigation efforts.
“The GRI Standards, developed through a multi-stakeholder process and informed by scientific evidence, provide the global reference point for organizations to identify and disclose their most significant impacts,” said Carol Adams, Chair of GRI’s Global Sustainability Standards Board (GSSB). “Explicitly linking the ESRS to the GRI Standards will not only allow reporting organizations to address disclosure gaps but also ensure coherence and comparability across borders. This alignment is vital if the ESRS are to deliver high-quality reporting on impacts, as needed by investors, policymakers, civil society and all stakeholders.”
