Not forgetting about GRI amidst the ISSB hubbub

Carol Adams has penned an article that is making the rounds that is required reading about the proper balance of sustainability reporting and a host of questions about the formation of the ISSB. Here’s an excerpt:

Then there’s the lack of consultation with GRI to date. It is the only sustainability standard setter that has not been involved in the IFRS Foundation’s Technical Readiness Working Group on sustainability reporting. The excuse put forward is that it is not concerned with investor needs. In fact, it has had investors in its governance structures and on the GSSB for some years. Board member, Jack Ehnes, for example, is former CEO of US pension fund CalSTRS. GSSB member Evan Harvey is the Global Head of Sustainability at Nasdaq in the USA. The GRI Stakeholder Council has seven members from investment institutions. GRI, knows what information investors want about corporate impacts on sustainable development and what information stakeholders need to maintain the trust that makes or breaks companies. GRI’s press releases repeatedly express a willingness to engage.

In a subtle shift in focus the IFRS Foundation’s sustainability-related financial information prototype now defines materiality to include “an entity’s impacts on society and the environment, if those impacts could reasonably be expected to affect the entity’s future cash flows“. GRI’s principles-based approach will get to that, but also, as A4S point out, provide advanced warning. Some will consider it better than the vagueness of determining what can ‘reasonably be expected’ to become monetary or the near impossibility of determining how, how much or when that might occur.

In a less subtle shift in focus, the ‘climate-related disclosure prototype’ includes metrics on water, waste and raw material sourcing. GRI Standards, developed over 20 years, do these metrics better. Not only are the IFRS Foundation’s prototype metrics beyond core climate-related issues (and others are missed) it proves the challenge of the framing reporting on impacts of the organisation around what can “reasonably be expected to affect the entity’s future cash flows”. (Also worth noting here that the WEF indicators that the IFRS Foundation refers to are a subset of GRI Indicators – WEF is not a standard setter.) There is an urgent need, and much work to be done, to increase disclosures on matters covered in the TCFD recommendations and SDGD Recommendations that are obviously financially material and not within GRI’s purview.

And here’s an excerpt from this note by Kim Schumacher:

In all of the self-congratulatory PR around the creation of an International Sustainability Standards Board (ISSB) by the IFRS Foundation during COP26, Carol Adams is asking the right questions about the additionality of this new body that bears very little substance in terms of advancing sustainability in the scientific sense in line with planetary boundaries.

I have been very open about the need for further harmonization, but those creating the ISSB have been literally avoiding acknowledging the existence of the GRI standards, which in and of itself appears to be highly disingenuous.

I am not at all saying that the ISSB does not have merit and that the GRI and its structures are perfect, as each have been constantly evolving.

But pretending like the latter don’t exist, and ignoring the fact that the GRI standards are by far the most widely used by large global corporates and numerous financial institutions will lead to even more confusion when it comes to complying with double materiality, which is the key to genuine sustainability reporting IMHO.