Interoperability between GRI and ESRS – Effortless standard change

In our last newsletter we introduced the European Sustainability Reporting Standards (ESRS) and the Global Reporting Initiative (GRI) Standards and touched on the interoperability between them. In this newsletter, we would like to elaborate on this topic and explain the extent to which companies that have previously prepared sustainability reports using the GRI Standards can easily apply their established processes and collected data to ESRS reporting.

Transitioning from the GRI Standards to the ESRS

The GRI Standards have established themselves as one of the world’s leading sustainability reporting standards and are widely used in corporate practice. However, with the introduction of the Corporate Sustainability Reporting Directive (CSRD) in the EU, companies that fall within the scope of the Directive will be required to prepare sustainability reports in accordance with the ESRS. This will be a significant change for many companies in the EU as they will need to transition from the established GRI Standards to the new ESRS.

To facilitate this transition and support harmonization with global standards, the GRI and the European Financial Reporting Advisory Group (EFRAG) have been working together since 2021. This collaboration aims to ensure that companies already reporting under the GRI can use their current reporting processes for the ESRS. To ensure a smooth transition, it is important to understand the interaction between GRI and ESRS and to prepare for the new requirements.

Using Established Practices and Processes for ESRS Reporting

In developing the ESRS, EFRAG sought to build on existing standards, and in particular to maximize consistency with the GRI Standards. This should make it easier for companies to transition to the new mandatory ESRS. Companies can adopt practices that they have already developed for their GRI reporting. Thus, companies that already report against the GRI Standards will be able to integrate the requirements of the ESRS into their existing processes, rather than having to start from scratch.

In addition, there are common core disclosures and terminology between the GRI Standards and the ESRS. This means that many of the key performance indicators and terms that companies already use for GRI reporting can also be found in the ESRS. The structure of the ESRS is also closely aligned with the GRI Standards. Companies that are familiar with the structure and organization of GRI reports will be able to quickly familiarize themselves with the ESRS.

GRI Data Mapping Tool Can Help Companies Navigate the Transition

To assist companies with the transition, GRI released a draft Data Point Mapping Tool last year (https://www.globalreporting.org/media/muajmnbl/draft-esrs-gri-standards-data-point-mapping.xlsx). This tool is designed to help companies understand the similarities and differences between the GRI and ESRS standards and to facilitate the transition from GRI to ESRS reporting. Companies that already report to the GRI Standards can use the tool to prepare for reporting to the ESRS.

For example, the data point mapping tool provides valuable support for gap analysis of the data required for ESRS reporting. Companies wishing to transition from the GRI Standards to the ESRS should first identify the topics for which they are already reporting under the GRI and have already collected data, as well as the ESRS topics for which data has not yet been collected. This will allow companies to target their data collection and ensure a smooth transition to ESRS reporting.

The tool links each ESRS data point to the corresponding requirements, recommendations and guidelines of the GRI Standards. However, it only provides information on the GRI Standards for which there is a corresponding ESRS data point. GRI disclosures that are not specifically addressed in the ESRS and not included in the tool can be included in a company’s ESRS sustainability report as company-specific disclosures if the company considers them material.

However, the tool also shows that the standards are only partially interoperable. The GRI reporting requirements cover less than half of the ESRS data points, with the differences in environmental standards being particularly striking. At the same time, it should be noted that companies with fewer than 750 employees do not have to include certain data points in their first report. These are listed in Appendix 1, Annex C of the final version of the ESRS and include, for example, information on Scope 3 greenhouse gas emissions or the company’s impacts and dependencies on ecosystems and biodiversity.

In addition to the content-related requirements, the processes and responsibilities within the company also pose a challenge. Companies that already report according to the GRI Standards have a significant advantage here, as they have established reporting processes and clear responsibilities.

Conclusion

The transition to ESRS reporting for companies that have previously reported against the GRI Standards is being facilitated by the collaboration between GRI and EFRAG. The ESRS requirements are based on practices and processes that companies reporting to the GRI Standards should already have in place. These can therefore be easily adopted for ESRS reporting. Companies also benefit from common core disclosures and similar terminology.

The new ESRS requirements relate in particular to certain required data points at the content level. To facilitate the transition, the GRI provides a data mapping tool for companies to use. We recommend that companies use this tool to conduct a gap analysis as early as possible in order to start collecting data in a timely manner. Companies with fewer than 750 employees should note that information on certain topics may be omitted in the first year of reporting.