Rival sustainability standards bodies Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) have formed a strategic partnership to bring greater clarity to the confusing business of sustainability reporting.
Companies struggle with the complexity and volume of reporting required of them, as pressure mounts on firms to report their environmental and social impact to stakeholders. Many companies use both SASB’s and GRI’s standards in their reporting, and the existence of so many standards has long been a point of frustration for consumers of sustainability information.
The two organisations, which were involved in a public spat over which standard was better at an event in Singapore last year, have said that they will co-produce communication materials and case studies to show how companies can best use both standards, and explain to consumers of the data what the key differences between the standards are. These materials will be launched before the end of the year.
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The two organisations were clear in their press statement that they are not merging, but said that the collaboration, announced on Monday (13 July), “may identify opportunities to consider how the SASB and GRI standards may be developed in the future.”
In a statement, SASB chief executive Janine Guillot said that in a post-Covid world, companies will increasingly be expected to disclose their sustainability performance, so the collaboration between GRI and SASB is “timely”.
John Pabon, founder of Melbourne-based sustainability consultancy Fulcrum Strategic Advisors, said that he is disappointed that the collaboration does not go further. “There are far too many reporting initiatives, so one less would be an amazing bit of progress,” he said.
“Interestingly, they admit how confounding the whole practice of reporting is (because of overlapping standards), yet they don’t go into changing things. It’s like they’re doubling down on their positions,” commented Pabon, who added that the announcement helped both companies stay top-of-mind during the pandemic.
“It’s really unfortunate they couldn’t have taken this opportunity to make meaningful change in their organisations and the practice of sustainability reporting,” he said.
Though there are similarities between the standards, the main difference between GRI, the market leader, and SASB is how companies report environmental, social and governance (ESG) issues that are the most relevant to their business. GRI defines what firms should report based on what matters to a broad group of stakeholders, while SASB is more focused on incorporating ESG data for investors and shareholders.
Last year, former SASB boss Madelyn Antoncic said during a panel discussion at the Asia Sustainability Reporting Summit that GRI was too difficult for investors to understand and hard for companies to compare their performance with their peers. GRI CEO Tim Mohin replied that since GRI is used by two-thirds of the world’s largest companies, Antoncic’s comments couldn’t be true.
Antoncic left SASB after 10 months in the role in November, and was replaced by Janine Guillot, an internal appointment.
In GRI and SASB’s joint statement on Monday, Guillot said: “The pandemic has demonstrated that so-called ‘non-financial’ information can indeed highlight material financial implications.
The interest among corporations to report their sustainability performance may have grown in the wake of the Covid-19 pandemic, as evidence has emerged that ESG-led investing leads to better than average returns.
Pabon commented that while it has been hoped that the pandemic would give companies the space to focus on sustainability issues, Covid-19 has become “an all-encompassing monster that’s taken our collective eyes off the goal.” As a result, companies are “giving the bare minimum” when it comes to reporting, he said.
“At this stage, if a company isn’t reporting then Covid isn’t going to provide the epiphany they need to do so,” Pabon said.