Ásthildur Hjaltadóttir, Chief Regional Officer at GRI, makes the case for a two-pillar reporting structure.
In recent months, Global Reporting Initiative – provider of the world’s most widely used sustainability reporting standards – has taken a more proactive stance in how we communicate about the changes and challenges in the ESG landscape. Why now, you may ask? Well, we are at a crucial juncture in the corporate transparency journey. One direction may lead to narrower disclosure and less scrutiny, the other, opportunities for robust reporting that drives accountability.
Sharing ‘the GRI perspective’ on these key developments is part of our efforts to improve understanding by all stakeholders and tackle some of the confusion out there, while making the case for the transition to an improved, more transparent corporate reporting system, for financial and sustainability disclosure.
No alphabet soup
It’s seems a controversial statement, given the column inches written on the topic, but there is no alphabet soup of sustainability standards. Yes, there is a myriad of guidelines, frameworks, surveys, and certifications that deal with ESG. Yet there are only two global standard setters for reporting. The GRI Standards, for multi-stakeholder applicable reporting on broad impacts, and SASB Standards, for value creation focussed disclosure for the investor-only audience.
Investors, you are important. But to put it quite simply, informing all stakeholders is good for business. By providing comparable, verifiable information on sustainability efforts, companies show the world that they practice what they preach. Investors want that assurance, as do governments, civil society, rating agencies, academics, among others.
Indeed, stakeholder capitalism is something of a buzz phrase these days, with the annual letter from the CEO of BlackRock, Larry Fink, calling for companies to “create value for and be valued by its full range of stakeholders”. However, stakeholder capitalism without sustainability reporting that reflects the needs of society and the environment makes little sense.
A stakeholder-centric corporate strategy can have multiple benefits – from enhancing reputation and brand to improved ability to hire new staff, mitigating environmental risks and increasing access to capital markets. So, explaining how corporate actions seek not only to be profitable, but also to safeguard stakeholder interests, is a powerful tool when trying to communicate how the business is accountable to people and planet.

Wider perspective
Achieving socio-economic and environmental cohesion demands a wider perspective than climate metrics or investor interests alone, which is where the GRI Standards come into play, alongside financial disclosure. That is why we continue to press the case for a two-pillar reporting structure – for financial and sustainability standards – with a core set of disclosures and each pillar on an equal footing. Covering the information needs of investors as well as other stakeholders, this will increase confidence and credibility in the sustainability performance of companies.
Our vision of this future ESG landscape changes intersects with by two separate yet inter-linked developments. The differences come down to materiality:
- The European Sustainability Reporting Standards (ESRS) being created by the EU, based on double materiality for a multi stakeholder audience (which includes investors). GRI and the European Financial Reporting Advisory Group (EFRAG) are leading its co-construction efforts.
- Standards for the disclosure of sustainability related financial information being drafted by the IFRS Foundation – with which the newly established International Sustainability Standards Board (ISSB) is charged – and will be based on financial materiality for an investor audience (SASB and its standards are in the process of being folded into the ISSB).
In our view, the approaches of the IFRS and the EU are not competing but complementary forces. Different standards have different purposes for different audiences, as determined by materiality. Standards with a sole purpose to inform investors are built on a different concept from impact standards that inform a broader group of stakeholders.

Clarity of purpose
What’s important is that the application of these standards have clarity of purpose. From biodiversity loss to climate change, health crises to inequality, sustainability challenges won’t be addressed without the end goal in mind. That is why all stakeholder groups benefit from credible reporting standards, which are essential to mitigate lingering concerns about greenwashing. Frameworks without a definite reporting obligation cannot tackle this, nor can ESG ratings and rankings.
We need transparency on impacts because this is the enabler of sustainable behaviour. I believe this perspective is increasingly being understood, by markets and stakeholders around the world. Therefore, as the ESG landscape continues to evolve, I am confident that the place and relevance of GRI, and the multi-stakeholder accountability that our standards represent, will continue to grow.
Ásthildur Hjaltadóttir, Chief Regional Officer at GRI, makes the case for a two-pillar reporting structure.
In recent months, Global Reporting Initiative – provider of the world’s most widely used sustainability reporting standards – has taken a more proactive stance in how we communicate about the changes and challenges in the ESG landscape. Why now, you may ask? Well, we are at a crucial juncture in the corporate transparency journey. One direction may lead to narrower disclosure and less scrutiny, the other, opportunities for robust reporting that drives accountability.
Sharing ‘the GRI perspective’ on these key developments is part of our efforts to improve understanding by all stakeholders and tackle some of the confusion out there, while making the case for the transition to an improved, more transparent corporate reporting system, for financial and sustainability disclosure.
No alphabet soup
It’s seems a controversial statement, given the column inches written on the topic, but there is no alphabet soup of sustainability standards. Yes, there is a myriad of guidelines, frameworks, surveys, and certifications that deal with ESG. Yet there are only two global standard setters for reporting. The GRI Standards, for multi-stakeholder applicable reporting on broad impacts, and SASB Standards, for value creation focussed disclosure for the investor-only audience.
Investors, you are important. But to put it quite simply, informing all stakeholders is good for business. By providing comparable, verifiable information on sustainability efforts, companies show the world that they practice what they preach. Investors want that assurance, as do governments, civil society, rating agencies, academics, among others.
Indeed, stakeholder capitalism is something of a buzz phrase these days, with the annual letter from the CEO of BlackRock, Larry Fink, calling for companies to “create value for and be valued by its full range of stakeholders”. However, stakeholder capitalism without sustainability reporting that reflects the needs of society and the environment makes little sense.
A stakeholder-centric corporate strategy can have multiple benefits – from enhancing reputation and brand to improved ability to hire new staff, mitigating environmental risks and increasing access to capital markets. So, explaining how corporate actions seek not only to be profitable, but also to safeguard stakeholder interests, is a powerful tool when trying to communicate how the business is accountable to people and planet.
Wider perspective
Achieving socio-economic and environmental cohesion demands a wider perspective than climate metrics or investor interests alone, which is where the GRI Standards come into play, alongside financial disclosure. That is why we continue to press the case for a two-pillar reporting structure – for financial and sustainability standards – with a core set of disclosures and each pillar on an equal footing. Covering the information needs of investors as well as other stakeholders, this will increase confidence and credibility in the sustainability performance of companies.
Our vision of this future ESG landscape changes intersects with by two separate yet inter-linked developments. The differences come down to materiality:
In our view, the approaches of the IFRS and the EU are not competing but complementary forces. Different standards have different purposes for different audiences, as determined by materiality. Standards with a sole purpose to inform investors are built on a different concept from impact standards that inform a broader group of stakeholders.
Clarity of purpose
What’s important is that the application of these standards have clarity of purpose. From biodiversity loss to climate change, health crises to inequality, sustainability challenges won’t be addressed without the end goal in mind. That is why all stakeholder groups benefit from credible reporting standards, which are essential to mitigate lingering concerns about greenwashing. Frameworks without a definite reporting obligation cannot tackle this, nor can ESG ratings and rankings.
We need transparency on impacts because this is the enabler of sustainable behaviour. I believe this perspective is increasingly being understood, by markets and stakeholders around the world. Therefore, as the ESG landscape continues to evolve, I am confident that the place and relevance of GRI, and the multi-stakeholder accountability that our standards represent, will continue to grow.
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