Comparing GRI and SASB Standards for Corporate Sustainability Reporting

As companies navigate the complex landscape of sustainability reporting, two frameworks have emerged as leaders in guiding these efforts: the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). Both frameworks offer valuable tools for disclosing environmental, social, and governance (ESG) information, but they differ significantly in their approach, scope, and target audience. Here's a comparison of GRI and SASB standards to help organisations choose the best framework for their sustainability reporting needs.

Overview of GRI and SASB

GRI Standards

• Established: Founded in 1997, GRI is a pioneer in sustainability reporting.

• Scope: Offers a comprehensive, principle-based approach covering economic, environmental, and social impacts.

• Target Audience: Designed for a broad range of stakeholders, including investors, employees, customers, and the public.

• Reporting Levels: Provides three levels of reporting: Core, Comprehensive, and Sector Disclosures.

SASB Standards

• Established: Focuses on industry-specific standards for financial material sustainability information.

• Scope: Tailored to 77 industries, emphasising financial materiality and investor relevance.

• Target Audience: Primarily aimed at investors, providing decision-useful information for financial analysis.

• Reporting Approach: Industry-specific standards ensure comparability across companies within the same sector.

Key Differences

1. Materiality Definition:

• GRI: Defines materiality based on the significance of economic, environmental, and social impacts on stakeholders.

• SASB: Focuses on financial materiality, identifying sustainability issues likely to impact financial performance.

2. Industry Specificity:

• GRI: Offers optional sector disclosures but lacks the detailed industry-specific guidance of SASB.

• SASB: Provides comprehensive industry-specific standards, ensuring comparability across sectors.

3. Reporting Flexibility vs. Comparability:

• GRI: Allows flexibility in reporting, which can lead to less comparability across companies.

• SASB: Ensures greater comparability due to standardised industry-specific standards, but offers less flexibility.

4. Resource Requirements:

• GRI: Requires more resources due to its comprehensive approach.

• SASB: More efficient for organisations with limited resources, focusing on financial material metrics.

Choosing Between GRI and SASB

1. Stakeholder Focus:

• Use GRI if your organisation needs to engage a broad range of stakeholders, including employees, customers, and the public.

• Use SASB if your primary focus is on providing investors with financial material sustainability information.

2. Industry Specificity:

• SASB is ideal for companies seeking to report on industry-specific sustainability issues that impact financial performance.

• GRI offers more flexibility but may not provide the same level of industry-specific guidance.

3. Regulatory Compliance:

• GRI can be more suitable for meeting various regulatory requirements across multiple sustainability topics.

• SASB is beneficial for compliance with investor-focused regulations.

A large number of corporate governance standards internationally

Using Both GRI and SASB

Many organisations choose to use both frameworks to leverage their complementary strengths:

• GRI provides a comprehensive overview of sustainability impacts relevant to a wide range of stakeholders.

• SASB offers industry-specific, financial material information crucial for investor decision-making.

Companies like ArcelorMittal and Nike have successfully integrated both standards into their reporting, enhancing transparency and stakeholder engagement.

Conclusion

In conclusion, while both GRI and SASB are essential tools for corporate sustainability reporting, they serve different purposes and cater to distinct needs. The GRI Standards offer a broad, principle-based approach suitable for engaging multiple stakeholders, while SASB Standards provide industry-specific guidance focused on financially material sustainability issues relevant to investors. By understanding these differences, organisations can choose the framework that best aligns with their sustainability reporting goals and stakeholder needs.

Sources: internet resources

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