News,
Sustainability Reporting according to GRI and ESRS: limited "Interoperability"
- Kirchhoff Consult examines requirements according to GRI and ESRS (CSRD)
- GRI requirements only cover half of the data points required by ESRS in the future
- Companies with a GRI report will do more than expected in CSRD reporting
- GRI is a good basis for the CSRD report
Hamburg, February 15, 2024 - Companies will have to publish the first mandatory sustainability statements based on the European Sustainability Reporting Standards (ESRS) as early as the 2025 financial year. Some (listed) companies that will be required to report, have already established voluntary sustainability reporting based on the GRI framework. The current GRI reporting requirements, however, only cover about 40 percent of the 1,180 ESRS data points that will be required. This means that the two frameworks are only partially interoperable. This was the result of a recent comparative analysis of the frameworks by Kirchhoff Consult.
"The expectation that the established GRI reporting would also apply to most of the new legal requirements in the course of CSRD reporting was strong," says Julian von Pressentin, Senior Consultant at Kirchhoff Consult and honorary member of the EFRAG Expert Community ESRS for listed SMEs. "A comparison of the two frameworks, however, shows that many companies have to do a lot more than expected. Even a meticulous application of the GRI framework leaves significant data gaps."
The desired "interoperability" between the two frameworks was only partially fulfilled
Based on a mapping between the data points of the 12 adopted standards (ESRS) and the GRI requirements, the officially intended "interoperability" between the two frameworks is only partially fulfilled. Only 40 percent of the ESRS data points are covered by existing GRI disclosures. In addition, just 15 percent of data points partially overlap with the GRI requirements. This is the case, for example, when different levels of detail or units are required by the two frameworks.
GRI Guidance and Recommendations were also examined in this statistical comparison. These are not mandatory even for companies that report in accordance with the GRI Standards. This means that only 470 of the 1,180 ESRS data points are completely fulfilled by a stringent application of the GRI framework while 180 data points are only partially fulfilled.
Significant differences between the individual ESG topics
The analysis by Kirchhoff Consult also shows that the compatibility between ESRS and GRI is topic-dependent. The overlaps in content are greater in the social and governance topic areas. It is observable that the GRI requirements often exceed the legal requirements - especially about reporting on the company's own workforce.
A different picture emerges when comparing the environmental standards: just a third of the ESRS requirements are fully or partially covered by GRI. The topic of biodiversity has the lowest operability. Even in the comprehensive ESRS E1 (climate protection), the overlap is relatively low at 36 percent. This is due to the extensive ESRS disclosures relating to the financial risks and opportunities arising from climate change. In GRI, this financial perspective is at best a marginal issue. Also, many of the necessary disclosures on carbon credits and removals, and carbon pricing are not covered by GRI. When addressed, it is only to a limited extent. Even for Scope 1, 2, and 3 emissions and energy, the ESRS requires a more granular disclosure. Additional data and information are often required to meet the new requirements.
GRI is a suitable basis for the CSRD report
The comparative analysis of the ESRS and GRI reporting requirements shows that even a detailed application of the GRI framework leaves many significant data gaps that need to be closed before the CSRD report. Companies that have already prepared a sustainability report based on the GRI framework benefit from the content overlap, especially in the social and governance standards. In addition, content-related data requirements are only one of the challenges to ensure successful reporting. The processes and responsibilities within the company are also important. Companies that have used frameworks such as the GRI have considerable advantages.
"Irrespective of GRI experience, the CSRD and ESRS are a package of extensive and complex requirements, but the complexity can be significantly reduced through an intensive examination of the standards, combined with practical experience," says Vincent Furnari, Managing Partner at Kirchhoff Consult. "By using systematic methods, such as the materiality analysis, with optimized templates for data collection, and expert analysis, lean and audit-proof solutions can be achieved. It is also important to discuss individually to what extent parallel GRI and CSRD reporting is expedient and which concepts are suitable for those communication requirements that cannot be integrated into the sustainability statement in the management report."
Images are available for download under the following links:
Figure 1: Comparison of GRI and ESRS (general overview, German only)
Figure 2: Comparison of GRI and ESRS (by standard, German only)
ABOUT KIRCHHOFF CONSULT AG
With around 60 employees, Kirchhoff Consult is a leading communications and strategy consultancy for financial communications and ESG in German-speaking countries. For more than 25 years, Kirchhoff has been advising clients on all aspects of financial and corporate communications, annual and sustainability reports, IPOs, investor relations and ESG and sustainability communications. 'Designing Sustainable Value': Kirchhoff combines content expertise with excellent design to create sustainable value.
Kirchhoff Consult is a member of TEAM FARNER, a European alliance of partner-led agencies. The common goal: to build the European market leader for integrated communications consulting.
Learn more on: kirchhoff.de
Say Hello.
Janina Schumann
Head of Corporate Communications
janina.schumann@kirchhoff.de
+49 40 609 186 40