GRI vs ISSB – topics and governance

This week, we are publishing the second installment on the similarities and differences between GRI and ISSB. Last week we discussed where both frameworks come from, and how you can link them despite their differences. This time we are going to talk on what is covered by GRI’s universal (also known as general) disclosures (the ones everyone must report), what is covered by ISSB’s S1 (we will get to S2 in another installment), and how both frameworks address disclosures on corporate governance.

First, the pillars…

• For ISSB, organizations must report on 4 broader topics:
  • Governance
  • Sustainability Strategy
  • Sustainable risk management
  • Sustainable metrics and targets

• For GRI, organizations must report on 5 broader topics:
  • The organization and its reporting practices
  • Activities and workers
  • Governance
  • Strategy, policies, and practices
  • Stakeholder engagement

Remember in GRI you can then go on to report on many other topics when you go to sector specific or topic specific disclosures. But for now, we want to focus on the mandatory topics. As can be seen, just by the titles alone, it would seem that an organization that is already reporting under GRI’s framework can easily report under ISSB’s S1. But the devil is in the details, so let’s double click on Governance first.

Details on Governance

• ISSB intends to make clear the governance processes, controls and procedures the entity uses to monitor and manage sustainability-related risks and opportunities. This includes:

1. Governance bodies or people in charge of the oversight of sustainability risks and opportunities
2. How that responsibility is included in that body’s (or person’s) mandate
3. How it determines which skills are available or will be developed to oversee this
4. How and how often this person or body is informed about these risks and opportunities
5. How these risks and opportunities are integrated into the decision making process (and whether tradeoffs are considered)
6. How the body or person oversees the KPIs and targets setting
7. Whether performance metrics are considered in remuneration policies
8. Management’s role in all this process (including which management level, committee, or position has this role, who oversees this group, and what kinds of controls exist for this oversight).

• GRI goes a bit further from general governance processes to sustainability related governance. This is covered by detailed disclosures on:

1. Full governance structure with various details (including independence, tenure, other commitments of members, gender, etc.)
2. Who oversees decision making and the management of the organization’s impacts
3. Nomination and selection of the highest governance body
4. Chair of highest governance body
5. Role of highest governance body and senior executives in overseeing the management of impacts, and frequency of reviews
6. Delegation of responsibility for managing impacts
7. Role of highest governance body in sustainability reporting
8. Process for highest governance body to prevent and mitigate conflicts of interest
9. Whether conflicts of interest are disclosed to stakeholders
10. How critical concerns are communicated to the highest governance body, and how many were in the past year
11. Measures to advance the collective knowledge, skills, and experience of the highest governance body on sustainability
12. Performance evaluation of the highest governance body on sustainability topics and the actions taken in response to evaluations
13. Policies and process for defining the remuneration of the members of the highest governance body and management, including whether their remuneration is related to sustainability efforts
14. Compensation ratios

As per the above, while both ISSB and GRI emphasize the integration of sustainability into governance processes, ISSB is more focused on a high-level framework focused on oversight and integration into decision-making. In contrast, GRI offers a comprehensive and detailed approach, covering various aspects of governance structure, conflict of interest management, communication processes, and remuneration policies. The GRI’s approach is more exhaustive, reflecting a broader and deeper dive into governance details.

For example, ISSB focuses on providing a high-level overview of governance mechanisms for sustainability-related risks and opportunities. GRI instead goes into greater detail by requiring disclosures on the full governance structure, including independence, tenure, gender, and other commitments of members. It also asks for more specific details on nomination and selection processes, roles in sustainability reporting, and measures to prevent conflicts of interest.

So once again, at least in this topic, organizations that are already reporting under GRI’s corporate governance disclosures, will find it relatively easy to link that to ISSB’s corporate governance disclosures. There may be slight additional details required, like how often are governance bodies informed of sustainability related issues, or how the organization approaches tradeoffs between sustainability commitments and other commitments, but the bigger things will be covered by their previous reports.

This might not be the case in other topics we will cover next, but if your organization is worried about adopting ISSB’s framework and it is already reporting under GRI’s framework, the work on corporate governance disclosures will be quite manageable.

I hope you found this interesting. As usual, if there is anything we can help you with, or if there is an ESG topic you would like to know more about, please let us know.

Best,

Marimar

CEO, Miranda ESG