“Interoperability” has been a buzz word for the last several years among those concerned with sustainability reporting. What does it mean? In simple terms, it means the ability of these standards to work together, for them to be connected.
This is clearly an important idea given that the sustainability reporting has many reporting standards, frameworks, and questionnaires, which often overlap in their content and methods. There are, for example, the GRI Standards, European Sustainability Reporting Standards (ESRS), CDP environmental questionnaires, TCFD Recommended Disclosures, SASB Industry Standards, and International Financial Reporting Standards (IFRS) Foundation IFRS S1 and IFRS S2.
The reporting “burden” is a real one. Companies are under pressure to disclosure more and more information using many different standards and frameworks. It is important that the standards can work together because many companies report using all of them.
Let’s look at what is available to facilitate interoperability among the standards and frameworks.
GRI and ESRS
If your company has been using Global Reporting Initiative (GRI) Standards and will be required to use ESRS, there are two documents that will be quite useful to you. The GRI ESRS Mapping Document (November 2023) maps the commonalities between the two sustainability reporting standards with regard to impacts. GRI defines impacts as an effect that an organization has on the economy, environment, and people including human rights. ESRS defines “impacts” as positive and negative sustainability-related impacts that relate to the undertaking’s business, as identified through an impact materiality assessment process. In an earlier post, I explained the difference between impact and financial materiality. GRI Standards focus on impact materiality and not financial materiality.
Another mapping document called the ESRS-GRI Standards data point mapping guide shows the connection from ESRS disclosures to the GRI disclosures. This may seem redundant, but it is not. It is useful because it lists the ESRS disclosures first and how they map to GRI disclosures. With both mapping documents, reporters have the reporting requirements from two directions.
CDP and ESRS
CDP prepared a CDP-ESRS Mapping document that lists the ESRS standard disclosures that connect to the relevant CDP 2023 Climate Change Questionnaire question numbers. This links specific ESRS 2 General Disclosures and the topic standard ESRS E1 Climate Change to specific questions in the CDP Climate Change questionnaire. The alignment guidance for the CDP 2024 Questionnaire is being constructed.
ESRS and IFRS
Interoperability guidance between ESRS and the International Sustainability Standards Board (ISSB) Standards was created in August 2023. This guide shows how ESRS 2 General Disclosures and ESRS EI Climate works with International Financial Reporting Standards (IFRS) S1 General Requirements for Disclosure of Sustainability-related Financial Information and S2 Climate-related Disclosures. The mapping table lists the IFRS S2 disclosures to the relevant ESRS disclosures.
GRI and IFRS
The connection between GRI 305: Emission 2016 and IFRS S2 Climate-related Disclosures can be found in a guide that compares greenhouse gas (GHG) emissions disclosures between the two standards. This includes things that companies should consider when measuring and disclosing Scope 1, Scope 2 and Scope 3 GHG emissions in accordance with both Standards.
In my future posts, I will feature other interoperability documents.