Published: 27 October 2021

Published: 27 October 2021

Emphasizing Impact: GRI Reveals its 2021 GRI Standards

Non-financial reporting in accordance with GRI Standards gets to the heart of the core business: the updated GRI Standards emphasize the importance of a sound environmental and social due diligence process along the value chain to identify, prevent and mitigate negative impacts and enhance a company’s positive contributions.

Alignment with international standards

Are you using the GRI Standards or considering adoption for your non-financial aka sustainability reporting?

The GRI Universal Standards (former GRI 101, GRI 102, and GRI 103) have recently been revised. The final version was released on October 5th, 2021. They will go into effect in January 2023, which will give reporting companies, or those to be, some time to adjust or prepare their reporting in compliance with these revised standards.

The changes to the 2021 version reflect comments and feedback received from a global consultation on an exposure draft, that was initiated by GRI in 2020. The previous version of GRI Standards was often criticized for its lack of emphasis on the impact of the reporting company across its entire value chain, including impacts from business relationships, and human rights-related impacts It now addresses increasing public awareness of a company’s responsibility along the value chain, which is in line with current regulatory developments in the field of Supply Chain Responsibility (e.g. Supply Chain Act in Germany, EU CSRD draft, the Australia Modern Slavery).

What are the major changes?

1. A modular system comprising three series of standards

a. Universal Standards (revised: GRI 1: Foundation 2021, GRI 2: General Disclosures 2021, GRI 3: Material Topics 2021)
b. Sector Standards (new; list material topics and disclosures of a given sector, which are mandatory to be used, when available and applicable to the reporting organization)
c. Topic Standards (slightly adapted 2016 version; disclosures to report impacts in relation to specific topics)

2. Only one way to report in accordance

Reporting in accordance with option “Core” or “Comprehensive ” is gone. Either a reporting organization complies with nine reporting requirements (see GRI 1: Foundation 2021) to claim that it has prepared the report in accordance with the GRI Standards 2021 OR it can claim that the report has been prepared with reference to the GRI Standards.

Disclosures from the Topic Standards can be individually chosen based on the organization`s material impact, i.e. the material topics.

3. It’s all about IMPACT

a. Materiality – The definition of materiality has been revised. From now on, the reporting company should prioritize those topics as material “that represent its most significant impacts on the economy, environment, and people, including impacts on their human rights”.
b. Stakeholder perspectives – Stakeholder and expert engagement are encouraged to get a better understanding of the impacts, but it is no longer necessary to assess the significance from a stakeholder perspective. However, stakeholder engagement remains key for sustainability management and an organization is still required to report on this engagement, when disclosing on material topics (GRI 3: Material Topics 2021).
c. Negative impacts – The reporting organization should also report whether it is involved with the negative impacts through its activities or as a result of its business relationships (this is similar to the concept of “topic boundary” of the version 2016 phrased differently and expanded with respect to business relationships).
d. Due diligence – Throughout the standards, there is a new emphasis on the concept of “due diligence”, meaning, the “process through which an organization identifies, prevents, mitigates, and accounts for how it addresses its actual and potential negative impacts on the economy, environment, and people, including impacts on their human rights”. From now on, reporting organizations need to report on their impacts, also considering those linked to their business relationships, through a “due diligence lens” as well (GRI 3: Material Topics 2021).

4. Value chain

It is important to note, that the focus is on the whole value chain, including business relationships, and thus requires a comprehensive understanding and assessment of the supply chain performance of a reporting organization. This increased demand for transparency goes hand in hand with current legislative developments, such as the German Supply Chain Law, the UK modern slavery statement, the Australian Modern Slavery Act or the Dutch Child Labour Due Diligence Law as well as the current draft for the EU Mandatory Human Rights Due Diligence Directive. In the same direction, Latin America voluntary reporting instruments and initiatives, especially from the stock markets, are moving toward developing legislation that encourages greater transparency such as Colombia’s Financial Superintendency New Code of Best Corporate Governance Practices that includes the preparation of ESG reports for issuers in Colombia, Chile’s Stock Exchange General Norm No. 385 that establishes the obligation for SAAs to disclose their practices in matters of governance, social responsibility and sustainable development, and Peru’s, Superintendency of the Securities Market requirements to companies that have securities registered in the Public Registry to disclose information on compliance with the code of good corporate governance and sustainability together with their annual report.

5. Revival of Sector Standards

This set of standards will list topics, that are likely to be material for the given sector, as well as corresponding sector-specific disclosures. Reporting organizations are required to use the Sector Standard when it is available and applicable and must review all likely material topics. In case topics are determined to be material, the organization must have an explanation in the GRI content index. Please keep in mind, that using the Sector Standard does not mean you do not have to conduct your own materiality process. The Sector Standards are not a substitute for this.

There are about 40 Sector Standards to be drafted. The first Sector Standard published is GRI 11: Oil and Gas Sector 2021. Currently under development are Sector Standards for Coal, Mining, Agriculture, and Fishing. Next in line are the following sectors: Food & Beverage, Textiles & Apparel, Banking, and Insurance.

6. Understanding the Organization

To better understand the context of the sustainability information provided by the organization, the set of general disclosures has been revised. 30 general disclosures on reporting practices; activities and workers; governance; strategy and stakeholder engagement provide insights into the profile and the scale of the reporting organization (GRI 2: General Disclosures 2021)

The former topic-specific standards GRI 307 Environmental compliance 2016 and GRI 412 Human rights assessment 2016, 419 Socioeconomic compliance 2016 have been incorporated into these general disclosures. This again underlines the focus on more impact-oriented reporting, which sees human rights assessments and compliance with social and environmental standards as fundamental governance tasks for organizations.

Companies are advised to adjust and make changes to their non-financial reporting in compliance with GRI sooner rather than later. For most companies, the GRI Standards 2021 will already be mandatory for the reporting year 2022, when publishing the report after January 1st, 2023.

How can ELEVATE support you in the transition?

  • Whether you are based in Latin America, the US, Asia, or Europe, ELEVATE Global Advisory can support you. With many years of experience in supporting GRI and non-financial reporting according to various standards, ELEVATE has accredited GRI trainers and GRI practitioners to support you in developing an up-to-date and efficient reporting concept that aligns GRI with other reporting standards.
  • ELEVATE’s Materiality Assessment allows you to focus on impact, risk, and opportunities, and/or stakeholders according to your requirements: Combine ELEVATE Advisory’s expert knowledge with ELEVATE intelligence to get the most out of your Materiality Assessment.
  • Supply Chain Due Diligence is at the heart of ELEVATE’s services: Get in touch with our experts if you want to better understand your real impact and improve your performance from headquarter to sourcing location.

ELEVATE will host webinars in November (in English, Spanish and Portuguese) available on ELEVATE website to help companies better understand the changes that might affect their non-financial reporting.


These blogs are written by ELEVATE staff members or associates and the views and opinions expressed are not necessarily those of ELEVATE

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