Sustainability Reporting using GRI and CDP – Similarities and Differences
Nov 25, 2022
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This article will look to help you (the reader) get a clear understanding of two very popular sustainability reporting frameworks/standards that are widely recognized by companies, governments, non-profit organizations, etc. The two standards discussed here are the Global Reporting Initiative Standards (GRI Standards) and what was formerly known as the Carbon Disclosure Project Reporting System (CDP Reporting System).
To ensure that it is easy to compare the two reporting standards, we are considering certain common parameters:
Number of companies reporting using the standard
Typical target audience
The focus of the framework
What is reported
Who is reporting using the standard
Are there industry-specific versions of the standard?
What is the output used for?
We begin with GRI, move on to CDP and finally discuss similarities or methods of alignment between the two frameworks while reporting on sustainability, before concluding the article.
Introduction to GRI and CDP
GRI – Global Reporting Initiative
Established in 1997 as a non-governmental organization, along with the support of the United Nations Environment Programme (UNEP), the GRI has become a leader in sustainability reporting across the world and acted as a catalyst for transparency.
The GRI is an independent, non-profit organization that has multiple branches across the world in addition to its Amsterdam-based headquarters. The regional offices are located in the USA, South Africa, India, Brazil, China, and Colombia. The organization released a draft of sustainability guidelines in 1999 and the first full version came out in 2000. GRI’s governance structure includes a board of directors, a stakeholder council, a technical advisory committee, organizational stakeholders, and the Secretariat. Additionally, there is a Chief Executive and Chief Financial Officer.
The GRI Standards cater to a broad base of stakeholders and currently, over 10,000 companies are using the standards for their sustainability reporting. The purpose of the GRI Standards-based sustainability reporting is to help reporting organizations be transparent and ensure that they take responsibility for the impacts of their business activities. The GRI aims to create common global standards for reporting that includes an independent, multi-stakeholder process.
The focus of reporting with the GRI Standards is on the external environment, societal, and economic impacts. The actual reporting is on ESG and ranges from general, sector-specific, and topic-specific disclosures. The GRI Standards are suitable for a vast variety of organizations of any size, in any industry, and based in any location. In addition, large companies globally use the GRI standards for their sustainability reporting which ensures standardization and transparency.
The GRI Standards also have industry-specific standards (a.k.a sector-specific standards), many of which are currently being developed. The total expected number of sector-specific standards is 40 and recently an announcement was made for the Oil and Gas standard to be ready for use from 1st January 2023. The use of GRI Standards for sustainability reporting by organizations usually results in disclosures being showcased in the Company’s ESG Report, sustainability indices, awards, etc.
CDP – (formerly) Carbon Disclosure Project
The Carbon Disclosure Project is a non-profit organization that was founded in the year 2000, with the fundamental intention of linking environmental integrity and fiduciary duty. With over 13,000 organizations using the CDP system to track and assess their impacts, this reporting system is typically used for an audience that includes investors and customers who are requesting disclosure of environmental metrics. Additionally, there are hundreds of cities, states, and regions worldwide that disclose their environmental impacts through CDP.
The essential purpose of CDP disclosures is to motivate governments and companies to disclose the environmental impacts of their activities and more importantly, to take action to mitigate the impacts. CDP as a reporting system is focused on external environmental impact for requesting stakeholders.
The CDP method of disclosure is essentially about taking the information supplied through its reporting process and assigning a score to the company based on environmental transparency and action. This data and information along with the score assigned by CDP help investors and stakeholders make better investment decisions. CDP’s primary focus is on carbon emissions, water usage, and deforestation.
The CDP’s focus as briefly mentioned earlier is on environment and governance – unlike GRI which factors in ESG. Within Environmental disclosures, the core points of interest are climate change, water security, forests, and supply chain. While GRI is looking to develop industry-specific standards for 40 different sectors, in the case of CDP – high-impact industries such as Oil & Gas, have additional reporting requirements. Finally, the output from CDP reporting is generally a response to requests from investors or customers.
The CDP disclosure process is essentially an extremely detailed and extensive climate questionnaire that is to be filled out by the reporting organization. These questions largely center on performance and require extensive emissions disclosures covering a company’s operations and supply chain. Furthermore, to help companies align multiple standards while creating a sustainability report, the CDP has 25 questions within the Governance, Risks & Opportunities, Strategy, Targets, and Emissions sections that aligned with the TCFD recommendations. In addition, the CDP has aligned other sector guidance for high-impact sectors such as agriculture, energy, etc. An interesting piece of recent news with regard to CDP’s work with governments is the update that in the USA, the White House will require federal contractors to disclose environmental data through CDP and decarbonization targets.
While the differences between the two standards are evident ranging from approach to process to purpose or intention, it is pertinent to note that work is going on to get a global sustainability framework that includes discussions between the top 5 frameworks, which involves GRI and CDP.
What are the benefits of disclosure?
680+ investors with over USD 130 trillion in assets and 280+ large purchasers with over USD 6.4 trillion in procurement spend have begun requesting a large number of companies to disclose their environmental data through CDP
Protect and improve your Company’s reputation
Boost competitive advantage
Track and benchmark progress
Uncover risks and opportunities
Be a step ahead of regulations
Some of the reasons for disclosure include enhanced stakeholder engagement, getting executive-level buy-in with the help of data, better-informed stakeholders, finding opportunities for action, and benchmarking against peers.
While the GRI Standards are the most used framework and incredibly extensive in nature, with 40 possible topics and a multitude of disclosure options within each – the GRI doesn’t expect a company to use all sections but rather for the organization to find the most material topics. GRI Standards also differentiates itself by including Environmental, Social, and Governance related disclosures. Further GRI guides companies on how to assess material topics.
Alternatively, CDP is an extensive questionnaire primarily focused on environmental issues and assessing the impact on climate, water, and forests. It also includes a scoring system and is focused more on investors or stakeholders who request this specific information from companies. CDP is generally more relevant to companies operating in industries under environmental regulations with the questionnaire customized based on the industry. In addition, CDP is also being used by cities, states, and government entities.
Application of these standards could often be daunting and confusing. To ease your journey into adopting them, Report Yak – a specialized design agency with expertise in integrated reports, annual reports, sustainability reports, and impact reports – can help and has won multiple awards for conceptualizing, designing, and creating content for business reports of top corporations. You can check out our work and we would be happy to get on a call and discuss your next report!