Accounting: Discussion and Peer Responses
Accounting: Discussion
My selected framework for this discussion is the Global Reporting Initiative (GRI) Standards. This framework is the most adopted sustainability reporting framework that contains notable standards stipulated in a comprehensive structure (De Villiers et al. (2022). The GRI framework structure entails three crucial aspects—universal, sector, and topic standard categorization—upon which the standards are categorized. Foremost, the universal categorization applies to all organizations and provides guidelines in reporting sustainability matters: Accounting: Discussion and Peer Responses.
Second, the sector categorization only applies to specific industries. Third, the topic standard category focuses on specific sustainability issues/topics. Such topics include occupational health, management, and tax issues considering sustainability. Further, it is worth noting that adopting the GRI framework is valuable for organizations as it provides insights into sustainability reporting.
The GRI framework precisely guides organizations on how to report various sustainability subjects, making it a specific aspect-based framework. For instance, specific guidelines are provided to assist organizations to report occupational health as a topic under sustainability. The nature of the framework assists to address specific topics under sustainability, making it a flexible framework that accommodates prevailing circumstances in the market (Opferkuch et al., 2021).
The GRI framework standards can be read and be understood by individuals without degrees as the framework employes a straightforward language. Notably, this is another crucial aspect to note for the framework. However, this should nor mean that it is not the best for individuals with degrees, but a measure to ensure it stipulates clear instructions that can be understood by diverse groups of individuals. As a result, the framework is widely adopted without challenges in the application of its disclosure requirements.
Other noteworthy aspects of the GRI framework include global applicability and stakeholder inclusion. Essentially, the standards are made for universal application, which enables organizations globally to assess and communicate their economic, environmental, and social impacts. The standards are developed based on a multi-stakeholder process to reflect a broad spectrum of views. Notably, this enhances their relevance and acceptance among various stakeholders.
References
Opferkuch, K., Caeiro, S., Salomone, R., & Ramos, T. B. (2021). Circular economy in corporate sustainability reporting: A review of organisational approaches. Business Strategy and the Environment, 30(8), 4015-4036. https://doi.org/10.1002/bse.2854
De Villiers, C., La Torre, M., & Molinari, M. (2022). The Global Reporting Initiative’s (GRI) past, present and future: Critical reflections and a research agenda on sustainability reporting (standard-setting). Pacific Accounting Review, 34(5), 728-747. https://doi.org/10.1108/PAR-02-2022-0034
Peer Responses
Responding to Person 1
Hello,
Thank you for your post. It effectively highlights the industry-specific approach to the SASB framework. Further, the discussion gives a different focus to financial materiality whereby it distinguishes it from the broader ESG frameworks. I agree with you that the SASB framework makes sustainability reporting more relevant and actionable rather than being a one-size model that tries to fit all.
I believe this helps investors to make more informed decisions that are tailored to firm-operational sectors. One factor that I think is important to consider is the harmonization of all frameworks, which may make sustainability reporting easier. With the integration of SASB into the IFRS foundation, this is a step in the right direction that will finally see all ESG disclosure requirements harmonized.
According to Sharma and Goel (2024), the merger between reporting frameworks is likely to make sustainability reporting standardized. Overall, ways through which the frameworks can be improved are required for the benefit of all.
Reference
Sharma, R., & Goel, S. (2024). Opportunities and challenges for better sustainability reporting. Sustainability Reporting and Blockchain Technology, 106–118. https://doi.org/10.4324/9781003378341-9
Responding to Person 2
Hello,
Thank you for sharing your discussion post. It offers significant insight into the GRI framework, especially on universal sector and topic-specific standards. Your insight provides a discussion that evaluates how organizations structure sustainability reports. I take note that broad focus is a major strength of the GRI framework.
Notably, this is so because it assists organizations to disclose their economic, environmental, and social impacts comprehensively. However, I would like to understand whether the framework is not vulnerable to leading to inconsistent reporting because of its flexibility. Essentially, this is because the framework allowance for companies to define materiality based on their desired criteria.
I take note that this may affect the comparability of various firms, which leaves me wondering if it is the best for investors seeking to compare various institutions. For instance, De Villiers et al. (2022) report that some investors find GRI reports to be more qualitative as compared to those that are based on other frameworks. Thus, there is a need for this to be addressed for the betterment of the framework.
Reference
De Villiers, C., La Torre, M., & Molinari, M. (2022). The Global Reporting Initiative’s (GRI) past, present and future: Critical reflections and a research agenda on sustainability reporting (standard-setting). Pacific Accounting Review, 34(5), 728-747. https://doi.10.1108/PAR 02-2022-0034
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Question 
- As you explore the major sustainability reporting frameworks at a general level–and one of them in more detail–what stands out to you? The shared spreadsheet now includes your assigned framework.
Is there something about the overall organization or the content of the framework that is particularly noteworthy? Is the guidance deeply specific, or broadly general? Is the guidance readable without advanced degrees? These are just examples of characteristics that might be interesting.
Someone should create a new thread for posts about each of the frameworks, so one for GRI, one for SASB, one for ESRS, one for SEEA, and one for TCFD.
- Respond to posts from other students after you post.
Person 1
What stands out to me regarding the SASB framework is that its main focus is on sustainability issues that impact a company’s financial performance. That being said, it emphasizes the environmental, social, and governance (ESG) factors that can influence financial performance and value creation. Another thing that stands out to me on the SASB framework is that it provides industry-specific standards and identifies sustainability-related risks and opportunities in 77 different industries. With varying different types of industries, this makes it easier for companies to face sustainability challenges related to their specific industry.
Something that may be particularly noteworthy on the SASB framework is that it provides a clear and organized set of disclosure topics that vary from each industry. These topics help describe sustainability-related risks or opportunities that are involved with the activities made by entities within a certain industry. Another thing that may be noteworthy on the SASB framework is that it is designed to benefit investors, financial stakeholders, and creditors. With this type of design, these individuals are able to assess a company’s long-term viability and gain significant insights into a company’s sustainability practices and risks.
After doing some more research on the SASB framework, I would mention that the guidance of this framework is deeply specific compared to being broadly general. I say this because the SASB framework offers specific disclosure topics and metrics for 77 different industries. Unlike other frameworks with guidance that is considered broad, SASB helps identify important sustainability factors for each of these different industries. I would also mention that the guidance is readable without advanced degrees.
I did not know much, if anything at all, on the framework of SASB but after doing some brief research and reading, I quickly got a clear understanding of what it all entailed. Having some knowledge on sustainability reporting may make it easier to understand for individuals but otherwise the focus and approach of the SASB framework is pretty clear and well-structured to understand.
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Person 2
Global Reporting Initiative also known as GRI is summarized in the foundation document that is provided on their website, GRI – Home. The document states, “The GRI Standards enable an organization to publicly disclose its most significant impacts on the economy, environment, and people, including impacts on their human rights and how the organization manages these impacts. This enhances transparency on the organization’s impacts and increases organizational accountability”. Since there are so many areas to report in the standards have disclosures that allow an organization to report consistently for easier comparability amongst firms and organizations.
Accounting: Discussion and Peer Responses
GRI consists of a system of standards, Universal standards GRI 1, GRI 2, and GRI 3, then there are sector standards and topic standards.
*GRI 1: “introduces the purpose and system of GRI Standards and explains key concepts for sustainability reporting. It also specifies the requirements and reporting principles that the organization must comply with to report in accordance with the GRI Standards”
*GRI 2: “contains disclosures that the organization uses to provide information about its reporting practices and other organizational details, such as its activities, governance, and policies. This information gives insight into the profile and scale of the organization and provides a context for understanding the organization’s impacts.”
*GRI 3: “provides step-by-step guidance on how to determine material topics. GRI 3 also contains disclosures that the organization uses to report information about its process of determining material topics, its list of material topics, and how it manages each topic.”
*Sector Standards “provide information for organizations about their likely material topics. The organization uses the Sector Standards that apply to its sectors when determining its material topics, and when determining what information to report for the material topics”
*Topic Standards “The Topic Standards contain disclosures for the organization to report information about its impacts in relation to particular topics. The Topic Standards cover a wide range of topics. The organization uses the Topic Standards according to the list of material topics it has determined using GRI 3″