Will the ESRS replace the GRI as the gold standard in sustainability reporting?

The European Sustainability Reporting Standards (ESRS) implement the requirements specified in the Corporate Sustainability Reporting Directive (CSRD).

The ESRS set new standards in sustainability reporting and will be legally binding for a large number of companies within the EU once they are enforced. On the one hand, they refer to existing frameworks such as the Global Reporting Initiative Standards (GRI) or SASB. On the other hand, they introduce new principles such as double materiality.

Could the ESRS surpass the GRI, which is currently the world's most widely used sustainability reporting standard? To answer this question, in this article, we will look at the differences as well as the similarities between ESRS and GRI.

Availability

ESRS

The finalized drafts of the ESRS have been adopted by the European Commission on July 31, 2023. In addition, a Q&A on the adoption of the ESRS was published on August 1, 2023.

GRI

The first draft of the GRI Sustainability Reporting Guidelines was available already in 1999. This was followed by continuous further developments. In 2016, the GRI published an updated and restructured version of the standards which replaced the previous version. The standards are now organized in a modular set.

Legal bindingness

ESRS

The ESRS define what companies must disclose in order to meet the expectations of the CSRD. Therefore, the ESRS are legally binding for a large number of EU companies. Designed as a delegated act, the ESRS will apply immediately to affected companies. If a company affected by the ESRS fails to comply with the obligation to publish the required information, penalty procedures will be initiated, including e.g. fines.

GRI

Although the GRI is a standard used globally, companies are not legally required to report using the GRI standard. Reporting takes place on a voluntary basis.

Content

ESRS

The ESRS require additional effort in sustainability reporting of companies, e.g. through performance metrics that must be published. Moreover, the ESRS obligate more detailed reporting in the areas of Environment, Social and Governance. For instance, the ESRS require Scope 3 disclosure regardless of materiality.

GRI

While reporting according to the GRI requires a high level of detail, companies have more flexibility regarding what to report and in what form.

Target Group

ESRS

The ESRS will apply a large number of EU companies which meet at least two of the following requirements:

• more than 250 employees
• a balance sheet total of more than 25 million euros
• sales of more than 50 million euros
• capital market-oriented SMEs from January 1, 2026, specific criteria will apply to them

Note: Since December 2023, new thresholds for balance sheet and net turnover have applied for all company sizes; see updated list above.

GRI

The GRI applies to companies worldwide that intend to report sustainability metrics on a voluntary basis.

Overall, the ESRS currently cannot be considered the new GRI, mainly due to their limited geographical scope-at least as long as the ESRS have not become mandatory for non-EU companies as well.

Given the high overlap in content and strict reporting requirements, the ESRS provide innovation compared to the GRI. These include, for example, reduced flexibility, and thus, early ESG data collection, in reporting due to double materiality. In addition, the ESRS have a decisive advantage: they are legally binding. As the ESRS are framed by EU directives, reporting in accordance with the ESRS is legally mandatory for certain companies from January 1, 2024. Given their gradual introduction, the ESRS will affect more and more EU companies until January 1, 2026. Therefore, it may be possible that the ESRS will surpass the GRI in the EU.

It remains to be seen how reporting under the ESRS will evolve as they come into force, and whether they will be able to compete with the already established structures at a global level and gained experience of the GRI.