Sustainability Reporting: Successfully Transitioning from GRI to ESRS

published on 20 March 2024 | Reading time approx. 3 minutes

Since January 1, 2024, companies within the user group have been obliged to report according to the new European Sustainability Reporting Standards (ESRS). As of January 1, 2025, all other large companies not covered by the Non-Financial Reporting Directive (NFRD) or the CSR-RUG are also required to report.

Companies already prepare a sustainability report in accordance with the internationally recognized GRI standard now face the challenge of ensuring an optimal transition from GRI to ESRS and utilizing established processes for ESRS reporting.

EFRAG has emphasised that ESRS have been designed to align with GRI standards as much as possible, suggesting that transitioning from GRI to ESRS should be feasible without major issues. This article highlights the specifics of both frameworks and addresses practical implementation.

GRI as starting point

GRI standards enable companies worldwide to voluntarily assess and disclose their impacts on the environment, economy, and society. With guidelines covering economic, environmental, and social aspects, they provide a foundation for sustainability reporting. Over 10,000 companies worldwide report according to or in alignment with GRI, making it the most widely used standard.

With the mandatory application of ESRS, it is expected that the focus in Europe will increasingly shift from GRI to ESRS. However, due to the geographically limited user group, ESRS will not completely replace the GRI standard—at least not until ESRS become mandatory for non-EU companies as well. The introduction of ESRS could also strengthen the relevance of GRI further, as in cases where issues or impacts are not fully covered by ESRS, GRI standards can be used to fill the gaps. Additionally, companies reporting according to ESRS in the future will automatically report “in alignment” with GRI standards as well.

Avoidance of Double Reporting

To prevent double reporting for companies in the future, there is a need for integrating the requirements of ESRS into existing processes. As confirmed by EFRAG, ESRS build upon existing standards and are largely aligned with GRI standards. The release of the draft "GRI-ESRS Interoperability Index" at the end of last year confirms the high level of similarities. Additionally, detailed technical guidelines for mapping GRI standards to ESRS requirements will be provided by GRI and EFRAG in the future.

It is evident that the use of GRI standards can serve as good preparation for ESRS reporting, and companies can build on established processes for future reporting under ESRS. Nonetheless, differences between the two standards can be observed, particularly arising from the granularity of data points.

ESRS and GRI – Differences and Similarities

The most significant difference lies in the materiality analysis, which, according to ESRS, is based on double materiality (Impact & Financial). Companies must additionally evaluate sustainability issues from a financial perspective to identify opportunities and risks.

The materiality of impact according to ESRS essentially corresponds to that of GRI. A sustainability aspect is therefore material in terms of its impact if the impact has an actual or potential, positive or negative effect on people or the environment in the short, medium or long term.

Now, financial materiality is added according to ESRS. This occurs when sustainability aspects entail risks or opportunities that can affect the financial position, financial performance, cash flows, access to financial resources, or capital costs of the company in the short, medium, or long term.

In addition to expanding the materiality analysis, ESRS impose higher requirements on describing the materiality approach and the procedures used for identification and evaluation.

The “GRI-ESRS Interoperability Index” shows that for the majority of GRI disclosures, corresponding similarities in ESRS can be identified. Sometimes, GRI requirements exceed those of ESRS. At the same time, it becomes clear that ESRS demand a greater number of data points and more detailed information in many areas. This is particularly evident in ESRS E1 – Climate Change and S1 – Own Employees.

Conclusions and recommendations

The ongoing high implementation effort associated with transitioning from GRI-compliant to ESRS-compliant reporting should not be underestimated. Many companies are unaware of the complexity and ongoing high effort and resources required and therefore start preparations too late.

For practical implementation, we recommend becoming familiar with ESRS first and identifying the gaps between current GRI reporting and ESRS requirements. The “GRI-ESRS Interoperability Index” can be helpful in this regard. Additionally, analyze which disclosure obligations are mandatory for your company in the initial reporting years (Phase-In) to derive the data you need to collect in the future.

Further topics may be excluded with the help of the double materiality analysis. For the data points resulting from the material topics, existing processes should then be optimized and expanded.