The new biodiversity standards issued by the Global Reporting Initiative (GRI) brings into focus the urgency for including biodiversity as part of the overall financial disclosure and reporting by corporates and institutions.

Billed as GRI 101: Biodiversity 2024, the new standard launched on January 25, sets out updated reporting requirements on the topic of biodiversity that can be used by an organization of any size, type, sector or geographic location. It is effective on January 1 2026 and supersedes the previous standard, GRI 304: Biodiversity 2016.

Although there are already existing biodiversity reporting standards, for Asian corporates and institutions, the GRI standard is more relevant as it is used by more than 10,000 organizations in over 100 countries, including Singapore, Indonesia, Malaysia, Thailand, Philippines, Vietnam and Myanmar.

In an online global panel discussion held on January 31, following the issuance of the new standard, the most urgent questions raised were around how it will interact with already existing biodiversity standards.

The responses from the panellists – which included representatives from the GRI, Global Sustainability Standards Board (GSSB), the Taskforce on Nature-related Financial Disclosures (TNFD), the UN Environment World Conservation Monitoring Centre (UNEP-WCMC) and representatives of the business sector – provides some insights into how Asian corporates, institutions and investors can navigate the highly complex issues surrounding biodiversity.

During the panel discussion there was consensus around two points: first, there needs to be a global harmonization of the existing frameworks and alignment of global standards with national versions, but this is already happening to some extent; and second, there are a lot of commonalities among the different standards, but there are also differences in the approach to materiality.

For context, the GRI is an independent international organization that sets global standards for reporting and disclosure, with over 500 members across 35 industries globally. Although GRI standards are conceived by the organization as voluntary, in recent years, they have become mandatory in certain jurisdictions.

“The European Union is aligned very strongly to GRI standards, and there are other jurisdictions that are also aligned, such as the Securities and Exchange Board of India, or have mandated GRI standards, such as Colombia,” says Carol Adams, chair of the GSSB, during the panel discussion. The GSSB oversees the development of GRI standards according to a formally defined due process.  

In terms of how the new GRI biodiversity standard will interact with existing biodiversity standards, there is a consensus among the panellists that there needs to be a global harmonization of the existing frameworks and alignment of global standards with national standards.

This means the GSSB and the GRI are hoping to see regulators and national standard setters align their respective regulations and standards to the newly-launched GRI biodiversity ones.

To a certain extent this is already happening in Europe, where, this year, the TNFD will be emphasizing “sector guidance” for nature disclosures launched in December 2023, according to Emily Mckenzie, technical director of the TNFD, who was also a panellist.

The TNFD sector guidance provides businesses that operate in, and are connected to, the agriculture, aquaculture, forestry, mining, oil and gas, utilities, chemicals and pharmaceuticals sectors with counsel on the key information they will require when conducting their TNFD LEAP (locate, evaluate, assess and prepare) assessments.

In this connection, the TNFD will be working with the GRI to look at the consistency and interoperability of the biodiversity guidelines, Mackenzie notes, for example, in areas of materiality assessment and other metrics on a granular level.

As an example of inter-agency coordination on standard setting, Mackenzie cites how TNFD has been working with the European Financial Reporting Advisory Group (EFRAG) for the past two years, resulting in the formalization of a cooperation agreement last year. She adds: “We’re also working with them on a mapping to look at the European sustainability reporting standards that underpin the CSRD [Corporate Sustainability Reporting Directive] in the European jurisdiction with the TNFD disclosure recommendations and metrics.”

EFRAG’s role is to ensure that International Financial Reporting Standards (the financial reporting standards used globally outside the US) are responsive to European needs and concerns, while the CSRD requires companies to report on the impact of corporate activities on the environment and society.

In reference to the second point of panellist consensus, that there are a lot of commonalities among the different standards, but there are differences in the approach to materiality. The GRI indicates, for example, that the impacts of an organization are or will become financially material over time, and that they form the basis for financial materiality judgments, referring to the impact an organization has on the economy, environment or society, as well as the impact that society and the environment have on the organization.

On the other hand, the TNFD recommends disclosure regarding nature-related issues, only to the extent that such are material to the reporting entity. The TNFD recommends that reporting entities use their jurisdiction’s regulatory approach to materiality.

In the GRI panel discussion, Sharon Brooks, head of nature and economy at the UNEP-WCMC, notes: “You can’t have one standard bearer doing different things. But I think what’s been reflected, in terms of all the cooperation that’s been happening behind the scenes, is really reflected in what we’re seeing in the standards. We’re seeing lots of commonalities coming out. There are differences in approach to materiality. And we’re at the convergence. It’s continuing, It’s going forward.”

The GRI is currently in the process of undertaking an education programme for users and investors about the updated biodiversity standard in a bid to widen interest in, and knowledge and use of, the standard when it comes into effect.

The newly-launched guidelines are the product of a consultation process that ended in February 2023, during which the GRI circulated a set of biodiversity exposure draft guidelines. The 2024 standard is designed to enable companies to meet growing demands from multiple stakeholders for information on biodiversity impacts by providing updated guidelines covering:

• Full transparency throughout the supply chain, where often the most significant impacts on biodiversity can go under reported
• Location-specific reporting on impacts, including countries and jurisdictions, with detailed information on the place and size of operational sites
• New disclosures on the direct drivers of biodiversity loss, covering land use, climate change, overexploitation, pollution and invasive species
• Requirements for reporting impacts on society, including those on communities and indigenous peoples, and how organizations engage with local groups in the restoration of affected ecosystems.