Carbon Accounting

A summary: Global Reporting Initiative (GRI)

Sumday Team
July 18, 2023
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5 minutes

The Global Reporting Initiative (GRI) provides a voluntary framework for sustainability reporting that focuses on governance, environmental impact, social responsibility, and economic performance.

Who does it apply to:

The GRI Standards has been designed to enable organisations, regardless of size and jurisdiction, to report on material ESG issues to their stakeholders.

Despite being a voluntary reporting framework, KPMG’s survey in 2022 found 4 in 5 of the largest global companies have reported with GRI already

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What are the sections relevant to carbon accounting:

The GRI Standards are structured as a system of interrelated standards that are organised into three series: GRI Universal Standards, GRI Sector Standards, and GRI Topic Standards.

For each of the Topic Standards, the GRI Framework includes three different types of material:

  • Requirements: These are mandatory instructions and must be complied with in order for an organisation to make the claim that they are reporting in accordance with GRI.
  • Recommendations: These actions are encouraged by the standard; however, they are not required in order for an organisation to claim that they are reporting in accordance with GRI.
  • Guidance: These sections are included in the Standard to provide context and help organisations better understand the requirements, but do not give rise to specific reporting obligations.

Under the GRI Topic Standard, GRI 305 - Emissions, is the standard that provides disclosure guidance related to carbon accounting. The guidance covers disclosure over:

  • Scope 1, 2, and 3
  • GHG emissions intensity
  • Reduction of GHG emissions

In addition to reporting on GHG emissions, GRI requires the disclosure of the other substances noted below:

  • Emissions of ozone-depleting substances (ODS)
  • Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions

Emissions reported under GRI 305 should be calculated and presented inline with the guidance outlined in the GHG Protocol.

Across all 3 Emissions Scopes the reporting entity should disclose the standards, methodologies, assumptions, and/or calculation tools used to quantify emissions.

In addition to support transparency and comparability, it is also recommended that organisations report a breakdown of emissions based on the following properties:

  1. Business unit or facility
  2. Country
  3. Type of source
  4. Type of activity

In addition to outlining the calculation of emissions, GRI 305 provides additional requirements for emissions intensity reporting. However, it notes that organisation-specific metrics should be chosen as the denominator. The Framework stops short of prescribing specific metrics, but it does give examples, including units of sales or quantity of sold products. The framework requires organisations to report the emissions intensity for S1, S2, and S3, as well as reporting S1 and S2 intensity separately.

Finally, under GRI305-5, organisations are required to outline their reduction of emissions relative to their reported baseline, including any specific reduction initiatives that the organization engaged in during the year.

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What are the disclosure requirements outside of carbon accounting that sumday advisors may be able to support:

GRI 3 - Material Topics under the Universal Standards, organisations are required to determine the topics material to them. The Standard provides guidance on performing a materiality assessment. Organisations should follow the steps below to assess the materiality of specific topics:

  1. Understand the organisation’s context
  2. Identify actual and potential impacts
  3. Assess the significance of the impacts
  4. Prioritise the most significant impacts for reporting

Internal accountants and external advisors can have a key role in the assessment of materiality both in terms of identifying potential impact, but also in assessing their significance. Sumday can help support this process where the potential impacts relate to emissions.

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Sector Specific Guidance

GRI has developed sector guidance for three sectors. These guidance documents highlight the series of GRI Topic Standards that are likely material topics to report on. GRI 305 - Emissions appears as a likely material topic across all three sectors.

  • GRI 11: Oil and Gas Sector 2021
  • GRI 12: Coal Sector 2022
  • GRI 13: Agriculture, Aquaculture and Fishing Sectors 2022

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Other Topic Standards

It is worth noting that many of the other Topic Standards included under GRI are related to carbon emissions, such as waste, water, and energy use. It is likely that the activity data captured in relation to these topics will also be required for quantifying emissions associated with these activities.

GRI also covers a wide range of other sustainability-related topics. Details of these can be found on the GRI website. These include environmental issues such as biodiversity, as well as social issues such as diversity, child labour, and anti-corruption.

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Key takeaways for advisors:

Sumday's carbon accounting software platform facilitates GHG emissions reporting in line with the GHG Protocol. Reporting from the product can be used to report accurately under GRI305, both in terms of the metrics and the sources and methodologies applied to calculate GHG emissions of the organisation.

Sumday also provides training for both business users and advisors to ensure that they understand the GHG protocol and can perform emissions assessments in line with global best practices.

Finally, stakeholders can use the outputs from Sumday to feed into an assessment of materiality and identify the significance of carbon-related topics in the context of the overall GRI report.

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Disclosure examples:

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