Cutting in Line: GRI and Integrated Reporting

Commentary by Bill Baue, Editor in Chief, Murninghan Post

The TakeAway: GRI’s Embrace of Integrated Reporting May Distract from XBRL and Sustainability Context

Last October at the Business for Social Responsibility Conference, Global Reporting Initiative CEO Ernst Ligteringen made an impassioned plea for the G20 to consider mandating integrated reporting, which blends financial and sustainability data.   He followed this overture by announcing a clear goal at the GRI Conference this May: “a standard for integrated reporting,” he declared, “should be defined, tested, and adopted by 2020.”   Finally, GRI trumpeted its launch earlier this month of the International Integrated Reporting Committee (IIRC), formed in collaboration with the Prince of Wales’ Accounting for Sustainability (A4S) Project.

Here’s the good news: integrated reporting holds the promise of driving sustainability forward by putting environmental, social, and governance (ESG) issues in front of traditional investors and corporate executives, alongside financials. By its very structure, this pairing stresses that sustainability issues deserve the same attention as financial factors.  In other words, this puts GRI data on par with GAAP data.

But there is also potential bad news: the GRI is a human organization, with broad aspirations and a limited budget.  When integrated reporting cuts to the front of the line, other priorities may fall.  The emphasis on integrated reporting suggests that two other key initiatives will get bumped down GRI’s priority list: XBRL and sustainability context.

These two items play vital roles in advancing sustainability in practice, yet have struggled to maintain a foothold on the GRI agenda.    XBRL, or eXtensible Business Reporting Language, is a standardized system for tagging information to allow for apples-to-apples and oranges-to-oranges comparisons across companies, and even across reporting systems.  GRI was a first-mover on XBRL, writing a taxonomy – or catalog of tags – of GRI indicators to express environmental, social, and governance in XBRL tagging as early as 2007.  Since then, XBRL has revised to 2.0 standards, while GRI’s taxonomy stagnates in XBRL 1.0 – limiting its usefulness.

In many ways, XBRL eclipses the significance of integrated reporting, because it enables users to synthesize data in their own ways – across companies, across time, across issues.  As BSR CEO Aron Cramer blogged recently, the integrated report may be built on an out-dated concept, as it applies to the artifact formerly known as a report.  Yes, “reports” will continue to exist in SEC filings and on flashy corporate websites.  But XBRL portends the death of the traditional report defined by clear boundaries of time and space – and the resurrection of a transcendent form of reporting, where data interacts independent of reports.

Sustainability context,” one of four GRI Reporting Principles on Content, is arguably the most important, as it defines what constitutes sustainability: “the performance of the organization in the context of the limits and demands placed on environmental or social resources at the sectoral, local, regional, or global level.”  Almost all sustainability reports, even those claiming GRI adherence, include sustainability data without context – for example, trends in eco-efficiency.  Precious few present sustainability data in the context the local, regional or global capacity to sustain a social or environmental impact.  In this sense, the term “sustainability report” is a misnomer; these reports won’t really earn their name until they explicitly integrate sustainability context.

Part of the problem is that GRI has outlined the principle of sustainability context, but hasn’t provided guidance on how to actually measure it.  To create such guidance will require a process of intellectual innovation and consensus building, since there are many who wonder exactly how it would be achieved.  Meeting this challenge will require intensified focus, which is exactly why I worry about GRI throwing its limited resources behind integrated reporting. The danger in GRI advocating for integrated reporting before fully baking sustainability context into the GRI recipe: we risk ending up with half-cooked sustainability metrics in integrated reports.

GRI’s public comment period on Report Content and Materiality lasts until September 22, 2010, so there’s still more than a month to urge GRI to multi-task, continuing to prioritize and advance XBRL and sustainability context.

The views expressed in this commentary belong to the author only, and do not necessarily represent the views of The Transition Group.

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12 Responses to Cutting in Line: GRI and Integrated Reporting

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  3. Naturally, as an XBRL reporting software vendor, we at Rivet Software also think that the GRI is in danger of losing the plot here. A content standard without a data standard (i.e. an XBRL taxonomy) is only half-baked. I agree with Aron Cramer, integrated reporting is an old and tired concept. Maybe the GRI doesn’t yet understand that the future is about ‘data as a service’ and you can’t play in that game without a data standard for people to agree on and share.

    • Bill Baue says:


      Thanks for your comment. From my interactions with GRI, it is very clear that GRI understands the importance of XBRL, so it’s less a question of them not understanding and more a question of prioritization. Further, I don’t agree that integrated reporting is an “old and tired concept” — I think it’s actually quite powerful. In a perfect world, GRI would pursue integrated reporting, XBRL, and sustainability context, with equal vigor, simultaneously. Unfortunately, we live in a world of constraints, which is what sustainability is all about: navigating constraints. My hope is that GRI does so gracefully, as I believe they can do.


      • Bill

        May I suggest you examine the GRI taxonomy itself and the way some of their ‘indicators’ are defined (e.g. NG08) as I have done. Then you would understand what I mean (or see my Rivet blog post on NG08).

        This is not a question of priorities it’s a question of understanding the importance of content and data standards being well-thought through. In this respect, I agree with Mark’s comments but also, as again I have pointed out on Rivet’s blog, I think the GRI XBRL taxonomy does not have the priority it should have and hope Bastian Buck at the GRI can raise the priority.

        It’s also a shame that the GRI has decided now, just when they are starting to gain some traction in the marketplace, to ‘go commercial’ and impose a fee for people to use their content. I have posted extensively on this issue at Just imagine if Twitter had imposed a fee for using their API ‘content’ or WordPress to use their blogging tool ‘content’ – you might not be tweeting through a third party tool or blogging using WordPress.

        The concept of integrated reporting has been around for decades. I was generating ‘integrated’ reports – combining financial and non-financial data – directly from accounting software for my customers back in the late 1980’s. It’s just that in the late 80’s very few people even gathered sustainability data let alone reported it. Because I’m so used to this ‘old’ term I think it’s better to start afresh with a new term not try to extend the old one.

        In my view sustainability reporting deserves better than ‘integrating financial and non-financial’ data. I actually preferred the Accountability term ‘connected reporting’ because it reminds us that in today’s global economy/climate change world, everything really is connected. Which is why I also continue, Lear-like, to evangelize the more comprehensive ‘holistic reporting’ term.

  4. Mark McElroy says:


    I want to say that I especially agree with Bill on the importance of GRI following through with the implementation of guidelines for incorporating sustainability context in reporting before it undertakes a new and potentially distracting initiative on integrated reporting. The absence of context in sustainability reports (and sustainability management, in general) is arguably the most pressing issue before us — if not a crisis in reporting — since without it there can be no literal sustainability measurement and reporting at all. Furthermore, this is not a new issue for GRI. The multi-stakeholder process there identified context as a basic reporting principle well over ten years ago, and yet it is quite possibly true that no GRI report has ever included it. Thus, before GRI wanders off into developing new facets of reporting, the older, more fundamental ones should be finished up. That’s what the vaunted multi-stakeholder process at GRI called for, so what’s the hold up?


  5. Bob,

    I’m afraid that XBRL has never been a priority for the GRI. The concept was introduced to the GRI in 2005, and in 2006 one of the Big-4 provided free resources to build a very basic example of taxonomy. The taxonomy contains only the top level GRI indicators and reporting elements, all as text elements. Since them, the GRI has said how important XBRL is, yet has done nothing other than state that it will start a project to update the taxonomy when they can find someone else to pay for it (my words, not theirs).

    However, both the GRI and XBRL groups continue to point to the GRI taxonomy as another example of XBRL in use. I do not know of any GRI reports tagged in XBRL; certainly not below the level of text elements. Hopefully I’ll be inundated with examples for my blaspheming.

    I do think the IIRC is a major step forward. This brings together the structural and marketing benefits of GRI with the accounting strengths of Accounting for Sustainability. There will be challenges, not least will be getting the major multinationals to accept that as the model, and to get the analyst community to demand integrated reports, including XBRL tagged versions. None the less, this is a big step forward for sustainability reporting, although not (yet) for XBRL.

    (note: The taxonomy was developed to meet (and does meet) the current XBRL specification 2.1 which was approved in December 2003.)

  6. Mike Wallace says:

    Thank you for the very thoughtful post, Bill, as well as the responses it has generated. Yours are some of many voices continually reminding GRI of all that needs to be done in this field.

    As many of you know from your work with GRI over the years, we continually seek opportunities to efficiently and effectively identify and address the various priorities that confront our collective interest in the pursuit of a sustainable economy . This is a challenge compounded by the resource limitations that all non-profits face, and it is exactly for this reason that GRI must leverage new strategic relationships to advance the way all organizations report – and therefore assess – their true performance.

    At the GRI conference, Ernst therefore also first highlighted GRI’s goal to promote the mainstreaming of Environment, Sustainability and Governance (ESG) reporting and to strengthen GRI’s guidance to help organizations improve their ESG reporting. At the conference Ernst also asked the question as to whether it was time to start working on the G4 version of the GRI Guidelines. The intent was to help us all collectively examine the emerging weaknesses in the current guidance and ensure that the most relevant understanding of ESG issues is reflected in the GRI Guidelines.

    GRI believes that integrated reporting is a positive and strategic step in the direction of a more sustainable economy and that any transition toward integrated reporting must combine the best of financial and of ESG reporting, as well as technological developments like XBRL. Integrated reporting must also ensure that it delivers an output that will serve both companies and society. No integrated reporting model would be served with weak or outdated ESG content.

    GRI believes that the International Integrated Reporting Committed (IIRC) offers a unique opportunity to work with key parties in the development a framework that will bring together financial and ESG information in a clear, concise, consistent and comparable format. The IIRC’s remit is to create a globally accepted framework for accounting for sustainability and it is an imperative that GRI be a part of this development.

    As always, we look forward to any and all stakeholder involvement and input.

  7. Mark McElroy says:

    Mike and all:

    Regarding the importance of integrated reporting, if what is being proposed by GRI is context-free integrated reporting, which I think is the case, then I do not agree that integrated reporting is a step in the right direction at all. Rather, it will only have the effect of further institutionalizing what is already a deeply defective form of reporting, even as it draws attention away from the issue — an issue, incidentally, that was identified long ago by GRI’s stakeholders as critically important to sustainability reporting, but which GRI itself has yet to embrace.

    Here I hasten to add that the financial side of mainstream reporting is not context-free; only the sustainability or non-financial side is. What’s shaping up to occur in the form of integrated reporting, then, is a comprehensive reporting model that fails to deliver in the sense that only half of it (the financial half) is fully cooked. How ironic, given the fact that what sustainability reporting was supposed to do is resolve that issue (i.e., bring non-financial externalities and stakeholder duties into the broader reporting picture where they belong).

    With all due respect, I think GRI may have lost its way here. Shouldn’t we be finishing the old work before we move on to the new work? Indeed, why ratify the failure to operationalize the inclusion of context in sustainability reporting by elevating it to the level of more complex reporting, as if context-free reporting should be elevated or integrated at all?



  8. Bill Baue says:

    Daniel, Mark, and Mike,

    Thanks for engaging with this commentary in such depth.

    Daniel, thanks for this additional history on GRI and XBRL. I was under the impression that the existing GRI taxonomy was in a version that is no longer compatible with the current XBRL version, so thanks for correcting me on this. I too await with interest to see if others can point to companies that have tagged their data using GRI’s XBRL taxonomy.

    And Mike, thanks for giving the GRI context, and reaffirming that, amidst the resource constraints that most all nonprofits face, GRI is committed to advancing integrated reporting, XBRL, and sustainability context, as all are interlinked.

    Mark, I agree with your sense of urgency around “baking” sustainability context into reports — this is absolutely vital. As with my comment to Daniel above, I’d be interested to have readers add to this comments thread with examples of reports with sustainability context baked in.

    Finally, I framed the issue as an “either / or,” with hopes that it’s a “both / and.” I continue to hold a candle for the “both / and” formulation, as I believe that integrated reporting, XBRL, and sustainability context are mutually reinforcing, and can combine to radically shift thinking and practice on corporate sustainability. It’s a delicate balance — the triangle needs all three legs!


  9. Ralph Thurm says:

    All, great discussion and I – given my past with the GRI – care a lot about its further development. What all of you have not yet addressed is that it seems at least logic to me that while working with the IIRC to build for a long-time synchronization of the standards, GRI should now also take the time to work on G4 as a safeguard for a better positioning.

    The IIRC work will realistically take many many years; at the GRI conference 2020 was mentioned by Ernst as a point in time until the standards should have converged. A G4 development should then indeed very much focus on context-related indicator setting and the structural demands that XBRL poses. GRI needs to focus on content that can be aggregated AND disaggregated, so indicators will most likely change quite a bit, become more quantitative (and the inclusion of context might be a great help there). In essence, GRI needs to solve content issues while at the same time work on being usable for the technological future of information transmission. The financial market users will not accept a failure on that front.

    With a G4 process starting 2011 and ending in 2013, with 3 years time afterwards to be fully integrated into a user’s data management, governance and actual integrated reporting, the IIRC should get great pilots to work with and still have enough time to iterate on the overall standards convergence by 2020. So ideally, both parallel processes could benefit from each other.

    What are your views on the need for a G4?

    By the way, GRI Framework materials are still free of charge, only additional training material and actual training with the certified training partners is fee-based. It is not fair to say GRI went commercial, it’s still a non-for-profit that needs to partially fund its work.

    • Bill Baue says:

      Thanks for adding your voice to this discussion — as former COO of GRI, your opinion carries significant weight.

      I welcome the development of a G4 framework (to supplant the current G3 framework) if, as you suggest, it “focus[es] on context-related indicator setting and the structural demands that XBRL poses.” Indeed, the process of creating a G4 framework provides an excellent opportunity to re-invigorate attention of sustainability context and XBRL, while also anticipating necessary alignment with integrated reporting as it develops simultaneously in the 2010s. Here again, my own concern is that the G4 process will divert attention from sustainability context and XBRL — but I will be glad if this concern fades away, and is proven unfounded by the stakeholder community embracing sustainability context and XBRL in the drafting of G4.

      In fact, this also points to another flip side of my concern: IIRC has the opportunity to embed sustainability context and XBRL at the core of its works on developing integrated reporting standards and protocols.

      On sustainability context specifically, I applaud GRI for choosing to lead its May 2010 Conference with Global Footprint Network President Mattis Wackernagel, and to GRI Chief Executive Ernst Ligteringen for integrating Wackernagel’s comments into his own speech — seeing as ecological footprinting underpins the notion of sustainability context, which is still in the conceptual stage of development as a framework by which companies can report. This bolsters my confidence that GRI has this on its radar screen and will move forward appropriately.

      Bill Baue
      Editor in Chief
      The Murninghan Post

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