GRI Welcomes Revised ESRS While Calling for Stronger Global Alignment and Removal of Asset Manager Exemption

The Global Reporting Initiative has published its response to two European Commission consultations on the revised European Sustainability Reporting Standards, welcoming the preservation of double materiality at the heart of the EU standards while identifying four priority changes needed to strengthen global alignment, support economic resilience and reduce reporting burden. GRI's response addresses both the redrafted ESRS and the Commission's proposed voluntary reporting standard for the thousands of companies now out of scope following the Omnibus package's reduction of the CSRD's coverage. While recognising that simplification was necessary, GRI is calling on the Commission to remove a proposed exemption for assets under management, reduce restrictions on how companies exchange sustainability data in their value chains, strengthen alignment with international standards and enhance the voluntary standard with double materiality assessment for mid-sized companies.

 

The Double Materiality Commitment and Its Significance

 

GRI's most positive observation concerns the Commission's decision to maintain impact and financial materiality on an equal footing in the revised ESRS, a position that GRI describes as crucial for companies to assess risks, strengthen strategy and remain competitive. Robin Hodess, Chief Executive Officer of GRI, said Europe has sent an important signal by preserving this dual perspective because both impact and financial materiality are necessary for companies to operate effectively. He said this approach helps create the conditions for a more coherent global reporting system at a time when sustainability reporting is evolving rapidly across markets worldwide. The preservation of double materiality is particularly significant given the pressure during the ESRS revision process to move toward a purely financial materiality approach aligned with ISSB standards.

The response builds on GRI's extensive engagement with the ESRS since 2021, which included co-creating the initial version of the standards with EFRAG before providing detailed input during the Omnibus simplification process. This long-standing involvement positions GRI as one of the most substantively engaged stakeholders in the EU standards development process, giving its recommendations considerable weight with policymakers evaluating the final form of the revised ESRS. The GRI Standards themselves form the foundation of impact materiality reporting globally, making the organisation's perspective on how the ESRS should interact with international frameworks particularly relevant.

 

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Four Priority Changes GRI Is Requesting

 

GRI's first priority is strengthening alignment with international standards to help companies avoid duplication and build on established sustainability reporting practices, addressing the same interoperability concern raised by NBIM and other major institutional investors in their own consultation responses. The second is removing the proposed exemption for assets under management, which would undermine transparency requirements for asset managers and their alignment with global best practice needed to support capital flows toward sustainable business. Asset manager exemptions are particularly concerning from a financial system transparency perspective given the role of investment decisions in directing capital toward or away from sustainable activities.

The third priority concerns the proposed value chain cap, a restriction on how companies can exchange sustainability data through their supply chains and business relationships that GRI argues would undermine the provision of key information needed to identify and manage impacts and risks. Supply chain data exchange is fundamental to Scope 3 emissions accounting and to the due diligence requirements under the Corporate Sustainability Due Diligence Directive, making restrictions on this data flow a significant practical obstacle to effective sustainability reporting and management. The fourth priority calls for incorporating double materiality assessment and disclosures into the proposed voluntary standard for mid-sized companies now outside the mandatory CSRD scope, ensuring that sustainability information continues to contribute to strategy and meet stakeholder needs even for smaller entities.

 

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Outlook for ESRS Finalisation and Global Reporting Coherence

 

The GRI response, combined with similar interventions from NBIM and other major stakeholders, reflects a broad consensus among sophisticated sustainability reporting actors that the revised ESRS should use the Commission's simplification mandate to improve quality and coherence rather than simply reduce volume. Whether the Commission will address the specific concerns raised by GRI regarding the asset manager exemption and the value chain data cap will determine whether the revised standards strengthen or weaken the European sustainability reporting framework's practical utility for the stakeholders it is designed to serve. The final form of the revised ESRS will have implications well beyond Europe, as the standards influence corporate reporting practices of multinationals with European operations and provide a reference point for sustainability reporting framework development globally.

 

 

Source: GRI