GRI 3: Material Topics 2021 – Materiality and Sustainability Reporting Standard

Introduction

GRI 3: Material Topics 2021 is one of the three Universal Standards within the GRI Sustainability Reporting Standards. Issued by the Global Sustainability Standards Board, it provides guidance for determining an organisation’s material topics and establishes disclosures for explaining how those topics were identified and how they are managed.

Under GRI, material topics are the topics that represent an organisation’s most significant impacts on the economy, environment and people, including impacts on human rights. GRI 3 therefore places impact materiality at the centre of the sustainability reporting process. Rather than beginning solely with sustainability issues that could affect the organisation financially, the process considers the effects the organisation has or could have through its activities and business relationships.

GRI 3 works alongside GRI 1: Foundation 2021 and GRI 2: General Disclosures 2021. GRI 1 establishes the requirements and principles for using the GRI Standards, GRI 2 provides disclosures about the reporting organisation, and GRI 3 establishes the process for determining material topics and reporting how those topics are managed.

The Standard also connects the Universal Standards with GRI Sector Standards and Topic Standards. Sector Standards help organisations consider impacts commonly associated with their industries, while Topic Standards provide specific disclosures for sustainability topics that an organisation has determined to be material.

Structure

GRI 3 has two main parts: guidance for determining material topics and three disclosures for reporting information about those topics.

The materiality process is organised into four steps.

Step 1 is to understand the organisation’s context. This involves examining its activities, business relationships, sectors, geographic locations, products and services, stakeholders and wider sustainability context. The aim is to establish the background necessary to identify where significant impacts may arise.

Step 2 is to identify actual and potential impacts. Organisations consider positive and negative impacts on the economy, environment and people, including human rights, across their operations and business relationships. Impacts can be short-term or long-term, intended or unintended, and reversible or irreversible. Information can come from impact assessments, audits, grievance mechanisms, risk management systems, stakeholder engagement, external research and other relevant sources.

Step 3 is to assess the significance of those impacts. For actual negative impacts, significance is determined by severity. For potential negative impacts, both severity and likelihood are considered. Severity is assessed through scale, scope and irremediable character. For potential negative human rights impacts, severity takes precedence over likelihood. Positive impacts are assessed using scale and scope, with likelihood also considered for potential positive impacts.

Step 4 is to prioritise the most significant impacts for reporting. Organisations rank impacts according to their significance and establish a threshold for determining which impacts become material topics. GRI specifies that the significance of an impact is the criterion for determining whether a topic is material for reporting. Difficulty in obtaining information or the fact that a topic is not yet being managed cannot by itself be used to exclude a material topic.

GRI 3 then contains three disclosures.

Disclosure 3-1 requires organisations to explain the process used to determine their material topics, including how impacts were identified and prioritised and which stakeholders and experts informed the process.

Disclosure 3-2 requires organisations to provide their list of material topics and explain changes from the previous reporting period.

Disclosure 3-3 requires information about how each material topic is managed. This includes the related impacts, policies or commitments, actions taken to prevent or address negative impacts, management of positive impacts, methods for tracking effectiveness, goals and targets, and the role of stakeholder engagement.

Applicability

GRI 3 applies to organisations reporting in accordance with the GRI Standards and is intended for use regardless of organisation size, sector or geographic location. An organisation reporting in accordance with GRI is required to determine its material topics and report the disclosures contained in GRI 3.

The process is designed to extend beyond an organisation’s direct operations. When identifying impacts, organisations consider their activities and business relationships, including entities across the value chain where relevant. This is important because an organisation can be involved with a negative impact by causing it, contributing to it or being directly linked to it through a business relationship.

Stakeholder engagement is an important part of the materiality process. Organisations are encouraged to engage relevant stakeholders and experts when identifying and assessing impacts. Particular attention may be needed for stakeholders who are severely affected or potentially affected and for vulnerable groups that may face barriers to participation.

Applicable GRI Sector Standards must also be used when determining material topics. These standards identify topics that are likely to be material for organisations within particular sectors. However, they do not replace the organisation-specific materiality assessment. Each organisation still evaluates its own circumstances and impacts.

Where a topic identified in an applicable Sector Standard is determined not to be material, the organisation is required to identify that topic in its GRI content index and explain why it is not material. This provides transparency around differences between sector-level expectations and the organisation’s own impact assessment.

GRI 3 also makes an important distinction between sustainability materiality and financial materiality. Material topics under GRI cannot be deprioritised merely because they are not considered financially material to the organisation. At the same time, information about significant sustainability impacts can help organisations identify related financial risks and opportunities.

Organisations are expected to review material topics in each reporting period because activities, business relationships and operating conditions can change. The materiality assessment is therefore intended to be an ongoing process rather than a one-time reporting exercise.

Status

GRI 3: Material Topics 2021 was published as part of the revised GRI Universal Standards and became effective for reports or other materials published on or after 1 January 2023.

The Standard forms part of the current set of Universal Standards alongside GRI 1: Foundation 2021 and GRI 2: General Disclosures 2021. Organisations reporting in accordance with GRI apply these Universal Standards together and then use the relevant Sector and Topic Standards according to their circumstances and identified material topics.

The materiality process introduced in GRI 3 places greater emphasis on identifying and assessing an organisation’s impacts and on the relationship between materiality, due diligence, human rights and stakeholder engagement. It also requires organisations to use applicable Sector Standards as part of the process for determining material topics.

GRI 3 recognises that material topics can change as an organisation’s activities, business relationships and operating context evolve. Organisations should therefore review previously identified material topics during each reporting period and document changes in their assessment approach and resulting material topics.

As of November 2026, GRI continues to publish GRI 3: Material Topics 2021 as part of its Universal Standards. Organisations preparing new sustainability reporting should nevertheless consult the latest GRI Standards and applicable Sector and Topic Standards because individual standards within the broader GRI system can be introduced or revised separately.

Conclusion

GRI 3: Material Topics 2021 provides the process that determines what an organisation should focus on when reporting its sustainability impacts under the GRI Standards. Its central principle is that materiality is based on the significance of an organisation’s impacts on the economy, environment and people, including human rights.

The four-step process gives organisations a structured way to move from understanding their operating context to identifying impacts, assessing their significance and determining which topics should be prioritised for reporting. Stakeholder engagement, expert input and relevant GRI Sector Standards help strengthen this assessment.

GRI 3 also ensures that identifying a material topic is not the end of the reporting process. Through Disclosure 3-3, organisations are expected to explain how each material topic is managed, including their policies, actions, goals, effectiveness measures and stakeholder involvement. This connects materiality assessment with the practical management of sustainability impacts.

Together with GRI 1 and GRI 2, GRI 3 forms a core part of the GRI sustainability reporting system. GRI 1 establishes the foundation and reporting requirements, GRI 2 describes the reporting organisation, and GRI 3 determines which impacts are material and how organisations report their management of those impacts.

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Published: 2021

Effective date: 1 January 2023

Published by: Global Sustainability Standards Board (GSSB), the independent standard-setting body of the Global Reporting Initiative (GRI)