In recent years, sustainability reports are no longer seen as “extra” documents that simply complement annual reports. Investors, regulators, and the public increasingly want to understand how companies truly manage their environmental and social impacts.
This is where two major frameworks often come into play: the Global Reporting Initiative (GRI) and the sustainability standards issued by the IFRS Foundation through IFRS S1 and IFRS S2. Although they have different approaches, they can actually complement each other.
Different Focus Impact vs. Financial Risk
In simple terms, GRI helps companies explain the impact of their activities on the economy, the environment, and society. Its approach is broad and designed for a wide range of stakeholders, not just investors. This means issues such as labor practices, waste management, and impacts on local communities receive significant attention in GRI-based reports.
On the other hand, IFRS S1 and S2 focus on sustainability related information that is directly linked to a company’s financial condition and future prospects.
These standards are designed to help investors understand sustainability related risks and opportunities that could affect financial performance. IFRS S1 sets out general disclosure requirements, while IFRS S2 specifically addresses climate related disclosures.
The difference becomes clearer in the concept of materiality. GRI applies a double materiality approach, considering both how the company impacts the environment and society, and how sustainability issues affect the company.
In contrast, IFRS applies single financial materiality. Information is considered material if it could influence investors’ decisions. As a result, a social issue might be highly relevant under GRI due to its public impact, but may not be prioritized under IFRS if it does not significantly affect financial performance.
How Can They Be Aligned?
Despite these differences, companies do not need to choose one over the other. GRI and IFRS can be aligned to produce a stronger and more coherent sustainability report. The IFRS structure, covering governance, strategy, risk management, and metrics and targets can be mapped against relevant disclosures within the GRI Standards.
For example, in greenhouse gas emissions reporting, GRI already provides detailed guidance on emissions disclosures. This information can then be used to meet climate related disclosure requirements under IFRS S2, particularly those related to risks and emissions reduction targets.
In this way, companies can avoid preparing two completely separate reports and instead develop a more integrated one.
Aligning GRI and IFRS allows companies to tell a more complete story. On one hand, they remain transparent about their environmental and social impacts. On the other hand, they clearly explain how sustainability issues influence strategy, risk management, and financial performance.
For general readers, this means sustainability reports become easier to understand and more meaningful. They go beyond broad commitments and include real risks, measurable targets, and concrete strategies. When GRI and IFRS are used together, sustainability reporting becomes not only informative but also more credible and closely connected to real business performance.
Given the importance of aligning GRI and IFRS, the challenge for many companies is no longer choosing which standard to use, but how to integrate both into a report that is consistent, efficient, and relevant to a wide range of stakeholders.
Without the right approach, this process can become complex and may result in suboptimal reporting. This is where professional support becomes essential. Through Validerra’s Sustainability Report development services, your company can produce an integrated report aligned with global standards one that communicates sustainability performance in a more credible and strategic way to both investors and regulators.
Author: Ainur
Editor: Shoofi
Reference:
Teixeira, S. J. (2025) Comparative Analysis between Companies that Adopt GRI Standards and Those that Follow only IFRS (ISSB)-Sustainability Report. International Journal of Current Science Research and Review. Volume 08 Issue 10 October 2025 DOI: 10.47191/ijcsrr/V8-i10-23
PwC. (2023). Strategi penyelarasan The GRI Standards 2021 dengan IFRS Sustainability Disclosure Standards S1 dan S2.