Author: Bang Nguyen, M.Sc.
GRI Certified Sustainability Professional
Co-Founder & ESG Strategy Director at CCV
GRI 1: Foundation 2021 is the first standard that every organization must consult when preparing a sustainability report under the GRI Standards. It is not a set of indicators to be measured, but the foundational document that defines how the GRI system works, its four core concepts, nine mandatory requirements and eight reporting principles. This article analyses GRI 1 from an implementation perspective: what an organization needs to understand, prepare and collect in order to lay the groundwork for a report that meets international standards.
1. What GRI 1 is and why it is the mandatory starting point
The Global Reporting Initiative’s sustainability reporting standards (the GRI Standards) are today the most widely used reporting framework in the world for organizations to disclose their impacts on the economy, environment and people. Within this system, GRI 1: Foundation 2021 plays a special role: it is the first standard an organization needs to read in order to understand how to use all the others. The standard is effective for reports published on or after 1 January 2023.
Unlike topic standards such as GRI 305 (Emissions) or GRI 303 (Water), GRI 1 contains no disclosures for an organization to fill in with figures. Instead, GRI 1 sets the rules of the game: it explains the purpose of sustainability reporting, defines the key concepts, and specifies the conditions an organization must meet to claim that it has reported “in accordance with” the GRI Standards. In other words, GRI 1 is the constitution of the entire system, while the other standards are its specific provisions.
The overarching objective GRI 1 sets out is transparency: helping an organization publicly disclose its most significant impacts in a consistent and credible way, so that information users — investors, customers, regulators, communities and researchers — can make well-founded assessments and decisions. Mastering GRI 1 from the outset therefore helps an organization avoid the most common mistake: collecting data before clearly understanding what it must report and according to which principles.
2. The three-tier system of standards: Universal – Sector – Topic
The first thing an organization needs to picture is the architecture of the GRI Standards. The system is organized into three interrelated series, each playing a different role in the reporting process.
The operating sequence is clear: an organization begins with GRI 1 to understand the system, uses GRI 2 to describe its context, uses GRI 3 to determine which topics are material, and only then selects the relevant Sector and Topic Standards for detailed reporting. Understanding this architecture helps a company avoid trying to “report on everything” and instead focus its resources where they are truly needed.
3. The four foundational concepts every organization must master
The heart of GRI 1 is the four concepts that govern how reports are understood and prepared. Everyone who collects, compiles and interprets data needs a shared understanding of these four concepts before implementation begins.
3.1. Impact
In the GRI Standards, “impact” refers to the effect an organization has or could have on the economy, environment and people — including effects on their human rights — as a result of its activities or business relationships. Impacts can be actual or potential, negative or positive, short-term or long-term, intended or unintended, reversible or irreversible. The crucial point to remember is that GRI reporting places “impact on the outside world” at its centre, not merely financial risk to the company itself.
3.2. Material topics
An organization may identify many impacts, but when using the GRI Standards it must prioritize reporting on the topics that represent its most significant impacts. These are its material topics. A topic such as “water and effluents” may cover impacts across all three dimensions — economic, environmental and social — at once. One important principle should be noted: GRI determines materiality based on the significance of impacts on the outside world, and a material topic cannot be set aside simply because the company considers it not yet financially material.
3.3. Due diligence
Due diligence is the process through which an organization identifies, prevents, mitigates and accounts for how it addresses its actual and potential negative impacts. Where it cannot address all impacts at once, the organization should prioritize by severity and likelihood; for potential human rights impacts, severity takes precedence over likelihood. This concept is built on authoritative international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines.
3.4. Stakeholders
Stakeholders are individuals or groups whose interests are affected or could be affected by an organization’s activities — including employees, suppliers, customers, local communities, investors, trade unions, vulnerable groups and others. Engaging with stakeholders helps an organization identify and manage its impacts. GRI 1 also distinguishes between stakeholders that have already been affected and those that could potentially be affected — an important distinction in the due diligence process and in determining who should receive remedy.
4. The nine mandatory requirements for reporting "in accordance with" the GRI Standards
This is the most binding part of GRI 1. To claim that a report has been prepared “in accordance with” the GRI Standards, an organization must comply with all nine requirements below. If even one is missing, the organization may not use this claim.
- Apply the reporting principles (the eight principles in section 5).
- Report all disclosures in GRI 2: General Disclosures 2021.
- Determine material topics, and review the applicable Sector Standards.
- Report the disclosures in GRI 3: Material Topics 2021 (3-1, 3-2, 3-3).
- Report disclosures from the relevant Topic Standards for each material topic.
- Provide reasons for omission for any disclosures that cannot be complied with.
- Publish a GRI content index.
- Provide a statement of use.
- Notify GRI by email at reportregistration@globalreporting.org (free of charge).
A note on “with reference”: If it cannot yet meet all nine requirements, an organization may report “with reference to” the GRI Standards under three lighter requirements: publish a content index, provide the corresponding statement of use, and notify GRI. This is often the starting point for companies new to sustainability reporting before progressing to full “in accordance” reporting.
4.1. The four permitted reasons for omission and their required explanations
When it cannot comply with a disclosure (for those disclosures where omission is permitted), an organization must state one of the four reasons below in the content index, together with the required explanation. It should be stressed that the last two reasons should only be used in exceptional cases; overusing them undermines the report’s credibility.
5. The eight reporting principles and the data needed to satisfy them
The eight reporting principles are mandatory conditions for ensuring information quality. For a company, each principle is not just an abstract criterion but implies specific types of data, documentation and processes that need to be prepared.
Accuracy: information must be correct and sufficiently detailed; clearly indicate which data is measured and which is estimated, along with the methods and assumptions used.
Balance: present both positive and negative impacts objectively, without overemphasizing good news or omitting unfavourable information.
Clarity: present information accessibly and understandably, using tables, charts and explanations of technical terms.
Comparability: report consistently over time; present the current period alongside at least two previous periods, using international metrics and both absolute and normalized figures.
Completeness: provide sufficient information to assess impacts during the reporting period, including cumulative impacts that may become severe in the long term.
Sustainability context: place impacts within the wider context of sustainable development, e.g. reporting greenhouse gas emissions relative to the goals of the Paris Agreement.
Timeliness: report on a regular schedule and publish early enough for users to use the information in their decisions.
Verifiability: gather, record and analyse information so that it can be examined; establish internal controls and keep documentation that allows third-party review.
6. What companies need to prepare and collect — a practical checklist
From the requirements and principles above, GRI 1 can be translated into a concrete preparation checklist. This is the implementation work every ESG or sustainability function should review before moving on to collecting figures for each topic.
One point often overlooked: GRI 1 makes clear that if an organization does not have a required item (e.g. a policy, committee or process), it can still comply by truthfully reporting that the item does not yet exist, together with the reason or a plan to develop it. The standard does not require a company to have everything in place, but it does require transparency about the actual situation. This core principle helps companies just starting out approach the reporting process without apprehension.
7. Enhancing credibility: internal controls and external assurance
GRI 1 recommends — but does not require — several ways to enhance the credibility of a sustainability report. The first is internal controls: a company should assess whether the controls established for financial reporting are adequate for sustainability data, and add new controls where needed. The second is external assurance, carried out by competent and independent providers to verify the quality and credibility of the disclosed information. In addition, an organization may convene a stakeholder or expert panel to advise on its reporting approach. GRI 1 also recommends aligning sustainability reporting with financial reporting in terms of period and entity scope.
8. Conclusion and what comes next
GRI 1: Foundation 2021 produces no figures in a report, yet it determines the entire quality and validity of those figures. A company that masters GRI 1 will clearly understand why it reports, what it reports, by which principles, and what it needs to prepare — from a mindset around impact, a stakeholder map and a due diligence process, through to internal control systems and methodology records. This is the foundation that makes the data-collection steps in subsequent standards coherent and credible.
Next part: GRI 2 – General Disclosures: what general information about the organization, its governance, strategy and reporting practices a company needs to disclose and collect in order to paint the overall picture before diving into each material topic.