Progress on the Global Reporting Initiative's New Banking Sector Standard: Highlights and Latest Developments

As a member of the GRI Banking Technical Committee, I participated in a GRI conference in Amsterdam in April 2024. Our goal was to make progress on key topics to be included in the draft of the GRI Banking Sector Standard. To help prepare banks and other financial institutions for changes in reporting requirements, I am pleased to highlight a few of the topics being proposed for the Banking Sector Standard below.

Reporting on Material Topics for the Banking Sector  

The Banking Technical Committee has identified an initial long list of material topics for the banking sector. These topics cover issues including climate change, non-discrimination, financial health and inclusion, biodiversity, and anti-corruption and prevention of financial crime (see Table 1).     

The material topics outlined in the new Banking Sector Standard will provide banking organizations with a helpful tool when conducting their materiality assessment and additional sector-specific reporting as needed. While banks can continue to report on any material topic, in the future, those reporting in accordance with GRI will need to refer to the Banking Sector Standard and provide an explanation if any of the identified topics are not material to them.

^{Source: Global Reporting Initiative}

^{Note: This is a partial list of potentially material topics under discussion, and is subject to further additions, removals, and changes.}

Below I have provided partial information on developments, as some topic discussions are still in their early stages. 

Reporting on Climate Change and Biodiversity

Considerable attention was paid to developing sector-specific reporting rules to supplement the revised draft of the GRI Climate Change Topic Standard and the new GRI Biodiversity Topic Standard.¹ This includes a particular emphasis on new disclosures related to just transition principles, transition plans for climate change mitigation, and climate change adaptation plans. 

The technical committee’s discussions focused on scope 3 greenhouse gas (GHG) emissions (category 15) and expectations for separately reporting financed GHG emissions, insured GHG emissions, and off-balance sheet GHG emissions (with breakdowns by sector). The committee also discussed reporting on exclusions, the rationales for the exclusions, any limitations on the data, and plans to improve the data. Regarding biodiversity, some committee members discussed limitations in data availability and quality, and reporting expectations around impact assessment and client due diligence.  

Reporting on Business Ethics 

Business ethics-related topics represent most of the controversies for companies in the banking sector. As such, discussions on how to structure disclosures for the various topics related to business ethics have been ongoing. While Morningstar Sustainalytics’ ESG Risk Ratings methodology groups business ethics disclosures together under one material issue,² the GRI covers aspects of business ethics under its Universal Standards and Topic Standards. The technical committee discussed potential reporting expectations for the banking sector around anti-corruption and prevention of financial crime, anti-competitive behavior, public policy, and tax topics. 

Reporting on ESG Integration

Another challenging area that is still being discussed within the technical committee is sustainability integration. How organizations define and manage sustainability impacts through their investment practices, organizational approach, alignment with core business strategies, and implementation through policies, processes, and investment decisions is recognized as very important within the banking sector. 

Reporting on Stewardship

As Associate Director, Stewardship at Morningstar Sustainalytics, I've seen firsthand how stewardship helps create positive impact and support improvements in company sustainability practices. I have been advocating for better disclosures on the approach, means and actions of stewardship and engagement activities by banks on material topics, and am pleased that this type of disclosure is being developed as part of this project. 

Next Steps  

The GRI Sector Standards drafts for the banking, capital markets and insurance sectors will undergo a significant feedback and comment period from technical committee members and peer reviewers through July 2024, and will enter a public comment period in early 2025, for release later the same year.

References

1. GRI. 2024. Topic Standard Project for Biodiversity – Project Update. https://www.globalreporting.org/standards/standards-development/topic-standard-project-for-biodiversity/. 

2. Morningstar Sustainalytics. Material ESG Issues: Business Ethics. Accessed July 18, 2024. https://www.sustainalytics.com/material-esg-issues-resource-center/business-ethics.