GRI Universal Standards 2021: What Changes for Sustainability Reporting in the Gulf

The Most Significant GRI Update in a Decade

On 5 October 2021, the Global Reporting Initiative (GRI) published its revised Universal Standards: GRI 1 (Foundation 2021), GRI 2 (General Disclosures 2021), and GRI 3 (Material Topics 2021). These standards become effective for reports published from 1 January 2023 and represent the most substantial revision to the GRI framework since the introduction of the modular Standards structure in 2016.

For companies in the Gulf, where sustainability reporting has been growing rapidly but remains largely voluntary, these changes carry significant implications. GRI is the most widely used sustainability reporting framework globally, and its standards increasingly inform both mandatory disclosure requirements and investor expectations. Understanding these changes now provides Gulf organisations with the lead time to adapt their reporting processes before the effective date.

Key Changes in the 2021 Universal Standards

1. Revised Materiality Approach

The most consequential change is the revised approach to materiality in GRI 3. The 2021 Standards adopt an "impact materiality" approach that requires organisations to identify their most significant impacts on the economy, environment, and people, including impacts on human rights.

Key differences from the previous approach:

• Impact-first materiality: Material topics are determined by the significance of the organisation's actual and potential impacts, not by what stakeholders consider important or what affects the organisation's financial performance. This is a meaningful shift from the previous "stakeholder inclusiveness" approach.
• Due diligence process: GRI 3 requires a structured due diligence process for identifying impacts, explicitly referencing the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises.
• Negative and positive impacts: Both negative impacts (to be prevented, mitigated, or remediated) and positive impacts (to be enhanced) must be considered.
• Value chain scope: Impacts across the full value chain, not just the reporting organisation's own operations, must be assessed.

2. Elevated Human Rights Requirements

The 2021 Standards significantly strengthen human rights disclosure requirements, reflecting the maturation of the business and human rights agenda globally:

• Human rights due diligence: GRI 2-23 requires disclosure of the organisation's policy commitments for responsible business conduct, including human rights. GRI 2-24 requires disclosure of how these commitments are embedded across activities and business relationships.
• Salient human rights issues: The materiality process must specifically consider human rights impacts, drawing on the UNGP concept of "salient human rights issues."
• Remediation: GRI 2-25 requires disclosure of processes for remediation of negative impacts, including grievance mechanisms.

3. New General Disclosures

GRI 2 (General Disclosures 2021) consolidates and expands what was previously spread across GRI 102. Notable new or strengthened disclosures include:

4. Sector Standards Programme

The 2021 revision introduces the GRI Sector Standards programme, which will develop sector-specific guidance on material topics and disclosures. The first sector standard, for Oil and Gas (GRI 11), was published alongside the Universal Standards and is directly relevant to the Gulf's hydrocarbon sector. Subsequent sector standards are planned for coal, agriculture, aquaculture, and mining, with financial services and other sectors to follow.

GRI 11 identifies 22 likely material topics for oil and gas companies, including:

• GHG emissions
• Climate adaptation, resilience, and transition
• Air emissions (beyond GHG)
• Biodiversity
• Waste
• Water and effluents
• Closure and rehabilitation
• Asset integrity and critical incident management
• Forced and compulsory labour
• Freedom of association and collective bargaining
• Economic impacts
• Local communities
• Land and resource rights
• Rights of indigenous peoples
• Anti-competitive behaviour
• Anti-corruption
• Payments to governments

Implications for Gulf Companies

Labour and Human Rights Disclosure

The elevated human rights requirements present both a challenge and an opportunity for Gulf companies. The GCC's labour market structure, characterised by a large migrant workforce, the kafala sponsorship system (undergoing reform in varying degrees across GCC states), and limited collective bargaining rights, creates a context where human rights disclosure requires careful navigation.

Companies that have proactively adopted responsible labour practices — fair recruitment, timely wage payment, adequate housing, occupational health and safety standards — will find it easier to report transparently. Those that have not will face a choice between improving practices or providing incomplete disclosure that undermines the credibility of their entire sustainability report.

Qatar's labour reforms, including the abolition of the exit permit requirement, the introduction of a minimum wage (QAR 1,000/month), and the establishment of the Workers' Support and Insurance Fund, provide a framework that companies can reference. But companies must go beyond citing national legislation and demonstrate their own due diligence processes.

Value Chain Impacts

The requirement to assess impacts across the value chain is particularly significant for Gulf companies with complex supply chains. Construction companies relying on subcontracted labour, hospitality groups with outsourced services, and energy companies with extensive contractor networks all need to understand and disclose impacts that extend beyond their direct employment relationships.

Oil and Gas Sector Standard

QatarEnergy, ADNOC, Saudi Aramco, and other Gulf national oil companies that report using GRI will need to respond to GRI 11's comprehensive list of likely material topics. The sector standard does not mandate reporting on all 22 topics — companies must still determine materiality through the GRI 3 process — but they must explain why any of the sector-identified topics are not considered material.

This "comply or explain" approach for sector-identified topics is a new discipline. A Gulf oil and gas company that does not consider "climate adaptation, resilience, and transition" to be material would need to provide a credible explanation for that determination.

Governance and Remuneration

The enhanced governance disclosures, including the compensation ratio (GRI 2-21), present a particular sensitivity in the Gulf context where executive compensation practices are generally not publicly disclosed. Companies listed on stock exchanges with ESG disclosure requirements (e.g., ADX, QSE, Tadawul) may face increasing pressure to provide this data.

Practical Preparation Steps

Gulf companies currently reporting under GRI, or planning to begin GRI reporting, should take the following steps before the January 2023 effective date:

Gap Assessment

Conduct a detailed gap assessment comparing current reporting against the 2021 Universal Standards requirements. Identify new disclosures that require data collection processes to be established, particularly GRI 2-7, 2-8, 2-21, 2-23, 2-25, and 2-30.

Materiality Process Update

Redesign the materiality assessment process to align with GRI 3's impact-based approach. This requires identifying actual and potential impacts on the economy, environment, and people across the value chain, rather than simply surveying stakeholders about topic importance.

Human Rights Due Diligence

Develop or formalise a human rights due diligence process aligned with the UNGPs. This should include salient issue identification, impact assessment, integration of findings, tracking effectiveness, and communicating how impacts are addressed.

Sector Standard Review

For oil and gas companies, review GRI 11's 22 likely material topics and determine which are material through the GRI 3 process. Prepare explanations for any topics determined not to be material.

Data Collection Infrastructure

Ensure that data collection systems can support the new disclosure requirements. Several new disclosures require granular workforce data (by gender, region, contract type) and value chain information that many Gulf companies do not currently collect systematically.

The Broader Reporting Landscape

The GRI 2021 revision occurs against a backdrop of rapid evolution in sustainability reporting:

• The IFRS Foundation announced the creation of the International Sustainability Standards Board (ISSB) in November 2021, which will develop investor-focused sustainability disclosure standards.
• The EU's Corporate Sustainability Reporting Directive (CSRD) will introduce mandatory sustainability reporting for EU companies with extraterritorial reach.
• The SEC is considering mandatory climate disclosure rules for US-listed companies.
• Gulf stock exchanges are progressively introducing ESG disclosure requirements.

GRI's 2021 Standards are designed to be used alongside these emerging requirements, not in competition with them. GRI focuses on impact reporting (how the company affects the world), while the ISSB focuses on enterprise value reporting (how sustainability issues affect the company). Companies will increasingly need to address both perspectives.

GSustain provides sustainability reporting advisory services to organisations in Qatar and the wider GCC. We help companies navigate the evolving reporting landscape, conduct materiality assessments, and prepare GRI-aligned sustainability reports. Contact us to discuss your reporting requirements.