Two companies can each publish a sustainability report and give the reader nothing to compare. One lists its tree-planting and community projects at length. The other gives a short table of emissions and the financial risk from carbon pricing. They answer different questions for different readers. Frameworks exist to settle what a sustainability report should contain and for whom.
This topic covers the three frameworks that the syllabus names:
- the Global Reporting Initiative (GRI), whose standards are built around an organisation’s impacts on the economy, the environment and people
- the Sustainability Accounting Standards Board’s standards (Sustainability Accounting Standards Board (SASB) Standards), built around the information that investors need and organised by industry
- the sustainability disclosure guidelines of the Nigerian Exchange (NGX) for listed companies
It then covers the management approach and topic-specific metrics, how the sustainability reporting affects corporate performance, and the idea of materiality, which divides them. The next topic covers the International Sustainability Standards Board and the first sustainability disclosure standard.
The frameworks are examined as a discussion question. They are also a good base for the questions on the global standards in the following topics. No question in the diets reviewed tests the three frameworks as such. Read from social and environmental accounting to sustainability reporting first.
In 30 seconds
GRI is stakeholder-oriented and reports an organisation’s impacts on the economy, environment and society, whether or not they are financially material; it has universal, topic-specific and sector standards. SASB Standards are investor-oriented: financially material issues, in 77 industry standards, with disclosure topics, accounting metrics, technical protocols and activity metrics; they are now maintained by the International Sustainability Standards Board (ISSB).
The NGX Sustainability Disclosure Guidelines (effective 1 January 2019) encourage all listed companies to report and are mandatory for those on the Premium Board. Impact materiality looks at the effect of the entity on the world; financial materiality at the effect of sustainability matters on the entity’s value; double materiality uses both.
The Global Reporting Initiative
The GRI is one of the most widely used sustainability reporting standards. It is stakeholder-oriented: it asks the organisation to report on its impacts on the economy, the environment and society, whether or not those impacts are financially material to the organisation. Its reporting principles include stakeholder inclusiveness, sustainability context, materiality, completeness, balance, comparability, accuracy, timeliness, clarity and reliability. The GRI Standards are modular:
- Universal standards (GRI 1 to 3): the foundation, the general disclosures about the organisation, and the process of determining material topics.
- Topic standards, grouped as economic (for example GRI 201, economic performance), environmental (for example GRI 302, energy) and social (for example GRI 401, employment).
- Sector standards for industries with distinct impacts, such as oil and gas or agriculture.
SASB Standards
The SASB Standards provide industry-specific, financially material sustainability disclosure standards for use by investors and capital markets. Unlike the GRI, they focus on what investors need to know about the effect of sustainability matters on financial performance. Their principles are: financial materiality, industry specificity (77 industry standards), decision-usefulness for investors, cost-effectiveness, and evidence-based development. Each industry standard includes:
- Disclosure topics: the key environmental, social and governance (ESG) issues for that industry (greenhouse gas emissions, water management, human capital).
- Accounting metrics: the quantitative or qualitative measures to be disclosed.
- Technical protocols: how to calculate and disclose each metric.
- Activity metrics: operational data used to put the metrics in proportion, such as production volume or number of employees.
For an automobile manufacturer, a SASB disclosure might be fuel efficiency of products and the cost of regulatory compliance, because those are financially material in that industry. The SASB Standards are now maintained by the International Sustainability Standards Board, which requires an entity applying International Financial Reporting Standard (IFRS) S1 to consider them in identifying sustainability-related risks and opportunities.
The Nigerian Exchange guidelines
The Nigerian Exchange (formerly the Nigerian Stock Exchange) issued its Sustainability Disclosure Guidelines in 2018, with approval of the Securities and Exchange Commission, effective from 1 January 2019. They are aligned with global frameworks such as the GRI, the United Nations Global Compact and International Organization for Standardization (ISO) 26000. The Exchange encourages all listed companies to report, and the guidelines are mandatory for companies on the Premium Board.
A report can be in the annual report, an integrated report or a stand-alone report. The principles include materiality and relevance, stakeholder inclusiveness, accuracy and integrity, consistency and comparability, and transparency and accountability. The Exchange announced recommendations for good practice in thirteen thematic areas under four core principles, which cover:
- Governance and ethics: board oversight of ESG matters, anti-corruption and compliance policies.
- Environmental management: emissions, waste, energy, biodiversity, and the related risks.
- Value creation and the marketplace: sustainable products and services, customer satisfaction and innovation.
- Workplace: employee welfare, diversity, health and safety, capacity building.
- Community investment and human rights: corporate social responsibility programmes, human rights due diligence and grievance mechanisms.
| GRI | SASB Standards | NGX guidelines | |
|---|---|---|---|
| Main user | All stakeholders | Investors and lenders | Investors and stakeholders in the Nigerian market |
| Materiality | Impact on economy, environment and society | Financial materiality | Materiality and stakeholder inclusiveness |
| Structure | Universal, topic and sector standards | 77 industry standards | Thematic areas under core principles |
| Status | Voluntary framework | Voluntary, now maintained by the ISSB | Mandatory for the Premium Board; encouraged for others |
Management approach, metrics and the effect on performance
For each material topic the entity explains its management approach: why the topic is material, the policies and commitments, the targets, who is responsible, the resources allocated, and how the entity handles grievances and measures progress. It then reports the topic-specific metrics and indicators. For example, an energy topic reports consumption by source, intensity per unit of output, and progress against a target.
Sustainability reporting is associated with better corporate performance through: improved risk management and resilience, access to capital (investors and development finance institutions, green bonds, possibly lower cost of capital), stronger stakeholder trust and reputation, and alignment with long-term value creation and with the United Nations Sustainable Development Goals.
The evidence is mixed and it is hard to separate cause from effect, since well-run companies may report better as well as perform better. The costs of reporting and the risk of selective reporting are limitations.
For example, a company’s emissions fell from 50,000 tonnes to 44,000 tonnes, a reduction of 12%. Its target is a 20% reduction (to 40,000 tonnes) over five years, which needs a compound reduction of 1 − 0.81/5 = about 4.4% a year.
Materiality in practice
Suppose a company scores five topics from 1 to 5 for stakeholder concern (impact) and for effect on enterprise value (financial): emissions (5 and 5), water (3 and 2), community investment (4 and 2), data security (3 and 5), waste (2 and 1). With a threshold of 4:
- Emissions: material under both views (double materiality).
- Community investment: material from the impact view only; a GRI-style report includes it.
- Data security: material from the financial view only; a SASB or ISSB-style report includes it.
- Water and waste: below the threshold in both; monitored, but not reported as material.
The ideas in more depth
Why the frameworks differ
They answer different questions. The GRI asks what the organisation does to the world; SASB and the ISSB ask what the world does to the organisation’s value. A complete picture needs both, which is why many entities report against more than one and why the ISSB standards are designed to work with the GRI and other frameworks.
Why a Nigerian guideline matters
A national exchange can set expectations for its listed companies earlier than a national law can. The Exchange’s guidelines gave Nigerian companies practice in sustainability reporting before the move to the international standards.
Sources and references
- GRI Standards; SASB Standards (maintained by the ISSB); Nigerian Exchange Sustainability Disclosure Guidelines (2018).
These points are stated as at 5 November 2026.
Worked examples
Example 1: classifying topics. Data security scores 3 for stakeholder concern and 5 for effect on enterprise value; community investment scores 4 and 2. Required: the view in which each is material (threshold 4).
- Data security. Financially material only.
- Community investment. Impact material only.
Example 2: a target. Emissions of 50,000 tonnes fall to 44,000 tonnes. Required: the reduction and the rate needed to reach 40,000 tonnes in five years.
- Reduction.
(44,000 − 50,000) ÷ 50,000 = −12%. - Annual rate.
1 − 0.81/5 = 4.4% a year.
Example 3: choosing a framework. An investor wants the sustainability matters that affect an oil company’s cash flows. Required: the suitable framework.
- Answer. The SASB Standards for the industry (or the ISSB standards that use them), because they focus on financial materiality.
How to answer in the exam
- Compare the frameworks on user, materiality, structure and status.
- Define each type of materiality and give an example of a topic for each.
- For the Nigerian guidelines, state the effective date, the board to which they are mandatory and the thematic areas.
- Discuss the benefits and limits of reporting for performance.
Common mistakes in the exam
- Saying the GRI is only for investors.
- Saying SASB covers all topics, not the financially material ones for each industry.
- Stating that the Nigerian guidelines are mandatory for all listed companies.
- Mixing the two views of materiality.
- Listing frameworks without comparing them.
- Claiming that reporting always improves performance.
Quick revision
- GRI: impacts, stakeholders, universal, topic and sector standards.
- SASB: financial materiality, 77 industries, now under the ISSB.
- NGX: 2018 guidelines, effective 1 January 2019, mandatory for the Premium Board, encouraged for others.
- Double materiality = impact and financial.
Practice questions
These are original questions written in the style of the Institute’s exams. Try each one before you open the answer. Section A is a recall check, because the paper itself is written.
Recall check: multiple choice
Question 1. The GRI is mainly concerned with:
- Only financial risk
- Only tax
- An organisation’s impacts on the economy, environment and society
- Only share price
Show the answer
C. Whether or not financially material.
Question 2. SASB Standards focus on:
- All stakeholders’ impact
- Financially material issues by industry
- Only governance
- Only the environment
Show the answer
B. In 77 industry standards.
Question 3. The Nigerian Exchange’s guidelines took effect on:
- 1 January 2019
- 1 January 2010
- 1 January 2024
- 1 January 2030
Show the answer
A. They were issued in 2018.
Question 4. The universal GRI standards are:
- GRI 201 to 205
- GRI 300 to 305
- GRI 400 to 405
- GRI 1 to 3
Show the answer
D. Foundation, general disclosures and material topics.
Question 5. The SASB Standards are now maintained by:
- The GRI
- The ISSB
- The Exchange
- The United Nations
Show the answer
B. Under the IFRS Foundation.
Question 6. The Nigerian Exchange guidelines are mandatory for:
- Premium Board companies, with others encouraged
- All private companies
- No company
- Only banks
Show the answer
A. Other issuers are encouraged to report.
Question 7. Double materiality combines:
- Two years
- Two companies
- Impact materiality and financial materiality
- Two audits
Show the answer
C. Matters that matter both ways.
Question 8. GRI 302 is a topic standard on:
- Employment
- Economic performance
- Anti-corruption
- Energy
Show the answer
D. An environmental topic.
Question 9. Activity metrics in SASB Standards are used to:
- Calculate tax
- Audit the report
- Normalise the metrics, for example by production volume
- Set the share price
Show the answer
C. They give the metrics proportion.
Question 10. The management approach describes:
- How the entity manages a material topic: policies, targets, responsibilities and resources
- The audit fee
- The share price
- The tax rate
Show the answer
A. And how it measures progress.
Section B style: written questions
Question 11 (10 marks). (a) Compare the GRI and SASB Standards. (6 marks) (b) State the status of the Nigerian Exchange guidelines. (4 marks)
Question 12 (15 marks). A company scores topics from 1 to 5 for stakeholder concern and effect on enterprise value: emissions (5, 4), water (2, 2), customer privacy (3, 5), local employment (5, 2). With a threshold of 4: (a) classify each topic. (8 marks) (b) State which would appear in a GRI-style report and which in an investor-focused report. (7 marks)
A further written question
Question 13 (20 marks). Emissions were 50,000 tonnes and are now 45,000 tonnes. The target is a 10% reduction over four years from 50,000.
(a) Calculate the reduction achieved. (4 marks) (b) Calculate the annual compound reduction needed for the target. (6 marks) (c) State TWO benefits and TWO limitations of sustainability reporting for corporate performance. (8 marks) (d) State why the target should be reported with its baseline. (2 marks)
Model answers
Show the model answer to Question 11
(a) The GRI is stakeholder-oriented and reports impacts on the economy, environment and society, whether or not financially material (2). SASB Standards are investor-oriented and focus on financially material issues (2). The GRI has universal, topic and sector standards (1); SASB has 77 industry standards (1).
(b) They were issued in 2018 and are effective from 1 January 2019 (1.5). Listed companies are encouraged to report (1), and reporting is mandatory for companies on the Premium Board (1.5).
Show the model answer to Question 12
(a) Emissions: material under both views (2). Water: not material (2). Customer privacy: financially material only (2). Local employment: impact material only (2).
(b) A GRI-style report would include emissions and local employment (3.5). An investor-focused report would include emissions and customer privacy (3.5).
Show the model answer to Question 13
(a) (45,000 − 50,000) ÷ 50,000 = −10%, so the target has been met in the first period (4).
(b) Target 45,000 tonnes in four years: 0.91/4 = 0.974, so a reduction of about 2.6% a year (6).
(c) Benefits (2 marks each): better risk management and resilience; improved access to capital and reputation. Limitations (2 marks each): the cost of reporting and the difficulty of linking it to performance; the risk of greenwashing.
(d) Without the baseline and the date, progress cannot be measured or compared (2).
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