1-18. EHS Information Disclosure Based on GRI Standards: How to Write for Investors

The Global Reporting Initiative (GRI) Standards are the most widely used international framework for companies disclosing sustainability information. The GRI also serves as a standard for disclosing information in EHS areas, such as the environment, health and safety, and social issues, enabling investors and stakeholders to obtain reliable and comparable data. With ESG investments in particular on the rise, how EHS information is presented has become a key factor in determining a company's reputation.

A distinctive feature of the GRI Standards is that they prescribe disclosure items by theme in a modular format. In addition to common foundations (Universal Standards), they prescribe detailed indicators for each topic, such as the environment, labor practices, human rights, and society. Major EHS-related themes include energy (GRI302), water (GRI303), emissions (GRI305), waste (GRI306), and occupational health and safety (GRI403). Companies are required to identify the materiality of their business activities and, based on that, select and report on relevant GRI indicators.

The key to information disclosure that resonates with investors is first and foremost "quantitativeness and comparability." It is important to go beyond simply presenting examples of initiatives and clearly show figures for greenhouse gas emissions, water usage, occupational accident rates, etc., and to show comparisons with the previous year and the industry average. In addition, setting future goals and presenting progress as measurable KPIs allows a company's improvement efforts to be objectively evaluated.

Next is the "balance between risks and opportunities." GRI places importance not only on achievements but also on disclosing issues and risks. For example, transparently explaining negative information, such as "We aim to achieve zero workplace accidents, but x number of serious accidents occurred in fiscal 2023. The causes and corrective measures are as follows," increases credibility. Investors place more importance on how issues are addressed than on their existence, so honest disclosure is required.

Furthermore, "connection to strategy" is also essential. Rather than simply presenting EHS activities as CSR activities, companies can position them in the context of increasing business value for investors by clearly explaining their connection to business strategies and long-term growth plans. For example, an effective explanation would be, "Improving water use efficiency not only reduces costs, but also strengthens competitiveness by addressing future water resource risks."

In practice, there are an increasing number of cases where EHS information based on the GRI Standards is disclosed in "integrated reports" and "sustainability reports" that integrate financial reporting. This makes it possible to show investors the relationship between financial and non-financial data. It is also effective to ensure the reliability of reports by receiving external assurance (third-party verification).

In conclusion, the GRI Standards are an internationally recognized "common language" for information disclosure, and are essential for Japanese companies to gain the trust of investors and the international market. By presenting information in the EHS field not simply as an introduction to initiatives, but as quantitative data, responses to issues, and connections to business strategies, transparency and persuasive disclosure that resonates with investors can be achieved.