GRI completes financial sector trio with new draft standard for banking

In 2024, the Global Reporting Initiative (GRI) launched a set of three sector-specific draft standards to improve sustainability reporting across the financial services industry. These drafts—covering insurance, capital markets, and banking—address a long-standing gap: the lack of tailored guidance for financial institutions on how to disclose their indirect but far-reaching sustainability impacts.

The release of the GRI Banking Sector Exposure Draft marks the installment in this financial services initiative. Together, these standards reflect GRI’s shift toward more sector-relevant, impact-based disclosures, aligned with its updated Universal Standards (2021). They aim to improve transparency around how different financial actors such as banks, insurers, asset managers, exchanges, and data providers who shape economic, environmental, and social outcomes.

The common foundation: What all three standards share

All three draft standards are designed to be used alongside the GRI Universal Standards (2021). They are built on a consistent architecture, with the goal of making sustainability reporting:

• Relevant to sector-specific operations
• Comparable across entities and regions
• Responsive to stakeholder and regulatory expectations

Key shared features include:

• Clear guidance on sector context and business model disclosures
• Identification of actual and potential sustainability impacts
• Requirements to report on risk management, governance, and ESG integration
• Emphasis on transparency, stakeholder engagement, and materiality

Each draft also aligns with:

• TCFD (climate risk)
• ISSB/SASB (investor-focused disclosures)
• CSRD (double materiality and EU compliance)
• UN principles and global ESG frameworks relevant to each segment

Key themes and technical distinctions

Some of the most critical technical aspects of this draft include:

• Distinguishing between different levels of influence: Asset owners and managers are expected to disclose how they allocate capital and engage companies. Exchanges are asked to disclose listing standards and sustainability indices. Data providers must explain the robustness and independence of their methodologies.
• Materiality and risk integration: Firms must describe how they identify material sustainability risks—not only for their portfolios, but for the markets and stakeholders affected by their decisions.
• Conflicts of interest and transparency: This is particularly relevant for firms offering both investment products and ratings or ESG assessments.

What makes the banking standard different?

While there’s a shared foundation, the core differences lie in how each segment influences sustainability outcomes.

1. Nature of impacts: Indirect vs. direct control

• Banks primarily influence sustainability through lending and financing decisions—what projects and companies they support with capital.
• Insurers impact sustainability via underwriting and investment policies, determining what risks they will or won’t insure.
• Capital market entities (asset managers, index providers, exchanges) influence outcomes through stewardship, ratings, index design, and capital allocation—often with limited direct engagement.

2. Financed emissions and portfolio responsibility

• Banking has a strong focus on financed emissions (Scope 3, Category 15) and credit-related ESG screening.
• Insurance addresses investment portfolio emissions but also emphasizes underwriting emissions, a category still under development in many frameworks.
• Capital markets may not directly finance assets, but are expected to report on ESG data integrity, stewardship influence, and voting behavior.

3. Social inclusion and financial access

• The banking standard goes further than the others in addressing financial inclusion, affordability, and client well-being. This includes:

a. Access to banking services for low-income and rural communities

b. Fair lending practices and anti-discrimination policies

c. Financial literacy and hardship support programs

• Insurance touches on access and affordability but focuses more on product exclusions, risk-based pricing, and claims fairness.
• Capital markets do not typically engage with end users, so the social angle focuses on responsible product design, transparency, and avoiding greenwashing.

4. Client and customer interaction

• Banks and insurers have direct relationships with customers, so both are required to report on:

a. Customer satisfaction and dispute resolution
b. Claims and complaints handling (especially for insurers)
c. Responsible marketing and fee disclosures (especially for banks)

• Capital market actors, especially asset managers and data providers, engage primarily with institutional clients or intermediaries, making their focus more on methodologies, ratings, and transparency.

5. Governance and stewardship

• All three standards require disclosures on how organizations:
  • Govern sustainability
  • Address conflicts of interest
  • Align incentives with ESG outcomes

However:

• Banks are expected to report on board-level oversight of ESG risks in lending and investment decisions
• Insurers must disclose how ESG criteria are embedded in risk modeling and underwriting
• Capital market entities focus on transparency of ESG ratings and stewardship responsibilities, including proxy voting and engagement with investees

Final thoughts

With the release of its draft standard for banks, GRI completes its comprehensive, sector-specific framework for financial services sustainability reporting. While each segment has its nuances, the overarching goal is the same: to create transparent, accountable, and comparable ESG disclosures that reflect the financial sector’s massive influence on the real economy.

For banks, this standard is more than a compliance tool—it’s a blueprint for building trust, aligning with global best practices, and becoming a true agent of sustainable finance.