In today’s sustainable development landscape, non-financial reporting is becoming increasingly important for business. It enables companies to report on the environmental, social and governance (ESG) aspects of their operations, and it increases trust among investors, partners and customers. In Ukraine, the transition to transparent, structured and standardised reporting is particularly urgent. The logical question that arises is which reporting standards are better to work with: the international GRI (Global Reporting Initiative) standards or the new ESRS (European Sustainability Reporting Standards)? Let’s try to figure it out.
GRI — a classic of global sustainability
GRI is one of the world’s best-known standards for non-financial reporting. It is based on the principles of transparency, completeness, clarity, and consistency. Over 10,000 organisations worldwide use GRI to disclose information on sustainable development. In Ukraine, GRI is the preferred choice for companies looking to demonstrate social responsibility and compliance with environmental standards.The advantages of GRI include its extensive international experience, the large number of guidelines it provides, and the possibility of taking a comprehensive approach to various aspects of sustainability, from environmental impact to employee rights and business ethics. However, GRI is a voluntary initiative, not a mandatory standard, and it requires significant resources to implement, particularly for small and medium-sized enterprises.
ESRS — a new challenge from the European Union
In recent years, the European Union has placed greater emphasis on sustainability reporting. As part of the reforms set out in the CSRD Directive (Corporate Sustainability Reporting Directive), new standards have been introduced in the form of the European Sustainability Reporting Standards (ESRS). The ESRS are specifically designed to unify and enhance non-financial reporting across Europe.For Ukraine, which is committed to European integration and aligning its legislation with EU standards, the ESRS are not an alternative, but an inevitable future. The recently created Strategy for the Implementation of Sustainability Reporting by Enterprises, in particular, establishes the mandatory nature of these standards for large, publicly traded companies, obliging them to report in accordance with the CSRD and ESRS rules.
Why ESRS is relevant for Ukrainian companies today
For many companies, particularly large, publicly traded ones and those operating in high-risk industries, transitioning to the ESRS will soon become a necessity. According to the Strategy, companies must implement the sustainable development management systems and submit reports that align with international standards and the European Union’s requirements.
The following are the key points of the strategy that define the role of ESRS for Ukrainian business:
- Mandatory reporting: The rule applies to companies with a large number of employees and a significant amount of annual revenue or balance sheet. They are obliged to prepare environmental, social and governance (ESG) reports in accordance with established standards. These standards are hereinafter referred to as ESRS.
- Harmonisation with the EU: Ukraine has officially embarked on a course of integration into the European economic and regulatory environment. The strategy is based on the implementation of the same reporting standards as in the EU, ensuring a unified approach and enabling Ukrainian companies to maintain competitiveness in European markets.
- Step-by-step implementation: The strategy outlines a phased implementation of the standards. Firstly, large enterprises are required to report, followed by medium-sized enterprises financial institutions. This provides companies with the opportunity to adapt and prepare the relevant internal processes.
- Responsibility and control: The Strategy provides for the establishment of mechanisms to control the quality of the information provided and possible consequences for failure to submit or submission of inaccurate data. This approach is intended to encourage companies to take the process of implementing ESG reporting seriously.
- Integrate ESG into business processes: It is important to note that the government will not only require reporting, but also encourage companies to integrate sustainability principles into their management strategies, risk management and internal controls. This means that ESG becomes an integral part of a business’s day-to-day operations.
For Ukrainian companies, this represents both a challenge and an opportunity. Meeting the requirements of the ESRS will help to comply with future legislation, as well as creating opportunities to attract investment, improve reputation and develop long-term competitiveness.
The ESRS is not merely a concept for the future; it is a tangible reality for Ukrainian companies seeking to develop in accordance with global sustainability trends.
Does it make sense to continue working with GRI?
GRI remains a relevant and useful tool, especially for those companies that are just starting to report and want to build a systematic approach to ESG. It allows you to get acquainted with the basic concepts, build the first indicators and prepare for the transition to more sophisticated standards.However, it should be noted that GRI is not a regulated standard in Ukraine, and its application is a voluntary choice. Companies planning large-scale cooperation with European partners will eventually have to switch to ESRS.
Practical advice for Ukrainian enterprises
- Assess your status and needs. Large companies operating in regulated sectors with European capital should prepare for the ESRS. Smaller companies can start with the GRI framework to gradually introduce a culture of sustainable development.
- Study the legislation. It is important to understand which requirements currently apply to you and which are planned for the near future.
- Implement it gradually. The ESRS is a comprehensive standard. The main steps are adopting ESG best practices, building data collection systems and improving employee competence.
- Involve specialists. High-quality reporting requires internal control and external support, such as audits, consultations and training.
Conclusion
For Ukrainian companies, the question of whether to use the ESRS or the GRI is a matter of time, resources, and strategic guidelines. GRI is a well-established standard and a good starting point for developing an ESG culture. However, the ESRS will set the tone for reporting in Ukraine in the coming years, particularly for large companies.Although preparing for the new standard requires time and planning, it creates opportunities for better integration into international markets and increased investor confidence, while also contributing to the sustainable development of the business as a whole.
BDO in Ukraine offers comprehensive annual sustainability support to help your business successfully adapt to the new ESG standards, increase transparency and investor confidence. If you have any questions, please don’t hesitate to contact us — we are happy to answer your questions. Be responsible for ESG with BDO in Ukraine!
