GRI’s Focussed Paper on Digitalization’s Impact on Sustainability Reporting: Challenges and Opportunities

AMSTERDAM, January 17, 2025 – As digital technologies continue to reshape industries, their implications for sustainability ​reporting are becoming increasingly evident. A recent Global Reporting Initiative (GRI) report explores ​how digitization presents challenges and opportunities for companies seeking to achieve sustainability goals. From artificial intelligence (AI) and large data to ​the environmental toll of digital infrastructure, the ​report highlights the need to update ​reporting ​frameworks to reflect the complexity of the digital ​age.

Overview of digitisation and its challenges

Digitalisation, defined ​as the use of digital ​technologies and data to stimulate innovation, has increased adoption in all industries. According to the ERM report, this trend has significant environmental, economic and human rights implications. For example, while digital tools increase productivity, they ​also generate significant electronic waste and increase energy needs, particularly in data ​centres. In addition, ​the adoption of AI carries risks related to prejudice, discrimination and privacy ​breaches.

The physical ​infrastructure that supports digital ​systems, such ​as fiber optic ​cables, cellular towers and satellites, requires enormous resources to produce and maintain. With the proliferation of ​personal devices, this ​infrastructure has led ​to an intensification of environmental problems, including higher levels of emissions and waste.

Economic ​and social effects

From an ​economic point of view, digitisation has created uneven advantages, with some sectors experiencing ​an increase in productivity, while others are caught up in job movements. ​The rapid deployment of automation technologies has raised ​concerns about labour market shocks. However, digital ​innovation has ​also opened up new economic opportunities, particularly in emerging markets.

At the social level, ​digitisation raises ​human rights concerns, particularly regarding data confidentiality and governance. The report highlights the ethical dilemmas posed by the adoption of ​algorithmic decisions, which ​can ​perpetuate inequalities if they are not properly administered. These issues underscore the urgent need for sound regulatory frameworks and transparent communication practices.

Gaps ​in Current Sustainability Reports

IGR standards, widely ​regarded as the reference for sustainability reporting, address ​some of the impacts of digitization, but leave critical gaps ​unanswered. For example, while disclosures on customer privacy (GRI 418) ​and energy consumption (GRI ​302) cover certain ​aspects ​of digitisation, standards are not fully compliant with ​the broader ​implications of AI, data governance and e-waste management.

The ​report calls for updating existing standards and ​developing new guidelines to better understand the unique ​challenges posed by digital technologies. This includes ​the incorporation ​of internationally recognized frameworks, such ​as the European Union Act ​and the OECD Guidelines for Responsible Business Conduct.

Opportunities for ​improvement

Despite these challenges, digitization offers opportunities for transformation to promote sustainability goals. For example, AI analysis can optimize the use of resources, while digital platforms allow better monitoring and reporting of supply chain emissions. However, achieving ​these benefits requires a concerted effort to align digital innovations with sustainability objectives.

The report underlines the importance of collaboration among stakeholders, including business, policy makers and international organizations, to ​establish clear reporting expectations. By bridging the gap between digital innovation and sustainability practices, organizations can ensure that digital transformation supports rather than undermines environmental and social progress.

As digitization evolves, it is clear that its integration into sustainability reporting will be crucial to ​meeting the ​pressing challenges of our time. By updating frameworks to reflect the realities of the digital age, companies can ​better ​navigate the complexities ​of sustainability and promote greater transparency and accountability.