Capital markets drive the flow of capital across the globe. But with that power comes responsibility—and scrutiny. To help bring transparency and accountability to this high-impact sector, the Global Reporting Initiative (GRI) has released a draft Sector Standard for Capital Markets. This is a tailored framework that zeroes in on how financial market actors influence sustainability outcomes—not just through what they fund, but how they operate.
Why capital markets need a sector-specific GRI standard
The capital markets sector is not a single entity—it’s an interconnected system of:
- Asset owners (e.g., pension funds, sovereign wealth funds)
- Asset managers (mutual funds, private equity, hedge funds)
- Market infrastructure providers (stock exchanges, clearing houses)
- ESG data and ratings providers (index compilers, research firms)
- Credit rating agencies
These actors do not have direct operational impacts like manufacturers or utilities, but they influence sustainability outcomes through financial decisions—what gets financed, rated, traded, or listed.
The new GRI draft recognizes this indirect influence and aims to provide a consistent, transparent structure for disclosing:
- How decisions impact people and the planet
- The methodologies used to assess ESG criteria
- The extent to which capital market firms promote—or hinder—sustainable development
Structure of the standard: What’s inside
This GRI Sector Standard follows the modular approach used in other sector standards and is meant to be used alongside the GRI Universal Standards (2021). The disclosures fall into three main categories:
1. Sector context
This section requires firms to explain:
- Their role in the capital markets value chain
- The financial instruments they offer or manage (e.g., equities, bonds, derivatives)
- The markets and geographies they operate in
- Their stewardship responsibilities and approach to long-term value creation
2. Sector-specific impacts, risks, and opportunities
Here, organizations must disclose:
- Actual and potential impacts their business decisions have on the economy, environment, and society
- How they use data, indices, benchmarks, and ratings to shape those impacts
- How sustainability risks are integrated into investment processes, product design, and capital allocation
Example disclosure requirement:
“Describe how ESG factors are integrated into investment analysis and decision-making, including voting behavior and stewardship activities.”
3. Recommended disclosures and metrics
The standard outlines recommendations tailored to sub-sectors (e.g., asset managers vs. stock exchanges). It includes qualitative and quantitative metrics, such as:
- Percentage of assets under management screened for ESG criteria
- Number of companies engaged on sustainability issues
- Share of revenue from sustainable investment products
- ESG-related voting outcomes
- Transparency of ESG methodologies and client communications
Example disclosure requirement for rating agencies and data providers:
“Disclose the process for developing ESG ratings and whether rated entities are given the opportunity to review or respond.”
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.
Alignment with international frameworks
The GRI draft ensures interoperability with other major initiatives:
- ISSB (International Sustainability Standards Board): Aligns with investor-relevant financial disclosures
- Task Force on Climate-related Financial Disclosures (TCFD): Builds on climate governance, strategy, and risk disclosures
- EU Corporate Sustainability Reporting Directive (CSRD): Helps meet dual materiality and taxonomy requirements
- Principles for Responsible Investment (PRI): Enhances transparency around stewardship and ESG integration
Final thoughts
Capital markets have the power to accelerate—or stall—sustainable transformation across every sector. By defining clearer standards for transparency and accountability, GRI’s new draft could become a game-changer for how sustainability is embedded into financial systems.
For firms that want to lead on ESG, this isn’t just another reporting framework—it’s a roadmap to more responsible and resilient markets.
