What Are the Common Framework for Sustainability Reporting?

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The UN Sustainable Stock Exchange initiative (SSE) maintains a database of ESG disclosure guidance materials.

As of March 2021, 56 of the 105 SSE members globally have published guidance material for listed companies. The SSE database also identifies mentions of 6 major reporting frameworks in the published guidance material. The 6 frameworks are: Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), International Integrated Reporting Council (IIRC), CDP Global (CDP), Taskforce for Climate-related Financial Disclosure (TCFD), Climate Disclosure Standards Board (CDSB).

ESG Reporting Standards

Global Reporting Initiative (GRI)

GRI

The GRI Standards are modular and interrelated, and designed to help organizations communicate about the impacts they have on the economy, environment and society. Materiality definition is outward focused; it refers to “the impacts of the company on the world around it”.

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Sustainability Accounting Standards Board (SASB)

SASB

SASB Standards enable businesses around the world to identify, manage and communicate financially-material sustainability information to their investors. Materiality definition is inward focused; it revolves around the impacts of sustainability topics on a company’s financial condition or operating performance.

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International Integrated Reporting Council (IIRC)

IIRC

Integrated reporting brings together material information about an organization’s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates. It provides a clear and concise representation of how the organization demonstrates stewardship and how it creates value, now and in the future. At the core of this value creation narrative is the concept of the six capitals. They are financial, manufactured, intellectual, human, social and relationship, and natural.

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Focused Reporting Standards

Task Force on Climate-related Financial Disclosures (TCFD)

TCFD

The TCFD recommendations aim to promote more informed investment, credit, and insurance underwriting decisions through better reporting of climate-related risks and opportunities. The recommendations are structured around four thematic areas that represent core elements of how organizations operate: governance, strategy, risk management, and metrics and targets.

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CDP Global (CDP)

CDP

CDP is a global disclosure system that enables companies, cities, states and regions to measure and manage environmental impacts. Reporting entities complete a questionnaire that focuses on climate change, water and forestry impacts and receive a score ranging from A to D-. CDP regularly provides updates and guidance on the questionnaires and reporting timelines.

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Climate Disclosure Standards Board (CDSB)

CDSB

The CDSB Framework for reporting environmental and climate change information is designed to help organisations prepare and present environmental information in mainstream reports for the benefit of investors. It has been aligned with the TCFD recommendations in April 2018.

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UN Guiding Principles Reporting Framework

The UN Guiding Principles Reporting Framework provides comprehensive guidance for companies to report on human rights issues in line with their responsibility to respect human rights.

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Deciding on which framework to adopt?

Deciding on which ESG reporting framework to adopt largely depends on a company’s specific needs and goals, as well as the expectations and requirements of its stakeholders. Here are some factors to consider when selecting an ESG reporting framework:

Materiality: The framework should help companies identify and report on their material ESG issues, which are the sustainability topics that are most relevant to the company’s business, industry, and stakeholders.
Industry-specificity: Some frameworks, such as SASB, provide industry-specific guidelines for ESG reporting, which can be helpful in identifying and reporting on industry-specific ESG risks and opportunities.
Stakeholder expectations: Companies should consider the expectations and requirements of their stakeholders, such as investors, customers, regulators, and civil society organizations, when selecting an ESG reporting framework.
Reporting maturity: Companies at different stages of ESG reporting maturity may benefit from different frameworks. For example, companies that are just starting to report on their sustainability performance may find it useful to adopt a more general framework like GRI, while companies with more advanced reporting capabilities may benefit from adopting more specific frameworks like SASB or TCFD.
Integration with other reporting frameworks: Companies should also consider how the selected ESG reporting framework integrates with other reporting frameworks they use, such as financial reporting or integrated reporting.

Ultimately, the framework that a company chooses to adopt should be aligned with its sustainability strategy, goals, and values, and should provide a clear and transparent picture of its ESG performance and impacts to its stakeholders.