ESG Reporting Frameworks

• The importance of corporate disclosure on ESG factors
• Standard setters and international goals to promote sustainable development at different levels
• Materiality and stakeholders approach

ESG reporting stands for the collection, measurement, and disclosure of ESG components of a company’s performance. As for ESG, the metrics include environmental, social, and governance standards reported by companies. ESGs are included on many reports such as corporate social responsibility reports, sustainability reports, or integrated annual reports. In recent years, these reports have become more and more important as ESG disclosure is increasingly integrated  with financial reports.

Standard- setters and related efforts

In 2011,  the Sustainable Accounting Standards Board (SASB) was launched to help companies disclose material and decision-relevant information to investors in a cost-effective way. SASB has also developed a Materiality Map with industry-specific standards for 79 industries across 11 sectors.

The Global Reporting Initiative (GRI) was the first and most widely adopted global standards for sustainability reporting. The GRI looks at a broad range of stakeholders, in order to help companies decide what to report on. By defining core metrics and comprehensive standards, GRI integrates a series of company reports. It is updated according to operational changes from regulations to company activities.

The World Economic Forum’s International Business Council (WEF IBC) recommends a set of 22 metrics and reporting requirements based on already existing standards and disclosures such as SASB and GRI. The combined frameworks serve to promote convergence and help companies around the world to improve transparency and consistency. It is currently in a stress-test phase.

International goals and guidance

In 2015 the United Nations created 17 Sustainable Development Goals, or SDGs. These 17 defined goals run through 2030 and are supported by 193 countries, and many smaller entities across the world. 

The Task Force on Climate-related Financial Disclosures (TCFD) was established by the Financial Stability Board in 2015 to promote more effective climate-related disclosures. TCFD focuses on the financial impacts of climate-related risks and opportunities of an organization.