Modern companies have to implement business sustainability in practice and disclose their impact transparently. ESG frameworks and standards allow the organisation to shape their sustainability efforts and communicate effectively with stakeholders. The tools required for ESG performance measurement include frameworks like the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and Task Force on Climate-related Financial Disclosures (TCFD). Additionally, software solutions for ESG data tracking, carbon accounting platforms, and lifecycle assessment tools enable businesses to address the emerging demand for accountability and transparency
The following article describes the difference between ESG frameworks and standards, looks deep into the most popular options available today, and throws light on how to choose the right ESG frameworks and standards reporting for your organisation.
What Is the Difference Between ESG Frameworks and Standards?
Understanding the difference between ESG frameworks and standards is important as organisations start to integrate sustainability reporting.
ESG Frameworks:
Frameworks are general guidelines that enable the organisation to identify the proper ESG strategies as well as reporting considerations. They present key principles without defining specific metrics or methodologies.
Examples:
- Global Reporting Initiative (GRI)
- Task Force on Climate-related Financial Disclosures (TCFD)
ESG Standards:
Standards are detailed, quantifiable descriptions of what is to be measured in assessing ESG performance. They define the ways a company should collect, calculate, and report data.
Examples:
- Sustainability Accounting Standards Board (SASB) Standards
- ISO 26000 (Guidance on Social Responsibility)
It is only when frameworks and standards combine that organisations can ensure comprehensive reporting and consistent measurement of their ESG initiatives.
What Are the Key ESG Frameworks and Standards?
Practitioners can follow nine of the most accepted ESG standards and frameworks that may eventually guide organisations in achieving sustainability:
- Global Reporting Initiative (GRI): It develops detailed sustainability reports that are applicable universally.
- Task Force on Climate-related Financial Disclosures (TCFD): Focuses on disclosure of climate-related financial risks.
- Sustainability Accounting Standards Board (SASB): This body provides industry-specific standards for ESG reporting.
- Integrated Reporting Framework (IR): A framework that incorporates both financial and nonfinancial disclosure in an integrated form within one report.
- CDP (formerly Carbon Disclosure Project): It considers mainly those themes having to do with environmental impacts, such as carbon emissions and water security.
- ISO 26000: Offers guidelines on corporate social responsibility practices.
- UN Sustainable Development Goals (SDGs): Universal goals for the encouragement of sustainability and social equity.
- Climate Disclosure Standards Board (CDSB): Its focus is on environmental and climate-related information in annual reports.
- GRI Standards: A widely adopted set of detailed reporting standards under the broader GRI framework.
These various ESG frameworks and standards deal with different aspects of sustainability, thus allowing businesses to adapt more to their specific needs and the demands of the particular industry they belong to.
How to Choose the Right ESG Reporting Framework or Standard for Your Organisation?
The choice of the right ESG reporting framework or standard would depend on what your organisation does because of its industry and the expectations of its stakeholders.
Considerations for Selection:
- Industry Relevance: Industry-specific standards, which Sustainability Accounting Standards Board (SASB) is leading, help make reporting current and relevant.
- Prioritising Stakeholders: Make a clear distinction between the ES aspects that are most relevant to each of your various stakeholders. For instance, investors may pay more attention to disclosures about climate change that are based on TCFD.
- Regulatory Requirements: Make the selection in line with the emerging ESG frameworks and standards reporting required from regulators in your jurisdiction.
- Organisational objectives: What would you like to achieve? Is your principle related to risk management, transparency, or sustainability performance?
- Resource availability: Ensure that one has the relevant internal resources and skills to operationalise the framework or standard chosen.
It helps organisations new to ESG reporting generate the knowledge and ability needed to apply those frameworks by pursuing ESG certification courses.
Curious About Key ESG Frameworks and Standards?
Conclusion
When appropriate ESG frameworks and standards are implemented, business organizations will be held accountable and their expectations will be met, all while meeting regulatory requirements. Being aware of the differences, identifying diverse popular options, and making judicious choices in the selection of tools best fitted in the context will contribute to building sound ESG reporting regimes.
Therefore, with the increasing demand for transparency, the adoption of effective ESG reporting frameworks facilitates compliance. Transparency strengthens an organization’s reputation by building trust with stakeholders, which in turn supports long-term sustainability by fostering investor confidence, customer loyalty, and responsible business practices.
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FAQs on ESG Frameworks and Standards
What are the ESG standards and frameworks?
ESG standards are fixed, measurable parameters assisting in quantifying ESG performance, while ESG frameworks give general guidance on how a company structures ESG reporting and strategies.
What are the Big 4 ESG standards?
Here, the “big 4” standards considered highly comprehensive tools in ESG reporting and disclosure are GRI, SASB, TCFD, and CDP.
What are the big 3 ESG reporting frameworks?
The ESG “big 3” frameworks commonly consist of GRI, TCFD, and the Integrated Reporting Framework.
Which ESG framework is the most popular?
With its universal applicability and detailed guidelines, the GRI can be said to be one of the most popular ESG reporting frameworks.
How many ESG standards are there?
There are numerous ESG standards, including SASB, GRI, and ISO, each tailored to different industries and reporting objectives. These standards provide specific guidelines to measure and disclose ESG performance effectively.
