Frameworks vs. Standards

1. ESG reporting frameworks provide overarching principles for ESG reporting, while standards offer specific tools and requirements to implement those principles.

2. Frameworks focus on the bigger picture, such as how information is structured and what data is collected, whereas standards are more technical, providing precise metrics for reporting on each ESG topic.

3. Frameworks contextualize information and offer guidance, while standards are more rigid and thorough, with specific criteria and metrics on 'what' should be reported.

Key ESG Frameworks and Standards

1. Task Force on Nature-Related Financial Disclosures (TNFD): TNFD provides a framework for organizations to report on their nature-related dependencies, impacts, risks and opportunities. TNFD takes a "double materiality" approach, requiring companies to assess both their impact on nature and nature's impact on them.

2. Global Reporting Initiative (GRI) Standards: GRI Standards offer a modular, interrelated structure for organizations to report on their economic, environmental, and social impacts. They are the most widely adopted sustainability reporting standards, used by 78% of the world's top 250 companies.

3. Sustainability Accounting Standards Board (SASB) Standards: SASB has developed industry-specific standards focused on financially material sustainability factors. Over 2,800 unique companies have reported using SASB standards since 2020. SASB standards have now been consolidated into the IFRS Foundation's efforts.

4. UN Global Compact: A principle-based framework for businesses to align strategies and operations with principles on human rights, labour, environment, and anti-corruption.

5. CDP (Carbon Disclosure Project): CDP provides a global environmental disclosure system for companies to report on climate change, water security, and deforestation risks and opportunities. The companies ESG performance is assessed and scored (A-F) through online questionnaires on the CDP website.

6. EU Corporate Sustainability Reporting Directive (CSRD): An EU legislation mandating large companies to disclose environmental and social impacts, focusing on the concept of double materiality.

7. IFRS Sustainability Disclosure Standards: Developed by the International Sustainability Standards Board (ISSB), these global baseline standards aim to create a unified set of sustainability disclosures focused on investor needs.

8. SEC Climate Disclosure: This SEC rule enhances and standardizes climate-related disclosures regarding climate risks and GHG emissions that have a material impact for publicly listed companies in the United States.

9. BRSR: Introduced by the Securities and Exchange Board of India (SEBI) in 2021, BRSR requires the top 1,000 listed companies in India to disclose their performance on key environmental, social and governance (ESG) parameters. The framework aims to standardize sustainability reporting, enhance transparency, and enable investors to make informed decisions.
   
   Audits play a vital role in ensuring accurate and complete ESG reporting, fostering trust among stakeholders. By independently verifying ESG data, audits enhance transparency, strengthen stakeholder relationships, and hold organizations accountable for their sustainability commitments. While GRI and CDP recommend audits, frameworks like BRSR, SEC Climate Disclosures and CSRD mandate them.

Choosing the Most Suitable ESG Reporting Framework or Standard for your Organization
Here are the critical considerations when choosing an ESG reporting framework or standard for your organization:

1. Clarify the purpose of your ESG reporting. Choose a framework that aligns well with your specific needs and goals.

2. Assess which frameworks are most appropriate for your industry and company type. Some frameworks are better suited for certain sectors.

3. Consider the credibility and recognition of the ESG reporting framework within your industry and among stakeholders.

4. Evaluate the scope and coverage of ESG factors included in the framework. Ensure it addresses the key issues relevant to your business.

5. Understand the current regulatory landscape in your jurisdiction and choose a framework that meets any applicable ESG disclosure requirements.

A thorough consideration of these factors empowers organizations to make informed decisions when selecting ESG reporting frameworks or standards. This ensures the chosen framework best aligns with their specific needs and effectively communicates their sustainability performance to relevant stakeholders. By doing so, organizations can build trust and transparency, fostering stronger relationships and ensuring broader participation in sustainability efforts.

Conclusion

The domain of ESG reporting continues to evolve rapidly, with the aim of promoting transparency and accountability. New frameworks and standards are emerging to address specific industry needs, company sizes, and local environmental/social challenges. Companies must navigate this complex landscape by adopting a comprehensive approach that aligns with industry-specific guidelines, regional mandates, and stakeholder expectations.

Ultimately, effective ESG reporting is not just a compliance exercise but a strategic imperative that can drive long-term value creation. As the world transitions towards a more sustainable future, companies that prioritize ESG integration, align with global standards, and proactively report on their environmental, social, and governance performance will be better positioned to mitigate risks, capitalize on opportunities, and contribute to a more equitable and resilient society.

Factors like shifting consumer preferences, technological advancements, evolving regulations, and fluctuating economic conditions necessitate continuous adaptation towards a more sustainable world for long-term success. Treeni's domain expertise led approach that includes the resustain^TM SaaS platform and managed services empowers companies with a strategic ESG approach and solution. Treeni’s consultants demystify and streamlines ESG reporting, by combining resustain^TM with managed services to provide actionable insights to drive continuous performance improvements aligned to business-critical goals. This fosters stakeholder confidence, strengthens long-term growth, and positions businesses for success. Contact Treeni to explore how we can elevate your ESG performance.

References

[1] - https://www.workiva.com/en-in/resources/ESG-reporting-101-what-you-need-know

[2] - https://www.wolterskluwer.com/en/expert-insights/the-abcs-of-ESG-reporting

[3] - https://www.pwc.com/sk/en/environmental-social-and-corporate-governance-esg/esg-reporting.html

[4] - https://www.techtarget.com/sustainability/definition/ESG-reporting

[5] - https://www.thecorporategovernanceinstitute.com/insights/guides/whats-the-difference-between-ESG-reporting-standards-and-frameworks/

[6] - https://www.azeusconvene.com/ESG/articles/the-ESG-reporting-frameworks-and-standards-explained

[7] - https://iimpcoll.com/content/what-are-esg-standards-frameworks

[8] - https://www.globalreporting.org/media/jxkgrggd/gri-perspective-ESG-standards-frameworks.pdf

[9] - https://www.wolterskluwer.com/en/expert-insights/leading-ESG-reporting-requirements-quick-guide

[10] - https://www.taxmann.com/post/blog/guide-to-ESG-in-india

[11] - https://www.greenstoneplus.com/resources/frameworks-standards/list-of-key-ESG-reporting-frameworks-and-standards

[12] - https://www.techtarget.com/sustainability/feature/Top-ESG-reporting-frameworks-explained-and-compared

[13] - https://novisto.com/list-ESG-reporting-framework-standard/

[14] - The Taskforce on Nature-related Financial Disclosures (tnfd.global)

[15] - https://www.ey.com/en_in/climate-change-sustainability-services/brsr-reporting-and-the-evolving-ESG-landscape-in-india

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