ESG Reporting Frameworks and Standards

The Reporting Landscape

Organizations seeking to report on ESG performance face a complex landscape of frameworks, standards, and guidelines. Understanding this landscape is essential for effective reporting.

Why Multiple Frameworks Exist

The proliferation of ESG frameworks reflects several factors:

Different purposes: Some frameworks focus on investor needs, others on broader stakeholder interests, others on specific topics like climate.

Different stakeholders: Investors, regulators, customers, and civil society have different information needs.

Historical evolution: Many frameworks emerged independently to address specific gaps.

Geographic variation: Different regions have developed different approaches.

The good news: there's now significant convergence effort, with the ISSB working to create a global baseline for sustainability disclosure.

Major Frameworks Overview

Global Reporting Initiative (GRI)

Purpose: Comprehensive sustainability reporting for all stakeholders

Founded: 1997

Approach: The most widely used sustainability reporting framework globally. GRI Standards provide a modular structure covering universal standards, sector standards, and topic standards.

Key Features:

Broad stakeholder orientation (not just investors)
Comprehensive coverage of E, S, and G topics
Materiality based on impacts on economy, environment, and people
Sector-specific standards for high-impact industries

Best For: Organizations seeking comprehensive sustainability reporting for diverse stakeholders

SASB Standards (now part of IFRS Foundation)

Purpose: Industry-specific sustainability disclosure for investors

Founded: 2011 (merged into IFRS Foundation 2022)

Approach: Developed standards for 77 industries identifying financially material sustainability topics and metrics.

Key Features:

Investor-focused
Industry-specific (different metrics for different sectors)
Financially material topics only
Quantitative metrics emphasized

Best For: Companies focusing on investor-relevant sustainability disclosure

Task Force on Climate-related Financial Disclosures (TCFD)

Purpose: Climate risk disclosure

Founded: 2017 (by Financial Stability Board)

Approach: Recommendations for disclosing climate-related financial risks and opportunities across four pillars.

Key Features:

Four pillars: Governance, Strategy, Risk Management, Metrics & Targets
Scenario analysis recommendations
Physical and transition risk disclosure
Widely adopted and increasingly required

Best For: Climate-specific disclosure, now effectively a baseline requirement

CDP (formerly Carbon Disclosure Project)

Purpose: Environmental disclosure platform

Founded: 2000

Approach: Operates a global disclosure system through questionnaires on climate change, water security, and deforestation.

Key Features:

Questionnaire-based disclosure
Scoring system (A-D) for transparency and performance
Largest environmental database globally
Used by investors and supply chain programs

Best For: Companies responding to investor or customer requests for environmental disclosure

International Sustainability Standards Board (ISSB)

Purpose: Global baseline for sustainability disclosure

Founded: 2021 (by IFRS Foundation)

Approach: Developing global standards for sustainability-related financial disclosures, building on SASB and TCFD.

Key Features:

Investor-focused
Global baseline intended for adoption/adaptation by regulators
Built on SASB and TCFD foundations
IFRS S1 (general requirements) and IFRS S2 (climate) issued in 2023

Best For: Companies preparing for convergence toward global standards

Regional Regulatory Frameworks

EU Corporate Sustainability Reporting Directive (CSRD)

Scope: Large EU companies and listed SMEs, plus non-EU companies with significant EU operations

Requirements:

Double materiality (impact and financial materiality)
Detailed disclosure on environment, social, governance
Digital tagging (XBRL)
Third-party assurance required

Timing: Phased implementation starting 2024

Standards: European Sustainability Reporting Standards (ESRS)

SEC Climate Disclosure Rules (United States)

Scope: SEC-registered companies

Requirements:

Scope 1, 2, and (for some companies) Scope 3 emissions
Climate risk disclosure
Climate-related financial statement impacts
Governance of climate risks

Status: Final rules issued, though subject to legal challenges

Other Jurisdictions

Many other jurisdictions are implementing or considering sustainability disclosure requirements:

UK: TCFD-aligned disclosure required for large companies
Singapore: Climate disclosure requirements phasing in
Japan: Climate disclosure requirements expanding
Australia: Climate disclosure consultation underway
Canada: CSA guidance on climate disclosure

Framework Alignment and Convergence

The Convergence Trend

Major developments are reducing framework fragmentation:

ISSB: The ISSB aims to create a global baseline that jurisdictions can adopt or build upon. SASB Standards are now under ISSB.

TCFD: TCFD recommendations have become the de facto standard for climate disclosure, incorporated into most other frameworks.

GRI-ISSB Collaboration: GRI and ISSB have agreed to coordinate, recognizing different but complementary purposes.

Practical Implications

For reporting companies:

TCFD climate disclosure is increasingly non-negotiable
ISSB standards will likely become the investor-focused baseline
GRI remains relevant for comprehensive stakeholder reporting
Regional requirements (especially CSRD) may exceed global baselines

Choosing Your Framework Approach

Single vs. Multiple Frameworks

Most companies reporting comprehensively use multiple frameworks:

TCFD for climate (often required)
GRI for comprehensive sustainability reporting
SASB/ISSB for investor-focused metrics
CDP for environmental disclosure responses

Alignment Strategy

Rather than treating frameworks separately:

Map overlapping requirements across frameworks
Create a unified data collection process
Use common data to populate multiple reports
Maintain a framework crosswalk showing where requirements are addressed

Starting Point Recommendations

Early-stage reporters: Start with TCFD and GRI's most relevant standards

Investor-focused companies: Prioritize ISSB/SASB and TCFD

EU-exposed companies: Prepare for CSRD/ESRS requirements

Supply chain participants: Respond to CDP and customer-specific requirements

Implementation Considerations

Resource Requirements

Framework implementation requires:

Staff time for understanding requirements
Data collection systems and processes
External expertise (often)
Assurance costs (increasingly required)

Timeline Expectations

Building comprehensive ESG reporting capability typically takes:

Year 1: Foundation—framework selection, gap analysis, initial data collection
Year 2: Development—improved data quality, expanded disclosure, process refinement
Year 3+: Maturation—comprehensive reporting, assurance, continuous improvement

Common Challenges

Data availability and quality
Framework complexity and interpretation
Cross-functional coordination
Keeping pace with evolving requirements

Key Takeaways

Multiple ESG frameworks exist with different purposes and audiences
Major frameworks include GRI, SASB/ISSB, TCFD, CDP, and regional requirements like CSRD
Convergence is underway, with ISSB creating a global baseline
Most companies use multiple frameworks
Implementation requires significant resources and multi-year commitment
Framework selection should align with stakeholder priorities and regulatory requirements

Next Module

Module 3 dives deep into environmental metrics and reporting—the "E" in ESG—covering greenhouse gas emissions, energy, water, waste, and other environmental factors.

ESG Reporting Frameworks and Standards

The Reporting Landscape

Organizations seeking to report on ESG performance face a complex landscape of frameworks, standards, and guidelines. Understanding this landscape is essential for effective reporting.

Why Multiple Frameworks Exist

The proliferation of ESG frameworks reflects several factors:

Different purposes: Some frameworks focus on investor needs, others on broader stakeholder interests, others on specific topics like climate.

Different stakeholders: Investors, regulators, customers, and civil society have different information needs.

Historical evolution: Many frameworks emerged independently to address specific gaps.

Geographic variation: Different regions have developed different approaches.

The good news: there's now significant convergence effort, with the ISSB working to create a global baseline for sustainability disclosure.

Major Frameworks Overview

Global Reporting Initiative (GRI)

Purpose: Comprehensive sustainability reporting for all stakeholders

Founded: 1997

Approach: The most widely used sustainability reporting framework globally. GRI Standards provide a modular structure covering universal standards, sector standards, and topic standards.

Key Features:

Broad stakeholder orientation (not just investors)
Comprehensive coverage of E, S, and G topics
Materiality based on impacts on economy, environment, and people
Sector-specific standards for high-impact industries

Best For: Organizations seeking comprehensive sustainability reporting for diverse stakeholders

SASB Standards (now part of IFRS Foundation)

Purpose: Industry-specific sustainability disclosure for investors

Founded: 2011 (merged into IFRS Foundation 2022)

Approach: Developed standards for 77 industries identifying financially material sustainability topics and metrics.

Key Features:

Investor-focused
Industry-specific (different metrics for different sectors)
Financially material topics only
Quantitative metrics emphasized

Best For: Companies focusing on investor-relevant sustainability disclosure

Task Force on Climate-related Financial Disclosures (TCFD)

Purpose: Climate risk disclosure

Founded: 2017 (by Financial Stability Board)

Approach: Recommendations for disclosing climate-related financial risks and opportunities across four pillars.

Key Features:

Four pillars: Governance, Strategy, Risk Management, Metrics & Targets
Scenario analysis recommendations
Physical and transition risk disclosure
Widely adopted and increasingly required

Best For: Climate-specific disclosure, now effectively a baseline requirement

CDP (formerly Carbon Disclosure Project)

Purpose: Environmental disclosure platform

Founded: 2000

Approach: Operates a global disclosure system through questionnaires on climate change, water security, and deforestation.

Key Features:

Questionnaire-based disclosure
Scoring system (A-D) for transparency and performance
Largest environmental database globally
Used by investors and supply chain programs

Best For: Companies responding to investor or customer requests for environmental disclosure

International Sustainability Standards Board (ISSB)

Purpose: Global baseline for sustainability disclosure

Founded: 2021 (by IFRS Foundation)

Approach: Developing global standards for sustainability-related financial disclosures, building on SASB and TCFD.

Key Features:

Investor-focused
Global baseline intended for adoption/adaptation by regulators
Built on SASB and TCFD foundations
IFRS S1 (general requirements) and IFRS S2 (climate) issued in 2023

Best For: Companies preparing for convergence toward global standards

Regional Regulatory Frameworks

EU Corporate Sustainability Reporting Directive (CSRD)

Scope: Large EU companies and listed SMEs, plus non-EU companies with significant EU operations

Requirements:

Double materiality (impact and financial materiality)
Detailed disclosure on environment, social, governance
Digital tagging (XBRL)
Third-party assurance required

Timing: Phased implementation starting 2024

Standards: European Sustainability Reporting Standards (ESRS)

SEC Climate Disclosure Rules (United States)

Scope: SEC-registered companies

Requirements:

Scope 1, 2, and (for some companies) Scope 3 emissions
Climate risk disclosure
Climate-related financial statement impacts
Governance of climate risks

Status: Final rules issued, though subject to legal challenges

Other Jurisdictions

Many other jurisdictions are implementing or considering sustainability disclosure requirements:

UK: TCFD-aligned disclosure required for large companies
Singapore: Climate disclosure requirements phasing in
Japan: Climate disclosure requirements expanding
Australia: Climate disclosure consultation underway
Canada: CSA guidance on climate disclosure

Framework Alignment and Convergence

The Convergence Trend

Major developments are reducing framework fragmentation:

ISSB: The ISSB aims to create a global baseline that jurisdictions can adopt or build upon. SASB Standards are now under ISSB.

TCFD: TCFD recommendations have become the de facto standard for climate disclosure, incorporated into most other frameworks.

GRI-ISSB Collaboration: GRI and ISSB have agreed to coordinate, recognizing different but complementary purposes.

Practical Implications

For reporting companies:

TCFD climate disclosure is increasingly non-negotiable
ISSB standards will likely become the investor-focused baseline
GRI remains relevant for comprehensive stakeholder reporting
Regional requirements (especially CSRD) may exceed global baselines

Choosing Your Framework Approach

Single vs. Multiple Frameworks

Most companies reporting comprehensively use multiple frameworks:

TCFD for climate (often required)
GRI for comprehensive sustainability reporting
SASB/ISSB for investor-focused metrics
CDP for environmental disclosure responses

Alignment Strategy

Rather than treating frameworks separately:

Map overlapping requirements across frameworks
Create a unified data collection process
Use common data to populate multiple reports
Maintain a framework crosswalk showing where requirements are addressed

Starting Point Recommendations

Early-stage reporters: Start with TCFD and GRI's most relevant standards

Investor-focused companies: Prioritize ISSB/SASB and TCFD

EU-exposed companies: Prepare for CSRD/ESRS requirements

Supply chain participants: Respond to CDP and customer-specific requirements

Implementation Considerations

Resource Requirements

Framework implementation requires:

Staff time for understanding requirements
Data collection systems and processes
External expertise (often)
Assurance costs (increasingly required)

Timeline Expectations

Building comprehensive ESG reporting capability typically takes:

Year 1: Foundation—framework selection, gap analysis, initial data collection
Year 2: Development—improved data quality, expanded disclosure, process refinement
Year 3+: Maturation—comprehensive reporting, assurance, continuous improvement

Common Challenges

Data availability and quality
Framework complexity and interpretation
Cross-functional coordination
Keeping pace with evolving requirements

Key Takeaways

Multiple ESG frameworks exist with different purposes and audiences
Major frameworks include GRI, SASB/ISSB, TCFD, CDP, and regional requirements like CSRD
Convergence is underway, with ISSB creating a global baseline
Most companies use multiple frameworks
Implementation requires significant resources and multi-year commitment
Framework selection should align with stakeholder priorities and regulatory requirements

Next Module

Module 3 dives deep into environmental metrics and reporting—the "E" in ESG—covering greenhouse gas emissions, energy, water, waste, and other environmental factors.