Frameworks For ESG Reporting

Photo by Lukas Blazek on Unsplash

By Gayaneh Giragol

More companies nowadays are moving towards investing in sustainable goals when it comes to Environmental, Social and Governance Sustainability. At its core, it is influencing positive change which includes smart investing.

ESG is becoming an essential part of companies.

According to Mike Walters, CEO of USA Financial, “ESG is important for the obvious impactful reasons relating to each stakeholder, but it also can be used to identify the strength and sustainability of the company itself”.

Based on the company’s industry and operations, they can adopt a suitable framework for ESG reporting. According to RIVERON, SASB and CDP are the most frequently adopted frameworks. 

Here below are the top 5 most adopted frameworks:

Frameworks Adopted Among the S&P 500 (2022) RIVERON

Sustainability Accounting Standards Board (SASB). SASB Standards identify the subset of sustainability issues most relevant to financial performance in each of 77 industries. It is relatively easy to adopt due to its limited scope and industry-specific consideration of financially material topics.

CDP. The Climate Disclosure Project is a framework that is responded to by filling out a complex questionnaire on the group’s website. CDP is a not-for-profit charity that runs the global disclosure system.

Task Force on Climate-related Financial Disclosures (TCFD). TCFD disclosures continue to gain popularity as organizations prepare to comply with the forthcoming SEC rule which largely mirrors this framework on issues related to climate-related financial disclosures.

The Global Reporting Initiative (GRI). GRI created the first sustainability reporting framework in the late 1990s and measures the impacts a company has on the environment, society, and the economy. Ratings are based on a voluntary issuer questionnaire.

UN Sustainable Development Goals (SDGs). The UN Sustainable Development Goals (SDGs) consist of 17 goals that aim to be achieved by 2030 and are meant to mobilize countries and organizations to tackle climate change, end poverty, and reduce inequality.

Forbes states that with more data and push-button technology becoming available, investors can cross compare their choices in real time and update allocations within minutes.