• Mohit Chandak

Sustainability reporting frameworks


By establishing a set of goals, measuring performance, and managing change, you can make your operations more sustainable (Book recommendation: Measure what Matters by John Doerr). The first step is to choose which reporting framework to follow when it comes to measuring sustainability at your firm. Let's find out what lies inside each framework.


What to expect today:

  • Sustainability reporting frameworks

  • CDP vs. SASB vs. GRI


Sustainability reporting frameworks

Image Source: Photo by Artem Podrez from Pexels

The main aim of sustainability reporting frameworks is to provide a tool to organizations to track their actions and allow themselves to measure against their peers on their progress. Sustainability reporting frameworks may also help organizations set priorities to reach environmental and social impact goals by providing a guideline on what needs to be measured and reported.


As sustainability has come sharply into focus, ESG reporting frameworks have become essential to many organizations. A number of frameworks are popularly used by companies, including CDP, TCFD, GRI, GRESB, SASB and many more.


The four most common frameworks


Implementing a sustainability reporting framework helps companies organize their reporting, and enable investors and other stakeholders to compare the company’s performance against its peers. Yet even companies that have been reporting for years are becoming overwhelmed by the number of frameworks out there.


Here’s a quick overview of the most common sustainability reporting frameworks used in the U.S. :

  • CDP:

  • Focuses solely on environmental reporting and may be the most widely used framework for environmental reporting

  • In 2021, a record-breaking 13,000+ companies disclosed through CDP

  • The Carbon Disclosure Project (CDP) focuses on only one prong of sustainability – environmental impact, particularly related to climate, water and forests. It tends to be most relevant to industries that operate under environmental regulations, and also is often used by cities, states or other government entities.


  • GRI:

  • Primarily used for ESG reporting

  • Around 10,000 companies use this standard

  • Framework consists of 34 possible topic areas and multiple disclosure options within each.

  • Focuses on materiality - encourages organizations to select the topics and disclosures that are most material (matter most) to their business and stakeholders (GRI provides guidance on how to determine material topics as well as how data should be collected)


  • SASB:

  • The Sustainability Accounting Standards Board (SASB) are the preferred reporting standards for the investor community. SASB sets specific standards for each industry, based on the topics that are most relevant to your business.

  • Many of these standards align with GRI disclosures, so companies often report using GRI and include a SASB index at the end of the report.

  • Nearly 1,300 companies now use the SASB standards, according to the Value Reporting Foundation.


  • TCFD:

  • Primarily used for climate risks

  • More than 2,600 organizations use the framework

  • The Task Force on Climate-related Financial Disclosures (TCFD) is a bit newer to the scene, but has grown popular as the financial sector becomes more intentional about considering climate-related risks when investing in a company. This is an important framework to consider if your business has the potential for significant environmental impact, such as manufacturing, energy, transportation, mining and agriculture.

Note that it is completely voluntary for companies to report using any of these frameworks but increasing adoption is setting a precedent for regulatory agencies to take action and standardize these reports.


Source:Standing Partnership, Measurably


CDP vs. SASB vs. GRI

In this section we give a detailed overview of the differences in the three most commonly used frameworks for disclosures.



CDP

SASB

GRI

Founded

2000 (Nonprofit)

2011(Nonprofit)

1997 (NGO)

Companies Reporting

​13k+

1.3k

10k+

Typical Audience

​Investors and customers who are requesting disclosure

​Financial stakeholders and investors

​Broad stakeholder base

Purpose

​Motivate governments and companies to disclose their environmental impacts and take action to reduce them

​Accounting standards to guide the disclosure of financially material sustainability information by companies to their investors

​Help organizations be transparent and take responsibility for their impacts by creating common global standards for reporting that include an independent, multi-stakeholder process

Focus

​External environmental impacts for requesting stakeholders

​Internal impact of ESG risks on financial performance

​External environmental, societal, and economic impacts

Who reports

​Cities and companies responding to investor or customer request; voluntary submission

​Any organization can use the SASB standards

​Most large companies globally use the GRI standards

What is reported?

​EG-Environmental disclosures related to climate change, water security, forests and supply chain.



​E,S,G-Standards to help businesses report on financially material issues across: environmental, social capital, human capital, business model and innovation, and leadership and governance

E,S,G-General disclosures, sector-specific disclosures, and topic-specific disclosures​

Industry specific versions

​High impact industries have additional reporting requirements

​77 industry-specific standards



​40 industry-specific standards coming, starting with high impact sectors

Output used for

​Response to investor or customer inquiry, CDP public scoring

​Company's public ESG report and other (sustainability indices, awards, etc.)

​Company's public ESG report and other (sustainability indices, awards, etc.)

Source: OneTrust


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