In recent years, ESG (Environmental, Social, and Governance) reporting has gained significant traction as organizations strive to demonstrate their commitment to sustainability and responsible business practices.
As the demand for transparent ESG disclosures grows, several frameworks and standards have emerged to guide companies in reporting their ESG performance. In this write-up, we will dive into the alphabet soup of ESG reporting and shed light on prominent players: the GRI, TCFD, the ISSB, IFRS and more. So, let’s decode these acronyms and understand their significance in the world of sustainable reporting.
- GRI (Global Reporting Initiative): The GRI provides a widely used framework for sustainability reporting. Its guidelines help organizations report on their economic, environmental, and social impacts.
- SASB (Sustainability Accounting Standards Board): SASB focuses on industry-specific reporting standards, providing guidance for companies to disclose financially material sustainability information relevant to their specific sector.
- TCFD (Task Force on Climate-related Financial Disclosures): The TCFD focuses on climate-related risks and opportunities, providing recommendations for companies to disclose climate-related financial information in their mainstream financial filings.
- ISSB: The International Sustainability Standards Board (ISSB) has emerged as a key global initiative under the umbrella of the International Financial Reporting Standards (IFRS) Foundation. The ISSB aims to develop comprehensive sustainability reporting standards that can be universally adopted by companies worldwide. By focusing on sustainability-related financial disclosures, the ISSB seeks to bridge the gap between financial and non-financial reporting, ensuring that sustainability information is integrated into mainstream financial reporting processes.
- IFRS: The International Financial Reporting Standards (IFRS) are widely recognized accounting standards developed by the International Accounting Standards Board (IASB). While the IFRS traditionally centered around financial reporting, the growing significance of sustainability has prompted the IFRS Foundation to expand its scope. Recognizing the need to integrate sustainability-related disclosures into financial statements, the IFRS Foundation, through its ISSB initiative, is working towards developing sustainability reporting standards that complement the existing financial reporting framework.
- CDP (formerly Carbon Disclosure Project): CDP is one of the leading platforms for environmental reporting and disclosure. Originally focused on carbon emissions, CDP has expanded to cover a broad range of environmental indicators. CDP’s standardized questionnaire provides a comprehensive framework for reporting on greenhouse gas emissions, water management, deforestation, and more. Through CDP, organizations can benchmark their performance, identify areas for improvement, and demonstrate their commitment to sustainability.
- ISO 14064: It is an international standard developed by the International Organization for Standardization (ISO) that specifically addresses greenhouse gas (GHG) emissions accounting and verification. It provides a consistent and transparent methodology for organizations to quantify, monitor, report, and verify their GHG emissions.
- SBTi: The Science-Based Targets Initiative is a collaborative effort between CDP (formerly Carbon Disclosure Project), the United Nations Global Compact (UNGC), World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). SBTi provides a framework for companies to set emission reduction targets aligned with climate science. By adopting science-based targets, organizations commit to reducing their carbon footprint in line with the goals of the Paris Agreement, helping to mitigate the impacts of climate change.
- Race to Zero: The Race to Zero campaign, convened by the United Nations Framework Convention on Climate Change (UNFCCC), aims to rally businesses, cities, regions, and investors to take action on climate change. Participants in the campaign commit to achieving net-zero emissions by 2050 at the latest. The campaign provides a platform for organizations to join forces, share best practices, and collaborate on solutions to accelerate the transition to a low-carbon economy.
ESG reporting has become a crucial aspect of corporate transparency and accountability. The alphabet soup of frameworks offers organizations standardized methodologies and guidelines to report their environmental, social, and governance performance. By adhering to these frameworks, companies can enhance their credibility, meet stakeholder expectations, and drive positive change towards a more sustainable and responsible future. As the landscape continues to evolve, organizations must stay updated with the latest developments in these frameworks.