ESGiQ Right Arrow ESG Framework Overview Part 1: Broad Frameworks

ESG Framework Overview Part 1: Broad Frameworks

calender Last Updated: May 12, 2021

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There are numerous ESG-related frameworks that have evolved over the years—each with their own spin and metrics around ESG. By navigating, assessing, and comparing ESG frameworks and standards, organizations can build their ESG programs that their employees, customers, as well as with investors and capital markets’ want to know about. 

While these frameworks are non-binding, they represent sets of best practices which can assist organizations comply with binding, legal requirements in jurisdictions around the world, such as the EU Non-Financial Reporting Directive and the EU Taxonomy Regulation. These frameworks include: 

  • GRI – Global Reporting Initiative  
  • SASB – Sustainability Accounting Standards Board  
  • IIRC – International Integrated Reporting Council  
  • CDP – Carbon Disclosure Project  
  • TCFD – Task Force on Climate-related Financial Disclosures  
  • CDSB – Climate Disclosure Standards Boards  
  • WEF Stakeholder Metrics 

This first part will look at broader frameworks that cover the gamut of metrics across environmental, social, and governance. These are becoming quite popular, especially outside of financial services, where organizations want a fuller look of ESG data. 

GRI (Global Reporting Initiative) – Summary 

Published by the Global Reporting Initiative (‘GRI’), GRI standards represent global best practice for public reporting on a range of economic, environmental and social impacts. The standards are modular and interrelated, as well as designed primarily to be used as a set, to prepare a sustainability report focused on material topics. They include three universal standards (to be used by any organization preparing a sustainability report), but also several topic-specific standards. 

The Global Reporting Initiative (‘GRI’) is an independent international organization providing businesses and other organizations with a global common language to communicate their impacts. through standards for sustainability reporting. 

The GRI Standards represent global best practice for reporting publicly on a range of economic, environmental and social impacts. The standards are modular and interrelated, as well as designed primarily to be used as a set, to prepare a sustainability report focused on material topics. More specifically, they include three universal standards (to be used by any organization preparing a sustainability report), but also several topic-specific standards. 

International Integrated Reporting Council – Summary 

Published by the International Integrated Reporting Council (‘IIRC’), the International Integrated Reporting Framework aims to accelerate the adoption of integrated reporting across the world. Among the scopes of integrated reporting, the framework stresses the importance of enhancing accountability and stewardship for the broad base of capitals (financial, manufactured, intellectual, human, social and relationship, and natural) and promote understanding of their interdependencies. 

The International Integrated Reporting Council (‘IIRC’), a global coalition of regulators, investors, companies, standard setters, the accounting profession, academia and NGOs, presents the International Integrated Reporting Framework, last revised in January 2021, a standard aimed to accelerate the adoption of integrated reporting across the world. Among the scopes of integrated reporting, the framework stresses the importance of enhancing accountability and stewardship for the broad base of capitals (financial, manufactured, intellectual, human, social and relationship, and natural) and promote understanding of their interdependencies.  

World Economic Forum Capitalism Stakeholder Metrics – Summary 

World Economic Forum  released the Capitalism Stakeholder Metrics in 2020 after consulting with leading organizations in this area. The World Economic Forum is committed to improving the state of the world, is the International Organization for Public-Private Cooperation. 

The Forum engages the foremost political, business and other leaders of society to shape global, regional and industry agendas. 

The result of this process is 21 core and 34 expanded metrics and disclosures: 

  • Core metrics: A set of 21 more-established or critically important metrics and disclosures. These are primarily quantitative metrics for which information is already being reported by many firms (albeit often in different formats) or can be obtained with reasonable effort. They focus primarily on activities within an organization’s own boundaries. 
  • Expanded metrics: A set of 34 metrics and disclosures that tend to be less well-established in existing practice and standards and have a wider value chain scope or convey impact in a more sophisticated or tangible way, such as in monetary terms. They represent a more advanced way of measuring and communicating sustainable value creation. 

The recommended metrics are organized under four pillars that are aligned with the SDGs and principal ESG domains: Principles of Governance, Planet, People and Prosperity. They are drawn wherever possible from existing standards and disclosures, with the aim of amplifying the rigorous work already done by standard-setters rather than reinventing the wheel. The metrics have been selected for their universality across industries and business models, but the intention is not to replace relevant sector- and company-specific indicators. Companies are encouraged to report against as many of the core and expanded metrics as they find material and appropriate, on the basis of a “disclose or explain” approach. 

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