ESG Reporting Frameworks: A Comparison Guide

As investor demand for environmental, social, and governance (ESG) information continues to grow, public companies face the challenge of navigating multiple reporting frameworks. This guide compares the major ESG reporting frameworks to help IR professionals select the right approach for their organization.

The ESG Reporting Landscape

The proliferation of ESG reporting frameworks has created a complex landscape for public companies. Each framework has its own focus, methodology, and audience, making it challenging to determine which is most appropriate for your organization's needs.

Major ESG Reporting Frameworks

Global Reporting Initiative (GRI)

Focus: Comprehensive sustainability reporting across environmental, social, and economic impacts

Best for: Companies seeking to report on their broader sustainability impacts to a wide range of stakeholders

Key characteristics: Modular, flexible standards with sector-specific guidance; focuses on materiality from a multi-stakeholder perspective

Sustainability Accounting Standards Board (SASB)

Focus: Industry-specific standards focused on financial materiality

Best for: Companies looking to communicate financially material sustainability information to investors

Key characteristics: 77 industry-specific standards; focuses on issues most likely to impact financial performance

Task Force on Climate-related Financial Disclosures (TCFD)

Focus: Climate-related risks and opportunities

Best for: Companies seeking to disclose climate-related financial risks and opportunities

Key characteristics: Structured around governance, strategy, risk management, and metrics & targets; forward-looking scenario analysis

International Sustainability Standards Board (ISSB)

Focus: Global baseline of sustainability disclosures for capital markets

Best for: Companies seeking a consolidated approach to sustainability reporting for investors

Key characteristics: Building on TCFD and SASB; focus on enterprise value; aims to reduce fragmentation in reporting standards

Framework Selection Considerations

When selecting an ESG reporting framework, consider the following factors:

• Audience: Who are your primary stakeholders for ESG information? Investors, customers, employees, regulators?
• Industry context: Which frameworks are most commonly used in your industry?
• Geographic requirements: Are there regional reporting requirements you need to address?
• Resource constraints: What is your capacity for data collection and reporting?
• Strategic alignment: Which framework best aligns with your sustainability strategy?

The Multi-Framework Approach

Many companies are adopting a multi-framework approach, using different frameworks to address different stakeholder needs. For example:

• SASB for investor-focused, financially material disclosures
• GRI for comprehensive sustainability reporting to all stakeholders
• TCFD for climate-specific risk disclosures

This approach allows companies to meet the needs of different stakeholders while leveraging the strengths of each framework.

Framework Convergence and Future Trends

The ESG reporting landscape is evolving toward greater consolidation and standardization. Key developments to watch include:

• The ISSB's work to create a global baseline of sustainability disclosure standards for capital markets
• Increasing alignment between different frameworks and standards
• Growing regulatory requirements for ESG disclosure, such as the EU's Corporate Sustainability Reporting Directive (CSRD)

Conclusion

Selecting the right ESG reporting framework(s) is a critical decision that impacts how effectively your company communicates its sustainability performance and risks to stakeholders. By understanding the strengths and focus areas of each framework, you can develop a reporting approach that meets stakeholder needs while supporting your company's sustainability strategy.

As the reporting landscape continues to evolve, staying informed about framework developments and convergence efforts will help ensure your ESG reporting remains effective and aligned with best practices.