ESG has been thrown around as a buzzword for some time now. But what does this actually mean? And how does this impact your business? This post breaks down some of the key things to know right now…
Firstly, it’s important to realise that ESG reporting has no value unless the standards and frameworks behind it are solid. But there is widespread confusion about the difference between standards and frameworks, terms that are often used interchangeably, and which are the most relevant.
According to the IFRS (International Financial Reporting Standards) Foundation frameworks “provide a set of principles-based guidance for HOW information is structured and prepared”. Whereas standards “provide specific, replicable and detailed requirements for WHAT should be reported”. Let’s look at some of the big players in this space.
Frameworks
1. Global Reporting Initiative (GRI)
The GRI remains as the most widely used reporting framework around the world, being adopted by over 10,000 companies across 100 countries.
The GRI standards are well established and universally recognised, with several amendments made since 1997. GRI is applicable for any organisation, regardless of size, industry or location and the framework is based around 3 sectors of GRI standards: Universal Standards, Sector Standards and Topic Standards.
2. Task Force on Climate-Related Financial Disclosures (TCFD)
TCFD was created in 2015 with a greater focus on climate-related financial information, as the name suggests. From the beginning of 2024, the recommendations within TCFD were fully incorporated into the International Sustainability Standards Board (ISSB) and are now spearheaded by the IFRS Foundation.
3. Carbon Disclosure Project (CDP)
The CDP is a not-for-profit charity established since 2000, providing a voluntary environmental reporting framework focussing on climate, water, and forestry. Companies reporting under the CDP also earn a Carbon Disclosure Rating, which can foster greater transparency and is useful for investors making sustainable investment decisions.
Standards
1. European Sustainability Reporting Standards (ESRS) and the Corporate Sustainability Reporting Directive (CSRD)
The CSRD stretches beyond any other existing EU sustainability reporting standards, and some companies will be required to report on this as early as 2025. These reports should be prepared in accordance with European Sustainability Reporting Standards (ESRS).
Large and listed companies will initially fall within scope, but SMEs will also be required to comply in the not-too-distant future.
2. International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards
In 2021, the IFRS Foundation established the International Sustainability Standards Board (ISSB). This was in response to global pressures for internationally consistent sustainability reporting standards. The IFRS and ISSB have taken charge over several ESG standards and frameworks, such as:
- Task Force on Climate-Related Financial Disclosures (TCFD)
- Sustainability Accounting Standards Board (SASB) Standards
As seen, there is no one-size-fits-all for ESG reporting standards and frameworks and there are many options to suit your company needs. Regulus-UK is here to face this challenge with you and have partnered with ISMS.online. The ideal platform that converges some of the top 100 most common standards and frameworks.
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