A Guide to ESG Reporting Frameworks

A Guide to ESG Reporting Frameworks

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There’s finally consensus among governments, businesses, and financial institutions that ESG risk is investment risk, and ESG reporting is critical to help transition to a low carbon future.

With ESG performance soaring to the top of the agenda, the nascent industry of ESG reporting appears destined for change, having long been plagued by a collection of competing guidance and reporting frameworks. Though all ESG metrics are important – the ‘E’ presents the biggest existential threat, is the most technically challenging to measure and improve, and the area where technology is most needed.

On this page, we explain the current environmental, social, and governance framework landscape, how environmental and sustainability reporting is accomplished in each ESG framework, and how sustainability and carbon accounting software can simplify ESG reporting.

The rise of corporate ESG: why is ESG important?

The world of environmental, social and governance metrics and ratings is on an incredible trajectory.  Largely in response to rising investor interest, growing numbers of organizations are focusing their attention on ESG performance. As Blackrock’s Larry Fink put it “Climate Change has become a defining factor in companies’ long term prospects.  As a result, ESG has moved from the margins to the mainstream.   Now more than ever before, companies are expected to report their ESG performance, and failure to take ESG risks seriously could result in a range of negative impacts for firms, stretching from shareholder action at Annual General Meetings to exclusion or divestment from asset managers.

The growing importance of ESG means that organizations must report on an ever-increasing range of different frameworks. But how do these ESG guidance and reporting frameworks compare, and how can organizations better prepare?

ESG frameworks and materiality

The ESG reporting landscape is cluttered with a large number and variety of reporting frameworks.  Using different lenses to assess and categorize the various frameworks can help with understanding the options and selecting the appropriate reporting frameworks for your organization.

The decision on which framework to report under should ultimately come down to the questions of materiality and relevance, which can be assessed in the first instance by considering the intended audience (for example, investors, boards, insurers, creditors, employees, governments, auditors) and what they will do with the information (to make financial decisions, compare performance between organizations, or to ensure compliance).

Other lenses to consider are:

Is this a reporting framework/scoring tool, or is it a guidance framework?

  • Reporting frameworks & Scoring Tools require quantitative or qualitative information to be provided in order to receive a score or other benchmark to enable comparison among peers. This information is primarily utilized by investors, shareholders, and boards.
  • Guidance frameworks inform how a company’s operations are likely to impact the environment (given their industry, for example) as well as the likely impact of climate change on the company’s ability to generate value – financial or otherwise. This information is relevant to financial stakeholders, namely investors, insurers, and creditors, but may also be relevant to the general public.

In addition to reporting and guidance frameworks, there has been a noticeable rise in companies making carbon reduction commitments.  Pledge platforms and ratings tools provide mechanisms for organizations to make public pledges to commitments to carbon reduction and to measure their commitment with supporting ratings tools.  Examples include the Science Based Targets Initiative, RE100, and the World GBC Net Zero Buildings Commitment.  We cover pledge platforms and related rating tools in this blog.

Which metrics does it primarily measure?

Whilst all frameworks require reporting on Environmental metrics (the E), they have varying levels of focus on the Social (S) and the Governance (G) elements of the ESG landscape.

Which sector is the framework designed for?

This is particularly relevant to the built environment which has several reporting frameworks and ratings tools aimed solely at built assets.  You can read more about these in the Buildings Ratings & Benchmarks section of this article.

What audience is the ESG Reporting Framework aimed at?

In considering which frameworks to report under, organizations should consider which audiences they are seeking to inform and influence.  Many reporting frameworks are aimed primarily at investors (such as the TCFD), but others seek to engage a broader audience (e.g. CDP reports seek to inform shareholders).

Every corporation needs a dedicated ESG reporting system

As the investor community sharpens their focus on ESG metrics, the levels of scrutiny applied to this data intensifies.  After all, the most valuable commodity in capital markets is reliable data.

Unlike the typical financial data investors are familiar with, ESG data has typically not been held to the same standards of accuracy.  It’s often held in disparate systems, and managed with manual processes using spreadsheets.  This is no longer sufficient.

Within organizations, core business processes are typically managed with the support of a dedicated IT system. In the same way an organization has an accounting system for capturing and reporting financial information, and a HR system for capturing and managing people data and metrics, it makes sense to have a dedicated, specialized software platform to support ESG reporting and performance improvement. Nowhere is this more important than for the “E” in ESG, which is the most difficult to report and track, and the most essential for organizations looking to reduce their carbon emissions.  

The metrics captured within the ‘E’ of ESG generally include environmental (water, waste, pollutants) and energy, plus the metrics required to support Greenhouse Gas (GHG) emissions accounting (scopes 1, 2 and 3).

Some organizations attempt to run their annual GHG accounting process using spreadsheets which amplifies risk and results in productivity loss – especially for complex, global organizations that report to multiple frameworks. Sustainability software can help you stay organized by automating data capture directly from the source and maintaining an emission factor engine for nationally-recognized carbon emissions factor data tables such as the US EPA (Climate Leaders), e-GRID USA, IPCC, IEA National Electricity Factors, Australian National Greenhouse Accounts, DEFRA (UK), and NZ Ministry for the Environment. 

Best practices to enable ESG goals with data

To set yourself up for success, there are data management best practices you can follow, not only for ESG reporting, but also for ongoing performance improvement. For instance, it is important to ensure that you have a good data foundation in a flexible format to meet reporting requirements now and in the future. Central to this, is that the data collection and storage process is auditable with traceability through to the source of the data.

Equally important is that it allows for flexible boundary setting globally. Specifically, that it is easy to configure and change reporting groups, and the locations, accounts and meters that underlie them. Baseline emissions need to be recalculated when structural changes occur in the organization that change the inventory boundary (such as acquisitions or divestments).

Structuring data into a flexible organization hierarchy can simplify the process for reflecting changes in operational boundaries and recalculating baselines to enable more agility in ESG reporting.

The data required for implementing decarbonization strategies is often scattered across various internal systems throughout an organization, many of which may be incompatible. It is also possible that the data may be held by suppliers that do not have systems and processes set-up to share it.

To address data capture challenges, companies should consider outsourcing the data capture process to a specialist service provider. Another best practice is to aim for automated data transfer whenever possible, since files handled by people prior to data collection are more prone to failure to load, precision loss, and metric confusion. Best practice is to utilize a cloud-based enterprise software platform to store and manage the data on an ongoing basis as this method is superior to spreadsheets.

Ultimately, the current reality is that ESG reporting is a complex space, and it can be a burden for a company to report to multiple frameworks. But with a strong data foundation in place, a company can set itself up well to meet reporting requirements efficiently and effectively.

ESG and sustainability reporting features

Automated data capture

Sustainability reporting software that automates data capture from the source significantly reduces the time, cost and effort of reporting.

Audit trails and data health checks

Software can ensure that all data captured is linked back to the transaction, including an audit trail for any changes subsequently made to that data.

Hierarchy management tools

In order to make meaningful comparisons of emissions over time, a GHG inventory boundary must be established between data sets. Sustainability software can apply in built tools that help set and manage boundaries over time.

Global coverage

Sustainability reporting platforms that support multi-country, multi-currency, and multi-metric reporting, and allow data capture in local units of measure and currencies and have the ability to convert to standard units simplify the sustainability reporting.

Support for reporting schemes and industry standards

Sustainability software can help organize your data, helping you to get the outputs required to report to various sustainability frameworks.

Ability to set and recalculate baselines

Baseline emissions need to be recalculated when structural changes occur in the organization that change the inventory boundary (such as acquisitions or divestments). Sustainability software can simplify the process for recalculating baselines.

Support for emission factors and carbon accounting methodologies

Sustainability software can maintain an emission factor engine for nationally-recognized carbon emissions factor data tables to include Australian National Greenhouse Accounts, DEFRA (UK), US EPA (Climate Leaders), e-GRID USA, IEA National Electricity Factors, NZ Ministry for the Environment,  and IPCC. In addition, sustainability software can allow system administrators to define custom time-varying factors.

Target tracking capability

Sustainability software enables you to set targets to match your goal setting and performance management practices as well as to meet voluntary or compliance reporting needs.

A detailed guide to ESG frameworks

Below we provide a snapshot of sustainability performance indicators utilized in each ESG framework, and how ESG and sustainability reporting software can help.

Dow Jones Sustainability Index (DJSI) & the SAM assessment tool

The Dow Jones Sustainability Index tracks the performance of the world’s leading companies in terms of economic, environmental and social criteria and is used by investors who wish to jointly assess financial and ESG aspects of company performance.

How DJSI works

The DJSI applies a transparent, rules-based component selection process based on the companies’ Total Sustainability Scores resulting from the annual SAM Corporate Sustainability Assessment (CSA). The CSA compares companies across 61 industries via questionnaires assessing a mix of 80-100 cross-industry and industry-specific questions. Companies receive scores ranging from 0 to 100 and percentile rankings for approximately 20 financially relevant sustainability criteria across economic, environmental and social dimensions. Only the top-ranked companies within each industry are selected for inclusion in the Dow Jones Sustainability Index family.  Investors in these indices gain exposure to the performance potential of well-known common factors – low volatility, dividend yield, value or momentum – while avoiding ESG-related risks in their portfolios by directing their investment towards more sustainable companies.

How ESG +  sustainability reporting software supports DJSI reporting

Companies who report to DJSI will be required to respond to a variety of financially relevant economic, environmental and social dimensions dependent upon what is relevant to their industry. DJSI may ask companies to disclose to their Scope 1, 2 and 3 to greenhouse gas emissions,  their total energy consumption (renewable and non-renewable), their water and waste use, and climate-related targets such as energy intensity. DJSI respondents are permitted to calculate Scope 2 emissions using a location-based or a market-based method.

Reporting sustainability dimensions and tracking their progress over time requires access to consolidated, auditable data, which can be more easily achieved with sustainability reporting software.

CDP – Climate Change

CDP is a framework for companies to provide environmental information to their stakeholders (investors, employees, and customers) covering governance and policy, risks and opportunity management, environmental targets and strategy and scenario analysis.

cpd-logo

How CDP works

CDP currently offers three questionnaires (Climate Change, Water, and Forests), each of these is scored using different methodologies.  Each questionnaire includes general questions alongside sector-specific questions aimed at high-impact sectors. The scoring of CDP’s questionnaires is conducted by accredited scoring partners trained by CDP.

How ESG+ sustainability software supports CDP reporting

The CDP Climate Change questionnaire for organizations includes a combination of qualitative and quantitative questions.  Sustainability reporting software is particularly well-suited supporting answers to the questions that require quantitative data.  Software can simplify emission calculations, particularly in calculating Scope 2 emissions using the required market-based method. In addition, it can be useful for maintaining a library of emissions factors used to calculate emission intensity, absolute emissions (Scope 1, Scope 2 location-based, Scope 2 market based and Scope 3), and can separate emissions by country/region, group, facility and activity.

GRI – The Global Reporting Initiative

GRI is a globally applicable guidance framework that provides standards (the GRI standards) which details approaches to materiality, management reporting and disclosure for a comprehensive range of sustainability issues.  Many organizations are guided by GRI standards in the production of their own sustainability reports.

How GRI works

The modular, interrelated GRI Standards are designed primarily to be used as a set, to prepare a sustainability report focused on material topics. The three universal Standards are used by every organization that reports under the GRI framework. An organization also chooses from the topic-specific Standards to report on its material topics – economic, environmental or social.

How ESG+ sustainability software supports GRI reporting

Once an organization has chosen the elements of GRI guidance they will adopt for their corporate sustainability reporting, ESG software acts as a single system of record for reporting – capturing data from source when required (in the case of energy data), bringing together data from other internal systems, and applying analytics to produce data required by the framework

Streamlined Energy & Carbon Reporting Framework (SECR)

The Streamlined Energy and Carbon Reporting framework is the UK government’s guidance for organizations required to disclose their energy use and and greenhouse gas emissions and related information. The SECR was introduced to take effect from 1 April 2019 as the previous Carbon Reduction Commitment (CRC) Energy Efficiency Scheme came to an end. It builds on and extends the previous reporting requirements faced by quoted companies while adding new mandates for large unquoted and limited liability partnerships (LLPs). It can also help all organizations with voluntary reporting on a range of environmental subjects, including greenhouse gas reporting and the use of key performance indicators (KPIs). The SECR is central to the UK’s strategy for improving energy efficiency and reducing carbon dioxide emissions, as set out in the Climate Change Act 2008. It is expected that an estimated 11,900 companies incorporated in the UK will need to report on their energy and carbon emissions under the new framework.

How the SECR works

Quoted companies who report to SECR are required to disclose their energy use, their global scope 1 and 2 greenhouse gas emissions in tonnes of carbon dioxide equivalent, and at least one emissions intensity metric of their choosing for current and previous financial years. Scope 3 emissions remain voluntary but are recommended for emissions sources considered material. Unquoted large companies and LLPs will also need to report as a minimum their UK energy use and associated GHG emissions from electricity, gas and transport fuels as well at least one intensity metric. Reporting each of these sustainability dimensions and tracking their progress over time requires access to consolidated, auditable data, which can be more easily achieved with sustainability reporting software.

How ESG + sustainability software supports SECR reporting

Reporting key environmental impact dimensions and tracking against targets year on year will be essential to reporting to SECR. Sustainability software can help you to maintain boundaries of your organization, time periods to collect data for, and key environmental data to measure and report over time. We recommend you develop and report at least 3 KPIs associated with your key environmental impacts.

You should consider actions 1-7 (below) which provide you with information to help you develop your environmental strategy.

  • ACTION 1  Intensity ratios
  • ACTION 2  Setting a base year
  • ACTION 3  Setting a target
  • ACTION 4  Verification & assurance
  • ACTION 5  Your upstream supply chain
  • ACTION 6  Downstream impacts
  • ACTION 7  Business continuity and environmental risks

Value Reporting Foundation – SASB + IIRC

In June 2021, The Sustainability Accounting Standards Board (SASB)  and the International Integrated Reporting Council (IIRC) announced their merger to form the Value Reporting Foundation (VRF).  The Value Reporting Foundation is an ESG guidance framework that sets standards for the disclosure of financially material sustainability information by companies to their investors.  The resources they provide include the Integrated Thinking Principles, the Integrated Reporting Framework, and SASB standards.  In total, the SASB Standards track ESG issues and performance across 77 industry standards.  VRF’s framework is built to support companies in sharing their outward ESG impacts through the language of investors, debt holders, and internal financial stakeholders.

How the SASB standards work

Of the other ESG reporting frameworks, the Global Reporting Initiative (GRI) is most similar to SASB, but supplies more broadly material information for reporting to stakeholders who are not just from financial portfolios.

Asset management companies, like BlackRock, Goldman Sachs, and Morgan Stanley, manufacturing giants, like GM and Nike, and even specialized industries with companies like Merck and JetBlue use SASB’s Standards to disclose ESG metrics. SASB also supplies resources to explain how investors across multiple asset classes use the standards. These tools allow organizations to be specific and report with a system that allows for transparency and relevancy with their investors.  

How ESG + sustainability software supports reporting to the SASB standards

SASB’s Environmental Reporting covers a variety of quantitative metrics within GHG Emissions, Air Quality, Energy Management, Water & Wastewater, Waste & Hazardous Materials, and Ecological Impacts.  Each category gets specific, asking for disclosure of data points in Scope 1, Scope 2, and Scope 3 emissions, measured on a company-wide portfolio level. Sustainability and carbon accounting software like Envizi can simplify carbon accounting for ESG by automating the collection of utility and meter data from across an organization with traceability through to the source and audit trails to track any changes subsequently made to that data. Hierarchy management tools help to adjust boundaries when organizations change, and an emission factor and GHG calculation engine help derive accurate calculations for each scope.

Task Force for Climate Related Disclosures (TCFD)

The Task Force for Climate-Related Financial Disclosures (TCFD) helps organizations across the globe articulate how ESG performance is most likely to materially impact future financial performance and value creation.

The TCFD  was created in December of 2015 after the G20 Finance Ministers asked the Financial Stability Board to evaluate the connection between climate-related issues and the financial sector. The FSB is an international body that makes recommendations to the global financial system, so the push towards climate-related finance was significant.

How the TCFD works

Broken into four pillars, TCFD addresses disclosure requirements related to:  

  1. Metrics & Targets: What are the measurements in assessing material climate-related risks and opportunities?  
  2. Risk Management: How does the organization define, assess, and manage climate-related risks?  
  3. Strategy: What is the tangible material impacts of climate-related risks and opportunities on the whole business, including strategy and financial planning? 
  4. Governance: How does the organization’s governance structure address climate-related risks and opportunities?  

TCFD is explicitly designed to address climate risks to the business, falling squarely within the ‘E’ of ESG reporting.

How ESG + sustainability software supports TCFD reporting

Sustainability software can support the capture and storage of qualitative data, which is essential to support data capture for the TCFD pillars of Risk Management, Strategy and Governance.  Where software has most impact is the capture and management of data required for the Metrics & Targets pillar of the TCFD.  These figures underpin the governance, strategy and risk management pillars of TCFD, which makes adequate control and management of this data, which include Scope 1, 2 and 3 GHG emissions values essential.

Software like Envizi can simplify GHG accounting with out-of-the-box tools that automate the collection of energy consumption data, the management of emission factors and the calculation of emissions – all with traceability through to the source and audit trails to track any changes subsequently made to that data. 

National Greenhouse and Energy Reporting (NGER)

The National Greenhouse and Energy Reporting (NGER) scheme is the Australian national framework for reporting and disseminating company information about greenhouse gas emissions, energy production, energy consumption. It was established by the National Greenhouse and Energy Reporting Act 2007 (NGER Act) and is monitored by the Clean Energy Regulator.

How NGERs works

NGERs collects emissions related data about greenhouse gases such as carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6) and specified kinds of hydro fluorocarbons and perfluorocarbons.  Records of activities must be adequate to enable the Clean Energy Regulator to ascertain whether the corporation or the person has complied with its obligations under the NGER Act.

This includes information that can be used to verify the relevance, completeness, consistency, transparency and accuracy of reported data during an external audit.

How ESG + sustainability software supports NGERS reporting

NGERs compliant sustainability software helps to automate the capture of relevant data, assist with meaningful GHG emission calculations (linking back to the source) and helps to organize this data into categories for submission direct to NGER Emissions and Energy Reporting System (EERS).

Building ratings & benchmarks

The built environment is responsible for close to 40% of annual global GHG emissions. As the impact from this sector is so large, several emissions ratings tools focus specifically on emissions from the built environment.  The data derived from these tools is often used to support other frameworks and pledge platforms.

Global Real Estate Sustainability Benchmark (GRESB)

GRESB is a global tool used predominately by investors to assess the sustainability performance of real estate and infrastructure portfolios and assets worldwide.

How GRESB Works

GRESB Assessments provide investors and asset managers with material insights into the sustainability performance of a companie’s real assets.  These performance insights are aligned with international reporting frameworks such as the Global Reporting Initiative (GRI) and Principals for Responsible Investment (PRI). Assessment participants receive comparative business intelligence on where they stand against their peers, a roadmap with the actions they can take to improve their ESG performance and a communication platform to engage with investors. Investors use the ESG data and GRESB’s analytical tools to improve the sustainability performance of their investment portfolios, engage with managers and prepare for increasingly rigorous ESG obligations.

How ESG +  sustainability software supports GRESB reporting

The GRESB Real Estate Assessment requires companies to report environmental performance data at the asset level and are required to compile asset level data such as green building certification, stakeholder engagement, and automatic asset categorization. Sustainability software helps manage the compilation and data quality of performance indicator data for energy, emissions, waste and water.

Sustainability data management and reporting systems that are GRESB data partners such as Envizi can aggregate and extract energy, emissions, water and waste data that are required to submit the GRESB – Asset Level Data Spreadsheet.

This will speed and simplify the submission of this GRESB data that is required to compile the Performance Indicators portion of the GRESB Assessment.

ENERGY STAR

ENERGY STAR is a nationally recognized energy rating and benchmarking mechanism in North America that incorporates commercial buildings across a diverse group of building use types.

How ENERGY STAR works

ENERGY STAR is a U.S. Environmental Protection Agency (EPA) voluntary program that helps businesses and individuals save money and protect the climate through superior energy efficiency. Rankings compare a building against others within its peer group. Buildings can benchmark their performance internally across their portfolio and externally among similar sectors.

ENERGY STAR scores are based on data from national building energy consumption surveys, and this allows ENERGY STAR’S Portfolio Manager product to control for key variables affecting a building’s energy performance, including climate, hours of operation, and building size. What this means is that buildings from around the country, with different operating parameters and subject to different weather patterns, can be compared side-by-side in order to see how they stack up in terms of energy performance. The specific factors that are included in this normalization (Hours, Workers, Climate, etc) will depend on the property type. The 1-100 scale is set so that 1 represents the worst-performing buildings and 100 represents the best performing buildings, with 50 representing the average.

How ESG + sustainability software supports ENERGY STAR reporting

Sustainability reporting software can support the ENERGY STAR rating standard by allowing you to streamline and integrate with ENERGY STAR Portfolio Manager (ESPM) to get real-time and official ENERGY STAR(R) Score results for your buildings or locations. This centralized approach minimizes the need to manage two systems at the same time, so that you can focus more on what you need to do rather than spending time on additional data stewardship work.

The National Built Environment Ratings Scheme (NABERS) – Australia

Using a 6 star scale, NABERS helps Australian building owners understand how their asset impacts the environment, and helps prospective tenants understand how energy efficient their leased space is.

How NABERS works

NABERS compares the performance of a building or tenancy to benchmarks that represent the performance of other similar buildings in the same location. NABERS scores are calculated by an independent assessor using 12 months of real, measurable information about a building or tenancy, such as energy and water bills or waste consumption data as the basis of their rating. NABERS ratings are currently available for Commercial Office Buildings, Tenancies, Hotels, Shopping Centers, and Data Centers. NABERS announced in 2019 a plan to expand to all major building types. Under Australia’s Building Energy Efficiency Disclosure Act, all buildings for sale or under lease over 10,000 sq ft must receive a NABERS rating. Governments are required to lease space in buildings with ratings of 4.5 or higher.

How ESG + sustainability software supports NABERS reporting

NABERS Energy and Water ratings rely on verifiable data from a building or tenancy, such as energy or water bills.

Sustainability reporting software that is ‘NABERS Equipped’ such as Envizi and has obtained a license from NSW Office of Environment and Heritage to capture all accredited NABERS rating information and auditing documentation in a centralized place for a portfolio of buildings and locations and allow you to view and calculate indicative NABERS Office Energy and Water ratings using the official NABERS algorithm.

NABERS Energy and Water ratings rely on verifiable data from a building or tenancy, such as energy or water bills. Sustainability reporting software that is ‘NABERS Equipped’ such as Envizi and has obtained a license from NSW OEH to capture all accredited NABERS rating information and auditing documentation in a centralized place for a portfolio of buildings and locations and allow you to view and calculate indicative NABERS Office Energy and Water ratings using the official NABERS algorithm.

NABERS Equipped software can also track and monitor the trend of NABERS Office Indicative ratings month by month, and compare with latest accredited rating, review consumption trend month-by-month and consumption intensity by rated area, store and review NABERS related consumption and building data in a centralized place for easy access by NABERS Assessors, and allow stakeholders to review and report NABERS Portfolio Average accredited ratings. These features can help companies monitor their historical performance and better ensure they meet or exceed their previous ratings.

The future of ESG frameworks

The ESG reporting landscape is often referred to as an ‘alphabet soup’ with good reason!  There are a plethora of frameworks, many of which overlap in terms of intent and even in terms of content.

A first step towards developing a common language around environmental sustainability was taken in July 2020 with the launch of the EU Sustainable Finance Taxonomy. It sets a common language between investors, issuers, project promoters and policymakers for assessment of whether investments meet robust environmental standards and are consistent with the Paris Agreement on Climate Change. By as early as 2022, companies may be required to report against the taxonomy and investors offering funds labeled as ‘environmentally sustainable’ may need to disclose the proportion that is taxonomy-aligned.

A few months later on September 11, more progress was made when five NGOs (CDP, CDSB, GRI, IIRC and SASB) published a statement of intent detailing their desire to work together and with the International Financial Reporting Standards (IFRS) to develop a comprehensive corporate reporting system. GRI, SASB, CDP and CDSB set the frameworks and standards for sustainability disclosure, including climate-related reporting, along with the TCFD recommendations to guide the majority of quantitative and qualitative sustainability disclosures. Meanwhile, the IIRC provides the integrated reporting framework to connect sustainability disclosure to reporting on financial and other capitals.

The next step forward came on September 22 when the World Economic Forum’s (WEF) International Business Council published a white paper in collaboration with Deloitte, EY, KPMG and PwC titled ‘Toward Common Metrics and Consistent Reporting of Sustainable Value Creation’. It proposed a set of voluntary ESG disclosure metrics, called Stakeholder Capitalism Metrics (SCMs). These are based on existing reporting frameworks, particularly the GRI, while also incorporating the SDGs and notably include one SCM that requires disclosure of a timeline to full implementation of the TCFD recommendations.

Later that month on September 30, trustees of the IFRS issued a ‘Consultation Paper on Sustainability Reporting’, which calls for the creation of a new climate risk-focused Sustainability Standards Board (SSB). It would make use of existing sustainability frameworks and standards, including TCFD, to establish a single global standard. The SSB would start with an initial focus on climate change but could broaden its scope to other environmental factors, or even the full range of ESG factors.

On October 8, the conversation gained pace in the UK when the Financial Reporting Council (FRC) published a discussion paper on a proposed blueprint for a new, more agile, corporate reporting system for the country. However, despite highlighting the ‘urgent need’ for comparable non-financial information, it acknowledged that until international standards are agreed on, companies will need to use existing frameworks to meet the demands of stakeholders.

Later that month on October 29 Sandy Boss, BlackRock Global Head of Investment Stewardship, weighed in on the debate declaring that, of the various private sector reporting frameworks available, ‘the one most likely to succeed is the one proposed by the IFRS Foundation’. She added that BlackRock would ‘continue to advocate for TCFD and SASB-aligned reporting until a global standard is established’.

On March 26, the WEF and SASB released a joint statement expressing intent to work together to establish a globally-accepted system for corporate disclosure with both organizations throwing their support behind the IFRS’s proposed creation of a Sustainability Standards Board.

And most recently in June 2021, SASB and the IIRC announced they were joining forces to create the Value Reporting Foundation.

The current reality is that ESG reporting is a complex space, and it can be a burden for a company to report to multiple frameworks. But with a strong data foundation in place, a company can set itself up well to meet reporting requirements regardless of whether a global framework comes to fruition.

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