ESG Reporting Frameworks Comparison: Which One Should You Use?

by Business 04 October 2021


Over the last three decades, people have become more conscious about the environment surrounding them and are demanding responsible actions, especially from businesses. It is no longer just about buying the products that appear the “best” on ads. Rather, people want to connect with the entire process used to create the product. To demonstrate this focus and commitment to delivering value, you should join the list of companies doing ESG sustainability reporting. 

The essence of ESG sustainability reporting is to tell stakeholders about your efforts in promoting positive environmental, social, and governance impacts. It is like telling every stakeholder that “look, this planet is ours and I am leading by example in protecting it.”  For your efforts to yield the benefits of sustainability reporting, you need to identify and work with an appropriate reporting framework. So, which one do you select? Here is a comparison of the top models.

A Deeper Look at the Main Sustainability Reporting Frameworks

A Deeper Look at the Main Sustainability Reporting Frameworks

The first question that runs through the minds of managers and investors when looking for the appropriate framework is, “Why are they so many?”

Although the concept of sustainability reporting is the same, the data that requires to be captured is different. For example, a manufacturing company that releases a lot of emissions cannot use the same framework as an insurance firm that makes zero emissions. However, the insurance firm still needs to make its efforts count through sustainability reporting. So, here are the main frameworks to consider:

Carbon Disclosure Project (CDP)

CDP was founded in 2000 and was among the first models for companies to use. It was designed with the primary goal being to link environmental integrity to the fiduciary duty of a company. One impressive thing about CDP is that it can be used on a wide range of companies and projects. Today, it is used by more than 9,500 companies, 800 cities, countries, and regions globally to disclose their environmental implications.

Every year, CDP gathers information it receives from different parties and then compares the participants based on their actions and transparency. The scores allocated to companies and projects are used by the management and investors to inform their decisions. The primary focus of CDP is the environment, which is checked through things such as water usage, carbon emissions, and pollution.

Global Reporting Initiative (GRI)

Global Reporting Initiative (GRI)

This is another framework that has gained a lot of popularity because of its ease of use and ability to generate highly accurate data. The framework was established in 1997 by the Coalition for Environmentally Responsible Economies (CERES) and UNEP and was among the first global standards for sustainability reporting.  It was initially proposed as a response to the Exxon Valdez Oil Spill.

Three decades after its launch, the framework is still very effective, being used in more than 90 countries and over 13,000 organizations. More than 250 of the globe’s biggest firms use GRI. This framework would work very well for small to medium companies that target greater flexibility. All the standards outlined in the GRI framework are defined by the global sustainability board.

Sustainability Accounting Standards Board (SASB)

This is another popular ESG sustainability reporting framework that you might want to consider. SASB framework has a set of 77 standards that companies use to identify and report financial material sustainability requirements. The good thing about the SASB framework is that it comes with specific standards for your industry. Therefore, it is an excellent choice for companies that need assistance to determine the disclosure topics.

Once you have selected the preferred framework, it is time to apply it and prepare the report in line with the main principles of ESG reporting. This is never easy because the process requires gathering and interpreting multiple data sets. To simplify the process, you should consider selecting appropriate sustainability management software from a reliable provider, such as Diginex.

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Ariana Smith is a blogger who loves to write about anything that is related to business and marketing, She also has interest in entrepreneurship & Digital marketing world including social media & advertising.

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