Sustainability reporting frameworks

Last updated: 17 July 2023 at 20:48

Environmental, Social, and Governance (ESG) reporting frameworks guide businesses in disclosing their impact and performance on critical sustainability matters. They are important because they allow companies to measure, understand, and communicate their sustainability performance to stakeholders, including investors, customers, and regulators. The frameworks originate from various international organisations, such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-related Financial Disclosures (TCFD), among others. They are used by businesses to report on aspects such as energy use, emissions, labour practices, diversity, governance structures, and risk management. Despite their value, ESG frameworks have faced criticism, often due to the lack of standardisation across different frameworks, which can lead to confusion for companies and their stakeholders.

ESG reporting frameworks can be used by companies of all sizes, including startups and small businesses. The principles of environmental stewardship, social responsibility, and good governance are applicable to all organisations, regardless of their size. ESG reporting can provide several benefits to smaller companies, including:

Risk Management: ESG reporting can help identify potential risks and opportunities related to environmental, social, and governance issues. This can be especially important for start-ups and small businesses, where a single overlooked risk could have significant consequences.
Investor Attraction: More and more investors are looking to invest in companies that take ESG factors into account. Start-ups and small businesses that can demonstrate good ESG performance may therefore be able to attract more investment.
Stakeholder Engagement: ESG reporting can enhance a company's relationships with its stakeholders, including customers, employees, suppliers, and the local community. For small businesses and start-ups, these relationships can be critical to their success.

However, it's important to note that ESG reporting can also present challenges for smaller companies. The process can be time-consuming and may require resources that could be used elsewhere. Smaller companies may not have the same level of access to ESG expertise as larger companies, and there may be less externally available data for them to benchmark against.

Overall, whether ESG reporting is suitable for a specific startup or small business will depend on a range of factors, including the company's industry, its stakeholders, and its strategic objectives. It's also worth noting that there are resources available to help smaller companies with ESG reporting, including guidelines from ESG framework providers and advice from sustainability consultants.

Here is a list of the most common sustainability reporting frameworks and standards. Each of these frameworks and standards serves a specific purpose in sustainability reporting and caters to different scopes, topics, and audiences:

CDP - Carbon Disclosure Project: An organisation that runs a global disclosure system for companies to manage their environmental impacts and measure their carbon footprint, water usage, and deforestation efforts.
CDSB - Climate Disclosure Standards Board: Provides a framework for companies to report environmental and climate-related information in their mainstream reports, focusing on the financial impacts of climate change.
GRI - Global Reporting Initiative: Offers a set of universal standards for sustainability reporting that covers a wide range of ESG issues, helping organisations understand and communicate their impact on various sustainability topics.
IIRC - International Integrated Reporting Council: Promotes integrated reporting, which combines financial and non-financial information, including environmental, social, and governance aspects, to provide a comprehensive picture of an organisation's performance and value creation.
IRIS - Impact Reporting and Investment Standards: System for measuring, managing, and optimising impact, primarily based on the United Nation's (UN) Sustainable Development Goals (SDGs) impact measurement framework.
SASB - Sustainability Accounting Standards Board: Develops industry-specific sustainability accounting standards that help companies disclose material, decision-useful information to investors.
TCFD - Taskforce on Climate-Related Financial Disclosures: Provides a framework for companies to disclose their climate-related financial risks and opportunities, enabling investors and other stakeholders to make informed decisions.
WEF IBC - World Economic Forum International Business Council: Developed a set of ESG metrics and disclosures based on existing standards, aimed at simplifying and aligning corporate reporting on sustainability. This is part of a broader Measuring Stakeholder Capitalism Initiative launched in 2019.

This information is brought to you by the Centre for Sustainable Design (CfSD) at the University for the Creative Arts in the UK. CfSD was established in 1995 in Farnham, Surrey, UK and is based within the Business School for the Creative Industries (BSCI). The Centre has led and participated in a range of high-quality research projects and has organised hundreds of conferences, workshops and training courses in Europe. CfSD works with partners in Europe, Asia, and North America to deliver high quality results.

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