ESG Frameworks is a set of principles that provides a framework for organizations to assess their sustainability performance, including ESG risks and opportunities. ESG frameworks are created by various organizations, including governments, NGOs, stock exchange authorities, nonprofit organizations, etc.
There are multiple frameworks available to assess ESG performance for businesses; organizations opt for the frameworks based on their short-term and long-term sustainability objectives.
Frameworks provide accurate information to key stakeholders such as investors, rating agencies, lenders, regulators, boards, customers, and supply chain partners about sustainability performance.
It also helps organizations set goals and implement ESG and sustainability strategies to achieve net zero goals.
Below are some widely used sustainability frameworks that have been used by organizations globally.
The GRI is an independent international organization that provides a framework for businesses, governments, and other entities to understand and communicate their sustainability impacts. The GRI Standards are the most widely used framework for sustainability reporting globally.
It does not encourage a scoring process but instead emphasizes transparency, accountability, stakeholder engagement, and materiality assessment.
In addition, GRI encompasses a wide range of sustainability topics including environmental impact, human practice, data privacy, resource use, and many others.
A wide range of organizations across diverse sectors and industries report their ESG performance using the GRI framework. This framework is particularly helpful for multinational organizations that operate in different regions with various sustainability requirements.
Moreover, its framework is publicly available for free, making it accessible to organizations of all sizes.
GRI Standards are Divided Into Three phase:
Universal:
A set of principles that suits all types of organizations and explains the process and methods for preparing sustainability reports.
Universal modular is a base for all GRI reporting.
In GRI, the universal standard is a specialized one, because it covers vast topics and now incorporates human rights topics. It encompasses:
Sector:
It provides guidance for specific sectors or industries such as manufacturing and agriculture.
Topic:
Topic standards provide guidance on specific topics such as waste management, emissions, and taxes.
GRI Reporting Framework Benefits:
Transparency is the most significant metric expected by investors and stakeholders. It helps build credibility.
Even in complex circumstances, GRI guides you in the right direction and helps you make informed decisions with the help of meaningful ESG insights.
With the help of the report, you can easily predict and forecast upcoming sustainability risk events in your ESG process and develop the best solutions to mitigate the risk.
The TCFD acronym is Task Force on Climate-Related Financial Disclosures, which was created by the Financial Stability Board in 2015 and published its official guidelines in 2017. It focuses on climate-related financial risks and opportunities for banks, companies, investors, and non-financial sectors.
Many organizations struggle to determine which metrics to disclose in their annual reports. Therefore, it provides comprehensive guidelines for organizations on how to disclose climate-related information in their financial filings. It is a valuable framework for investors that helps organizations significantly.
TCFD Framework Benefits:
The TCFD framework encourages organizations to provide clear information about climate-related risks and opportunities.
By providing information about climate-related financial information, the TCFD framework helps investors make informed decisions.
The acronym for CSRD is Corporate Sustainability Reporting Directives, introduced by the European Commission. It is used by larger organizations, including SMEs, and requires them to disclose their non-financial information according to European standards.
The CSRD helps investors, stakeholders, and policymakers assess organizations' non-financial performance. It emphasizes transparency and accountability in sustainability practices.
Who are all comply with CSRD:
CSRD Reporting Framework Benefits:
The SASB framework is used for industry-specific disclosure of sustainability information that focuses on financial performance. It is useful for investors.
SASB covers 77 different industries and identifies subsets of environmental, governance, and social issues. Its framework emphasizes financial materiality.
In addition, through the framework, organizations share their sustainability performance with investors. SASB was developed by a non-profit organization in 2011.
SASB Benefits:
The SASB framework delivers significant benefits to investors and corporations.
With the help of the SASB reporting, organizations can compare ESG reporting across various organizations within the same industries.
The SASB framework is fully customizable, providing industry-specific material metrics. This saves users time and effort without imposing a reporting burden.
The SASB framework addresses materiality issues, thereby effortlessly identifying risks. It also enables organizations to communicate effectively with their stakeholders and investors.
The CDP framework focuses on climate change, deforestation, and water management and includes a series of questionnaires based on these topics. It helps companies, cities, states, and regions report their environmental impact.
In April 2024, the CDP framework added new questionnaires to provide a more comprehensive environmental assessment.
The CDP framework was established in 2020 and operates online. It also helps investors make informed decisions.
Carbon Disclosure Framework Benefit:
The BRSR reporting framework was introduced in India. To provide a more comprehensive and holistic ESG assessment, the BRSR framework was replaced by the BRSR (business responsibility and sustainability reporting framework), developed by SEBI and based on nine principles.
The BRSR framework encourages listed Indian companies to adopt sustainable practices and disclose ESG information.
BRSR Framework Benefits:
In a nutshell:
Many organizations are making mistakes in preparing ESG reports and selecting ESG frameworks. This can hinder improvements in transparency and brand reputation.
Therefore, consider using ESG software specifically designed for all industries, including ESG reporting, ESG frameworks, ESG data management, net zero, risk management, and more.
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