Key ESG Reporting Standards

Why This Matters

ESG reporting has moved from a "nice-to-have" to a fundamental component of investor communications. You're being tested on understanding how different frameworks serve different purposes—some target financial materiality for investors, others emphasize stakeholder impact, and still others focus on specific environmental risks like climate change. Knowing which standard applies in which context is critical for investor relations professionals navigating disclosure requirements and stakeholder expectations.

Don't just memorize the acronyms—understand what each framework prioritizes and who its primary audience is. The real skill lies in recognizing when to use industry-specific standards versus comprehensive sustainability frameworks, and how regulatory requirements like the EU's directives differ from voluntary initiatives. Master these distinctions, and you'll be able to advise on disclosure strategy, respond to investor inquiries, and anticipate where ESG reporting is heading.

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Investor-Focused Financial Materiality Standards

These frameworks prioritize information that directly impacts financial performance and investment decisions. The core principle: sustainability factors matter to investors when they affect the bottom line.

Sustainability Accounting Standards Board (SASB) Standards

• Industry-specific materiality—SASB identifies the ESG factors most likely to impact financial performance in each of 77 industries
• Investor-driven design developed with input from institutional investors seeking comparable, decision-useful data across portfolio companies
• Financial statement integration enables companies to connect sustainability metrics directly to traditional financial reporting

Task Force on Climate-related Financial Disclosures (TCFD) Framework

• Four-pillar structure covering governance, strategy, risk management, and metrics/targets for climate-related financial risks
• Scenario analysis requirement pushes companies to model how different climate futures (e.g., 1.5°C vs. 3°C warming) affect business viability
• Forward-looking orientation distinguishes TCFD from backward-looking compliance reports by emphasizing future risk exposure

Climate Disclosure Standards Board (CDSB) Framework

• Mainstream report integration—designed specifically to bring climate data into annual financial filings, not separate sustainability reports
• Investor-grade rigor applies the same standards of accuracy and auditability expected in financial statements
• TCFD alignment provides practical implementation guidance for companies adopting TCFD recommendations

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Comprehensive Stakeholder-Oriented Frameworks

These standards take a broader view, addressing impacts on all stakeholders—not just shareholders. The principle: companies affect communities, employees, and ecosystems, and those impacts deserve disclosure.

Global Reporting Initiative (GRI) Standards

• Double materiality approach requires reporting on both how ESG issues affect the company and how the company affects society and environment
• Modular structure includes universal standards plus topic-specific modules (emissions, labor practices, anti-corruption, etc.)
• Widest global adoption—over 10,000 organizations use GRI, making it the de facto baseline for sustainability reporting

International Integrated Reporting Council (IIRC) Framework

• Six capitals model tracks value creation across financial, manufactured, intellectual, human, social, and natural capital
• Connectivity principle requires companies to show how strategy, governance, and performance link together over time
• Long-term value narrative shifts reporting from point-in-time snapshots to explaining sustainable value creation

ISO 26000 Social Responsibility Standard

• Guidance document, not certification—provides principles and recommendations rather than auditable requirements
• Seven core subjects covering organizational governance, human rights, labor practices, environment, fair operating practices, consumer issues, and community involvement
• Stakeholder identification emphasis helps organizations map and prioritize their responsibilities to different groups

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Environmental Data Platforms and Goal Frameworks

These initiatives focus on environmental measurement and alignment with global sustainability objectives. The principle: standardized environmental data enables benchmarking, and global goals provide strategic direction.

CDP (formerly Carbon Disclosure Project)

• Questionnaire-based disclosure collects standardized data on climate change, water security, and deforestation through annual surveys
• Scoring system rates companies A through F, creating competitive pressure and enabling investor screening
• Supply chain program extends disclosure requirements to suppliers, giving companies leverage over Scope 3 emissions

United Nations Sustainable Development Goals (UN SDGs)

• 17 interconnected goals spanning poverty, health, education, climate, and economic development through 2030
• Strategic alignment tool helps companies identify which goals their business model supports (or undermines)
• Impact reporting framework provides common language for communicating contributions to global priorities

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Regulatory and Investor-Led Initiatives

These frameworks carry compliance weight or represent collective investor expectations. The principle: some disclosures are mandatory, and investor coalitions can make voluntary standards effectively required.

EU Non-Financial Reporting Directive (NFRD)

• Mandatory disclosure for large EU public-interest entities with over 500 employees—approximately 11,700 companies affected
• Evolving into CSRD—the Corporate Sustainability Reporting Directive significantly expands scope and specificity starting 2024
• Double materiality requirement aligns with GRI approach, requiring disclosure of both financial and impact materiality

Principles for Responsible Investment (PRI)

• Investor commitment framework—over 5,000 signatories representing $\$120+$ trillion in assets agree to incorporate ESG into investment decisions
• Six principles covering ESG integration, active ownership, disclosure seeking, collaboration, and reporting
• Signatory accountability requires annual reporting on implementation progress, with potential delisting for non-compliance

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Quick Reference Table

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Self-Check Questions

1. Which two frameworks both emphasize financial materiality but differ in scope—one covering all ESG factors by industry, the other focusing exclusively on climate risk?

2. A European company with 600 employees asks which ESG disclosures are legally required. Which framework applies, and how is it changing?

3. Compare and contrast GRI and SASB: What type of materiality does each prioritize, and which stakeholder group is each primarily designed to serve?

4. An investor asks for your company's CDP score and TCFD-aligned scenario analysis. What specific information would each request require you to provide?

5. Your CEO wants to communicate how the company creates long-term value across multiple forms of capital. Which framework's six capitals model would structure this narrative, and how does it differ from GRI's approach?