When speaking with senior partners and ESG officers, I’ve noticed a sense of fatigue and confusion surrounding the numerous ESG frameworks and standards available today. Having navigated these complexities myself, I’ve put together a concise guide and useful links to help clarify these concepts specifically for private markets. It’s important to note that these may vary slightly for public markets.
Step 1: Distinguishing frameworks from standards
- “Standards” refer to the specific granularity, reliability, and comparability of topics in ESG reporting. They are technically oriented and endorsed by leading standards bodies worldwide.
- Frameworks offer guidance based on a set of principles. They define the direction of information but not the methodology, collection, or reporting itself. Frameworks focus more on how information should be structured in a broader context.
Step 2: Standards deep-dive
In this post, I’ll delve into standards, reserving a detailed discussion on frameworks and regulations for future posts.
GRI standards
GRI offers a comprehensive set of metrics applicable across all industries. These standards help organizations report on a wide range of sustainability issues, from environmental impact to social and economic performance. Approximately 75% of the world’s largest 250 companies use GRI for their annual sustainability reports, demonstrating its relevance and credibility.
GRI consists of three components:
- Universal standards
- Sector standards
- Topic standards
(You select them based on what is material to your business) GRI is widely recognized for its detailed and extensive criteria that can be adopted by organizations globally.
SASB industry-specific standards
(Pronounced as SASS-BEE) Tailored to address the unique needs of different industries, SASB standards guide businesses in reporting financial material sustainability information. This specificity helps companies effectively communicate with investors about sustainability factors that are likely to impact financial conditions.
Also Read:Â The climate change and gender equality connection: How to support underfunded women-owned business
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