Many sustainability reporting standards exist today to give guidance on what

to report and how. This article explores different reporting standards and
frameworks, as well as factors to consider when choosing one to work with.

What are reporting standards?

Sustainability reporting standards or reporting frameworks are guidelines to
report ESG (Environment, Social, Governance) impact on an organisational
level. Standards are created by experts in various topics and industries. They
provide guidance on how to prepare or file disclosures in a structured and
appropriate way that can be used by different industries, organizations of
different sizes and reporting requirements.

Why reporting standards?

Any company embarking on sustainability reporting faces the same question
at some point: what to report, and how? Thankfully, reporting standards and
frameworks exist to make the attempt a lot more manageable. They make it
easier to report on how sustainable a company's activities are by giving best
practices. This includes detailing specific measurements and indicators that
show how impactful the company's actions are.

Overview of the most important

sustainability reporting standards
Here is an overview of the most important ESG reporting standards that exist
in the reporting space today:

ESRS
The EU Sustainability Reporting Standards (ESRS) are being developed to
support the Corporate Sustainability Reporting Directive (CSRD), which would
make ESRS-aligned reporting mandatory for companies.

EU Taxonomy
The EU taxonomy is a classification system, establishing a list of
environmentally sustainable economic activities. The goal is to create more
transparency around the sustainability of companies’ business activities.

GRI Standards
Global Reporting Initiative (GRI) Standards is a modular set of universal,
sectoral, and topical standards. GRI Standards guide the disclosure of an
organisation's economic, environmental, and social impacts and the
management of those impacts.

SASB Standards
Comprised of 77 industry-specific reporting guidelines, the SASB
Standards guides organisations to report on the risks and opportunities
surrounding the most financially material ESG topics of their industry.

TCFD
The Task Force on Climate-related Financial Disclosures (TCFD)
recommendations is a framework to report on climate-related menace and
chance faced by a business.

CDP
The Carbon Disclosure Project (CDP) is a disclosure system focused on
environmental impacts, specifically water-, climate-, and forest-related
topics.

ISSB Standards
The IFRS Foundation is developing a global baseline for sustainability
reporting for the capital markets, with a focus on the impact of sustainability
on enterprise value.

GHG Protocol
The GHG Protocol is an accounting standard to measure and report
greenhouse gas emissions and is the basis for Scope 1, 2, and 3
classification.

Which sustainability reporting standard

to choose?
Several factors influence the decision to use certain sustainability reporting
standards over others. These factors determine which framework you should
choose:

• Regulatory requirements: Different countries and regions of the world

have their own reporting requirements and frameworks. For
compliance purposes, it may be necessary to use the dictated
standard, although this does not preclude the use of other standards to
support or complement the entire reporting approach.
• Investor interests: Investors often have their own considerations
when it comes to assessing a company's ESG performance. Depending
on their focus and investing orientation, investors require sustainability
information specific to their investment angle. Many reporting
 frameworks are investor-led or targeted with an emphasis on
connecting sustainability with financial performance, such as the TCFD
and CDP. If a company is investor-dependent, using a framework
designed for the capital markets would be an advantage.
• Industry best practices: Every industry faces its own unique risks and
opportunities that may not be covered in universal frameworks. For
those wishing to add more depth to their reporting, it makes sense to
use a reporting framework that dives into the key ESG issues in an
industry, such as one of the SASB Standards.

Standards for climate risk and emissions reporting

Growing concerns about climate accountability and the role of business in
national low-carbon blueprints are prompting new legislation on climate
disclosures, and with it, the development of climate reporting standards.
Climate reporting is a new tool to assess and disclose climate-related risks
and opportunities.

All general reporting standards include guidance on climate or emissions

reporting, the major difference being the degree and depth of reporting.

At present, the most recognised climate reporting framework is the TCFD,

which has been adopted by several OECD countries in rapid succession.

The GHG Protocol forms the foundational basis for most emissions
reporting, even if not explicitly stated. Most companies use its carbon
accounting principles to measure their carbon footprint. Even frameworks
including the GRI Standards and TCFD build on Protocol concepts, creating a
common and consistent language for emissions tracking.

Other sustainability reporting standards

Ratings agencies such as MSCI, S&P Global, Dow Jones, and FTSE use
independent frameworks developed internally to assess companies on a
range of sustainability dimensions. These frameworks do not offer guidelines
on what ESG indicators to report and how, but can provide useful insights
into the aspects that investors take into consideration. Accordingly,
companies can refer to these ratings frameworks to inform their reporting
approach.

Hybrid models have emerged where traditional financial reporting

frameworks are modified to include non-financial information. The
Integrated Reporting Framework, for example, adopts a holistic value
creation approach that combines both financial and sustainability-related
disclosures in its guidelines.

How and where to start with a

sustainability reporting standard?
Our first advice to reporting companies is to determine the reporting
objective:

• Is it to respond to an investor request, in which case the report may be

defined by the investing angle?
• Or is it to comply with reporting laws?
• Is the intent to cover all bases or to highlight one particular stage in the
operations with high impact?
But our best advice is to maintain the best of intentions while improving as
the reporting journey progresses. Perfection is an unrealistic expectation,
more so when the reporting standards themselves are still being developed
and refined.

Conclusion
Set progressive goals for the reporting journey, taking care to set up the
processes for data collection. A solid foundation for data collection will
enable a smoother reporting experience in the long run. As reporting
matures, you may find your chosen framework diverging from your needs or
objectives. This can be supplemented with additional standards or by making
a transition to a new framework.

How we help you

• We help you decide the most suitable reporting framework and guide
you through the data and disclosures required.

• We simplify the collection of ESG data in your organisation by offering

one central platform to automate data collection with integrations into
ERP, HRM, CRM, EMS etc.

• We facilitate data collection from your suppliers and ensure that

relevant information arrives in a complete and accurate manner. We
will handle the burden of information exchange with multiple
stakeholders.

• We help you complete the information requests from regulators and

guarantee the protection of business-critical information, for example
about your supplier network.