Choosing-the-right-framework-for-sustainability-report

Sustainability reporting framework

Choosing the right framework for your sustainability report

GRI, SASB, CDP, IIRC Which one to choose?

The last two decades have seen a tremendous increase in nonfinancial reporting by businesses, owing to increased demands from stakeholders for more information on corporations’ environmental and social impacts. Faced with this pressure to cover a wide range of concerns, including greenhouse gas emissions, climate risk, board diversity, and the gender pay gap, businesses have adopted sustainability reporting frameworks to assist them in structuring their nonfinancial reports.

The most common reporting frameworks

However, there are several sustainability reporting frameworks to choose from. It can be challenging for businesses attempting nonfinancial reporting for the first time to differentiate between the different models and understand their goals. In this article, we’ll be discussing four of the most common reporting frameworks to make this process a bit easier.

What is a Reporting Framework?

A reporting framework is a stand-alone tool that helps businesses produce sustainability reports and ESG disclosures. Reporting frameworks urge organizations to give non-financial information in addition to financial data, allowing all organizations worldwide to evaluate and compare their sustainability performance and disclose the results to the public.

Sustainability reporting frameworks

There are plenty of reporting frameworks to choose from, but you don’t have to make the decision alone. The first step is to decide which framework is best suited for your organization’s specific needs. Each framework has its own unique set of criteria that you might find beneficial depending on what type of information you’re trying to get across, and each framework has different priorities within certain key categories that are important for evaluating your environmental, social, or governance performance.

Reporting frameworks 1997-2012

What Are Some of The Most Popular Frameworks?

The most popular reporting frameworks include the Global Reporting Initiative (GRI), the Carbon Disclosure Project (CDP), the Integrated Reporting Framework (IIRC), and the Sustainability Accounting Standards Board (SASB).

Global Reporting Initiative (GRI)

Global Reporting Initiative

The GRI is a reporting framework that aims to help companies report their environmental and social impacts to a wide range of stakeholders. It also happens to be the most popular ESG reporting framework in existence among large companies. In 2020, 80% of the sustainability reports filed were under the GRI.

Environment: The GRI requires companies to report on the environmental impacts of their materials, energy consumption, emissions, waste, water usage, and regulatory compliance.

Social: The GRI requires organizations to report on their social, human rights, labour practices, responsible sourcing, business partnerships and structure, community investment activities, financial policies (such as loans offered), governance systems (board composition), and corporate citizenship.

Economic: The GRI requires organizations to report on their economic performance by providing data on total revenue, net income, and retained earnings.

Carbon Disclosure Project

Carbon Disclosure Project (CDP)

CDP
The CDP is a reporting framework that focuses specifically on climate change and greenhouse gas emissions. Founded in the U.S., but it’s considered being an international model that relies on participation from around the world. The CDP requires organizations to disclose the GHG emissions that are directly under their control, which can include manufacturing operations, fleets, products used by customers and purchased electricity.

Environmental:

The CDP forces organizations to report data on GHG emissions from all direct operations as well as indirect sources. It also considers greenhouse gases emitted from purchased products and services.

Social:
The CDP requires organizations to disclose information on environmental, social, and governance issues that can include community investments, human rights compliance, license applications for locations, and the structure of stakeholders such as boards and shareholders.

Integrated Reporting Framework (IIRC)

The IIRC is a nonfinancial reporting framework that aims to help organizations report their ESG performance. The Sustainable Accounting Standards Board (SASB), which catalysed the development of an operational standard for nonfinancial reporting and is also interested in creating a more sustainable financial market developed it.

Integrated Reporting Framework

Environment:
The IIRC requires organizations to disclose information on environmental impacts such as water use, greenhouse gas emissions, packaging, disposal practices, carbon footprints, and pollution.

Social:
The IIRC requires organizations to disclose their social impacts such as diversity in recruitment practices, the percentage of women at every level of management, community engagement initiatives (such as donations), supplier training initiatives (such as worker safety), measurements for working hours/overtime, and the number of accidents.

Government:
The IIRC requires organizations to disclose information about board structure (such as the proportion of independent directors), human rights compliance reporting, financial policies (such as loans offered), community engagement initiatives (such as donations), supplier training initiatives, and health and safety efforts.

When things aren’t sustainable, they eventually have to stop”. @Anders Ankarlid

Sustainability Accounting Standards Board (SASB)

The SASB is an organization that has created the first set of sustainability accounting standards. They are built on three principles: materiality, risk and uncertainty, and goals and performance.

Sustainability Accounting Standards Board

Environmental:
SASB’s framework requires organizations to disclose their significant environmental information such as greenhouse gas emissions and water use. It also requires reporting about natural resource use, disposal practices, and recycling.

Social:
SASB‘s framework requires organizations to disclose their social impacts, including community engagement initiatives (such as donations), supplier training initiatives (such as worker safety), measurements for working hours/overtime, and the number of accidents in a certain amount of time.

Government:
The SASB does not require organizations to report specifically about government action.

Picking The Right Framework for Your Report

Choosing the right framework for your sustainability report is a matter of finding a framework that meshes well with organizational objectives, stakeholder needs, and regulatory obligations.

As you can see, not all frameworks address all areas of ESG reporting. The PRI framework, for example, only addresses environmental and social impacts. If reporting on governmental or economic impacts is one of your organizational aims, you’ll likely need to avoid the PRI or combine it with another framework in a hybrid approach.

GRI, SASB, IIRC, CDP which one to choose?

Sustainability reporting framework
Sustainability reporting framework

It’s also important to remember that when it comes to reporting, stakeholders all want different things. Your customers may require social and environmental information, while your investors might only really care about the economic impacts of your business practices. It’s important to understand what type of data interests these stakeholders most before choosing a reporting framework so that you can make a more informed decision.

Deciding which framework to adopt is highly individualized, meaning that it’s hard to offer guidance beyond suggesting that companies research each framework and make sure that they align with their goals. Choosing a framework that aligns with your reporting needs, organizational objectives, and the interests of your stakeholders is one way to make sure you’re making an accurate representation of your company in a sustainability report. There are lots of options in frameworks but remember that it’s possible to choose a different framework in the future if you think another might work better for certain sections or topics within your report.

As COVID-19 continues to disrupt our way of life, it’s important for corporations to demonstrate their commitment to sustainability and a sustainable future. The framework provided in this article is one way you can make sure your sustainability reports are up to the task of addressing stakeholder concerns with respect to COVID-19.

About the Author

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Peter CaushBased in Dubai for over 10years, Peter Caush is the founder of Sandpaperme.com and TheSchoolAgency.com.A trusted authority on digital marketing Peter is passionate about helping SME’s grow their business in the Gulf region. When he’s not in the office Peter enjoys playing squash, often more times than his knees can cope.

About Sandpaper

At Sandpaper We have been around long enough to realize the importance of good report writing, research, and design. A thoroughly planned and executed report builds loyalty and trust among stakeholders.
In the 10 years of service, Sandpaper has managed a stay ahead of its competition; by developing and adapting to changes in both the global and local corporate landscape in the United Arab Emirates.

Annual Reports : Sustainability/Environmental, Financial/AGM, Impact and special focus.

Sustainability Reports, Annual Reports 90%
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