Which Sustainability Reporting Framework Is Best for Your Business?
As a corporate practice, sustainability reporting has been experiencing rapid adoption in recent years. The number of companies reporting on their sustainability performance has increased significantly, with many large businesses now producing regular reports.
There are a number of reasons why companies may choose to report on their sustainability performance. For some, it is a way of demonstrating their commitment to environmental and social responsibility. Others see it as a way of managing risks and opportunities, or of highlighting areas where they are making a positive impact.
If you’re interested in creating a sustainability report, you need to be aware of the different reporting frameworks that are available. In this article, Sandpaper will be discussing the four of the most popular reporting frameworks, so that you can decide which one is best for your business.
Let’s get started!
What Is a Sustainability Reporting Framework?
If you’re wondering what a sustainability reporting framework is, don’t worry! We’re going to explain this concept in detail before diving into the article.
A reporting framework is a set of standards developed by some entity (i.e., company, government, independent body, etc.) with the goal of standardizing the process of creating reports in a certain area. They’re essentially guidelines that reporters can follow to ensure that their reports are comprehensive and consistent.
Now, let’s focus on sustainability reporting frameworks specifically. These frameworks provide guidance on how businesses can report on their environmental, social, and governance (ESG) performance.
The goal is to help businesses create more detailed, accurate, and meaningful reports by giving explicit instructions in regard to:
- Volume: How much data should be reported.
- Velocity: How often data should be reported.
- Variety: What kinds of data points should be reported.
- Veracity: How accurate reported data should be.
- Value: How reported data should influence company decisions.
- Variability: How to track changes and shifts in reported data.
- Visualization: How to present data in the report.
Why Use a Sustainability Reporting Framework?
There are a few key reasons why your business should be using a sustainability reporting framework, including:
- Increased comprehensiveness: A well-designed framework will ensure that all relevant data points are captured in your report.
- Greater consistency: By following a set structure, you can be sure that your report is formatted in a way that is easy to understand and compare year-over-year.
- Improved clarity: A sustainability report that is clear and concise is more likely to be read and used by stakeholders.
- More actionable insights: By reporting on key indicators, you can identify areas where your company is excelling and areas that need improvement.
If you want to learn more about the many benefits of sustainability reporting, check out this article we’ve written on the subject:
Most Common Sustainability Reporting Frameworks
Now that we’ve answered the question, “What is a sustainability reporting framework?” it’s time to take a closer look at the different types of frameworks that are available.
The most commonly used sustainability reporting frameworks are:
- The Global Reporting Initiative (GRI)
- The Sustainability Accounting Standards Board (SASB)
- The International Integrated Reporting Council (IIRC)
- The Task Force on Climate-related Financial Disclosures (TCFD)
Let’s take a quick look at each of these frameworks so that you can get a better understanding of what they entail and which is best for your business.
1. The Global Reporting Initiative (GRI)
The Global Reporting Initiative (GRI) is the most widely used sustainability reporting framework in the world. Over 3,500 organizations from across a variety of industries use it to report on their ESG performance.
The GRI has a comprehensive set of guidelines that businesses can follow to produce detailed and reliable reports. The guidelines cover a few main topics, such as:
- environmental impact
- social responsibility
- governance
They also offer different levels of reporting, so businesses can choose to report at a basic or more advanced level, depending on their needs and resources.
One of the key benefits of using the GRI framework is that it allows businesses to compare their performance against others in their industry. This is because the GRI publishes sector-specific supplements and standards that provide guidance on how businesses in a particular industry can report on their ESG performance.
2. The Sustainability Accounting Standards Board (SASB)
The Sustainability Accounting Standards Board (SASB) framework is another popular sustainability reporting framework. Unlike the GRI, which focuses on all ESG topics equally, the SASB has a more targeted approach. It provides guidance on how businesses can report on the specific ESG topics that are material to their industry.
For those that don’t know, materiality refers to the environmental, social, and governance factors that could have a significant impact on a business’s ability to create value for its shareholders.
This focus on materiality makes the SASB framework especially useful for investors who are looking for detailed information on a company’s ESG performance. It also makes it easier for businesses to identify the key ESG issues that they need to focus on.
The SASB framework is currently being used by over 1,000 organizations, including companies such as Google, Coca-Cola, and General Electric.
3. The International Integrated Reporting Council (IIRC)
The International Integrated Reporting Council (IIRC) framework is a relatively new framework that was developed in 2013. It takes a holistic approach to sustainability reporting, and it focuses on how businesses can create value over the long term.
The IIRC’s guidelines cover topics such as strategy, risk, and performance. They also emphasize the importance of communication and stakeholder engagement.
One of the key benefits of the IIRC framework is that it helps businesses to understand how their ESG performance affects their overall strategy and business model. This can be extremely valuable for businesses that are looking to integrate sustainability into their operations.
4. The Task Force on Climate-related Financial Disclosures (TCFD)
The Task Force on Climate-related Financial Disclosures (TCFD) framework is a framework that was created by the Financial Stability Board in 2015. It provides guidance on how businesses can disclose the financial risks and opportunities that are associated with climate change.
The TCFD framework is voluntary, but it is gaining traction among businesses and investors. Over 1,000 organizations have already signed up to use it, including companies such as HSBC, JPMorgan Chase, and Microsoft.
Which Sustainability Reporting Framework Is Best?
So, which of these sustainability reporting frameworks is best for your business? The answer depends on a number of factors, including:
- The size and scope of your business
- The resources that you have available
- Your industry and sector
- Your stakeholders’ needs and expectations
- Any applicable government regulations
To help you choose the best sustainability reporting framework for your business, we’ve put together a list of guiding questions that may provide some clarity:
1. If you’re publishing an industry-specific report…
We’d recommend using the GRI reporting framework. This is because it offers sector-specific guidance that can help businesses to benchmark their performance against others in their industry.
2. If you’re reporting for investors…
We’d recommend using the SASB or TCFD frameworks. These frameworks are focused on materiality and climate-related risks, which are key considerations for investors.
3. If you’re looking for a comprehensive approach to sustainability reporting…
We’d recommend using the IIRC framework. This framework takes a holistic approach to sustainability reporting and provides guidance on how businesses can create value over the long term.
4. If you’re new to sustainability reporting…
We’d recommend using the GRI or IIRC frameworks. These frameworks are relatively simple to use, and they provide a good introduction to sustainability reporting. Plus, both offer free training resources to help you get started.
Start Standardizing Your Sustainability Reporting
At the end of the day, there is no “one size fits all” answer to this question. The best sustainability reporting framework for your business will depend on a number of factors. If you’re not sure which framework is best for your business, we recommend that you talk to a sustainability reporting expert.
At Sandpaper, we have a team of experienced sustainability reporting consultants who can help you to choose the best framework for your business. We can also assist with the development and design of your report, and we can provide advice on how to engage your stakeholders throughout the process.
To learn more about our sustainability reporting services, feel free to contact us.