What are the reporting frameworks? How do they differ?

An ESG framework is a set of rules that helps companies gather and analyze sustainability data. There are at least 14 common frameworks for Environmental, Social, and Governance (ESG) reporting. Each is different in the way it measures and scores a company’s data.

There are many methods of ESG reporting because there are many types of businesses. Even within the same industry, companies will choose the ESG framework that best meets their needs.

Companies could also choose their ESG reporting frameworks based on the needs of their circle of responsibility. This circle could include investors, vendors, customers, or other interested individuals or groups. All may have slightly different expectations for specific ESG reporting data from the organizations they monitor.

This still-complex ESG reporting system, with many options to choose from, is getting simpler. 

There are now a clear Top Five, most-preferred and often-used ESG Reporting frameworks. These are the Carbon Disclosure Project (CDP), Climate Disclosure Standards Board (CDSB), Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC), and Sustainability Accounting Standards Board (SASB). 

At this point these frameworks are mostly used by larger, publicly traded companies. But, it is likely that governments and regulatory bodies will require smaller businesses to use them in the future.

The choice of ESG reporting method is important. Each framework provides different rules and measuring tools. How do you choose which framework to use?

You could:

• Hire a consulting agency to find one that best fits your needs.
• Choose one based on how relevant it is to your industry.
• Choose one that has the best measuring tools for your industry.

Some caveats:

Some reporting tools can make a company seem more environmentally or socially responsible than others. Try to choose assessments that equally value, or weight, the E, S, and G pillars.

The most important parts of a successful ESG reporting program are the accuracy of the data being measured, and the ability to track goal-driven performance.

Frameworks differ in how they measure and score the data provided by a company, as well as in what they measure. There is currently no universally accepted standard for ESG frameworks. 

The principal features and differences between these Top Five frameworks are as follows:

Framework	Year Founded	Primary Focus	Size of User Base
CDP	2000	Climate impacts such as carbon emissions, water usage, and deforestation	9,600 companies and 800 cities/states/regions
CDSB	2007	Mostly environmental information	374 companies across 32 countries and 10 sectors, including some of the very largest firms
GRI	1997	Developed by the Coalition for Environmentally Responsible Economies (CERES) and the UN Environment Programme (UNEP) in response to Exxon Valdez Oil Spill	More than 13,000 organizations in 90 countries, translated into a dozen languages. 80% of the world’s 250 largest corporations use GRI. Governed by the Global Sustainability Standards Board
IIRC	2013	Designed to replace numerous, disparate corporate reports with an integrated framework	1,600 companies across 64 countries
SASB	2011	Contains 77 standardsthat are industry-sector specific. Also has sustainability topics and metrics to ensure financial materiality	120 large firms now use it, but because of its very specific focus on industry, many companies report through both SASB and GRI

The lack of standardization in ESG reporting means that companies can choose whichever framework suits their needs. This can become a problem when companies only choose to highlight the data that proves they are doing well. 

There are over 100 frameworks for ESG reporting. But there are only fourteen major frameworks, of which five are the gold standard. 

These are:

• Carbon Disclosure Project (CDP)
• Climate Disclosure Standards Board (CDSB)
• Global Reporting Initiative (GRI)
• International Integrated Reporting Council (IIRC)
• Sustainability Accounting Standards Board (SASB)