Existing ESG Standards and Frameworks
What is the use of an ESG Standard?
An Environmental, Social, and Governance (ESG) Standard provides guidance on how to measure, report and manage an organization’s non-financial risks and opportunities associated with its environmental, social, and governance performance.
Organizations can use an ESG Standard to:
assess their current performance against the recognized good practice;
identify areas for improvement;
report their ESG performance to key stakeholders; and,
benchmark their performance against others.
There are a number of existing ESG Standards and frameworks that organisations can choose from, depending on their sector, geographical location and other factors.
What are the existing ESG Standards and Framkeworks
There are a number of existing ESG standards and frameworks that companies can adopt or reference when developing their own internal ESG policies and procedures. These include:
– The Global Reporting Initiative (GRI) Sustainability Reporting Standards
– The International Organization for Standardization (ISO) 26000 Guidance on Social Responsibility
– The UN Global Compact
– The Principles for Responsible Investment (PRI)
– The Carbon Disclosure Project (CDP)
– The Sustainability Accounting Standards Board (SASB)
Each of these standards and frameworks provides guidance on a range of topics related to ESG, including environmental stewardship, social responsibility and governance. While there is no one-size-fits-all approach, companies can use these existing standards and frameworks to develop their own internal policies and procedures that are tailored to their specific needs and goals.
The Global Reporting Initiative (GRI) Sustainability Reporting Standards
The Global Reporting Initiative are the most widely used standards for sustainability reporting. Companies that report using the GRI Standards can disclose their performance on a range of environmental, social and governance topics. The latest version of the GRI Standards, released in 2016, is aligned with the UN Sustainable Development Goals (SDGs).
The International Organization for Standardization (ISO) 26000 Guidance on Social Responsibility
The ISO 26000 is a voluntary, internationally recognized standard that provides guidance on social responsibility. It is applicable to all organizations, regardless of size, sector, or location. The standard covers a range of topics, including environmental stewardship, human rights, labour practices, fair operating practices, consumer issues, and community involvement.
The UN Global Compact
The UN Global Compact is a set of 10 principles that address human rights, labour standards, environmental protection and anti-corruption. Companies that sign up to the Global Compact commit to integrating the principles into their business operations and reporting on their progress. The UN Global Compact also offers a range of resources and tools to help companies implement the principles.
The Principles for Responsible Investment (PRI)
The PRI is a set of six principles that aim to promote responsible investment practices. The principles cover environmental, social and corporate governance issues. Companies that sign up to the PRI commit to integrating the principles into their investment decision-making and reporting on their progress.
The Carbon Disclosure Project (CDP)
The CDP is a global disclosure system that allows companies to measure and report their greenhouse gas emissions. Companies that disclose their emissions through the CDP can access a range of resources, including climate change data and analysis, to help them manage and reduce their emissions.
The Sustainability Accounting Standards Board (SASB)
The SASB is a nonprofit organization that develops voluntary, industry-specific standards for the disclosure of financial material sustainability information. The SASB standards are designed to help companies communicate their ESG performance to investors in a way that is material to financial performance.
Task Force On Climate-related Financial Disclosures (TCFD)
The TCFD is a voluntary disclosure framework that provides recommendations on how companies can disclose climate-related risks and opportunities in their financial filings. The TCFD recommendations are designed to help investors understand the potential impacts of climate change on companies’ businesses and make more informed investment decisions.
The Global Initiative for Sustainability Ratings (GISR)
The GISR is a voluntary, internationally recognized rating system that assesses the sustainability performance of companies. The GISR ratings are based on a range of environmental, social and governance factors. Companies that receive a GISR rating can use it to communicate their sustainability performance to investors and other stakeholders.
The Investor Network on Climate Risk (INCR)
The INCR is a network of more than 100 institutional investors that focuses on climate risk. The INCR provides resources and information on climate risks and opportunities to its members, which include pension funds, asset managers and insurance companies.
Conclusion
There are a number of existing ESG standards and frameworks that companies can use to guide their disclosure of ESG information. These standards and frameworks cover a range of topics, including environmental stewardship, human rights, labor practices, and anti-corruption. Companies that disclose their ESG performance in line with these standards and frameworks can help investors understand the potential impacts of climate change on their businesses and make more informed investment decisions.