As the business world is advancing at the speed of light, Environmental, Social, and Governance (ESG) reporting also figures to be a major priority for organisations that are interested in stakeholder acceptance, as much as they tend to comply with standards and regulations worldwide and commit themselves fully to sustainable practices. An ESG report generally serves to evaluate a company's non-financial performance concerning environmental impact, ethics, and governance.
To facilitate professionals and organisations in adopting environmental standards in ways that best enhance their operations, the British Academy for Training and Development offers a course in environmental management standards ISO 14000. This programme helps attendees to gain important knowledge relevant for international alignment and also driving ESG performance onwards.
In this article, we will identify and discuss some of the top ESG reporting standards and offer practical steps on how businesses can meet them at the level of credibility and compliance in today's sustainability-driven world.
Why ESG Reporting Matters
ESG reporting goes beyond mere financial disclosures; it indicates the environment of an organisation as far as the management of environmental impacts, social responsibility, and governance risk is concerned. It has brought ESG into the limelight for some, if not all, of such increasing demand for transparency, sustainability, and accountability.
The benefits of ESG reporting are as follows:
That increases trust among investors and brings in sustainable investment.Helps boost the reputation of the brand and keep customers loyal.Enable firms to comply with legal and regulatory frameworks.Discovery of operational risks and opportunities.Improvement in the way of performing over the long term and providing resilience.
As companies come to terms with the fact that they can no longer operate contrary to sustainable practices, it creates an important aspect when it comes to selecting an appropriate ESG reporting standard.
Top ESG Reporting Standards
There are a number of internationally recognised frameworks on ESG reporting and standards that help companies in structuring their sustainability disclosures. Here are the top ESG reporting standards that every business should know:
1. Global Reporting Initiative (GRI)
GRI is one of the most popularly used standards internationally for ESG reporting. It guides organisations to inform stakeholders about their sustainability impact in a consistent and structured format.
Specific features of GRI:
Applicable to all organisations, regardless of sector.Stakeholder inclusiveness and materiality focus.Offers modular and topic-specific standards, such as GRI 305 for emissions and GRI 401 for employment.
How to comply with GRI standards:
Conduct a materiality assessment to determine the most relevant topics for stakeholders.Use the GRI's Universal Standards (GRI 1, 2, and 3) as the foundation.Report detailed data according to the topic-specific standards.Demonstrate transparency by explaining methodologies and reporting qualitative along with quantitative data.2. Sustainability Accounting Standards Board (SASB)
SASB standards provide a framework to help companies disclose information about sustainability factors that are financially material to investors.
Some key features of SASB:
Industry-specific guidance across 77 diverse sectors.Focus on financial materiality.Designed for the purpose of providing investor-useful insights.
How to apply SASB standards:
Identify the industry of interest from the SASB Materiality Map.
Focus on disclosing financial metrics that are materially relevant.Map your ESG efforts against relevant SASB metrics (energy usage, data privacy, or working practices).Align SASB metrics with annual financial filings or sustainability disclosures.3. Task Force on Climate-related Financial Disclosures (TCFD)
TCFD involves recommendations for climate-related disclosures so that there is transparency about risks and opportunities related to climate change.
Some key features of TCFD:
Emphasis on climate-related financial risks and strategies.Governance, Strategy, Risk Management, Metrics, and Targets: Four core pillars.Strong alignment with regulatory requirements in the UK, the EU, and beyond.
How to apply TCFD standards:
Integrate climate risk into corporate governance as well as other relevant board-level discussions.Assess climate risks as well as opportunities in the short, medium, and long term.Use scenario analysis to test the impacts of possible futures.Develop and disclose specific climate-related Key Performance Indicators (KPIs).4. Carbon Disclosure Project (CDP)
The CDP is a global not-for-profit organisation that maintains a disclosure system for investors, companies, and cities to manage their environmental impact.
Some key features of the CDP:
Focused on environmental disclosures (climate change, water security, and forests).An annual questionnaire-based disclosure system.Scoring of companies from D to A on their performance.
How to comply with CDP standards:
Register and fill in the annual CDP questionnaire.Ensure that data provided on emissions, energy usage, and climate strategies are accurate and thoroughly validated.Work collaboratively across departments to provide comprehensive responses.Set science-based targets to demonstrate that the long-term commitment is real and active.5. Integrated Reporting (IR) Framework
Integrated reporting promotes value creation through linking financial and non-financial information.
Key features of the IR Framework:
A special emphasis on integrated thinking and strategy alignment.Focuses on six capitals: financial, manufactured, intellectual, human, social, and natural.Encourages short and future-orientated reports.
How to meet IR Framework standards:
Develop a strategic story that joins ESG performance with financial results.Identify value drivers and stakeholder outcomes.Report succinctly, clearly, and in an integrated manner.Combine ESG metrics with financial metrics for an overall picture.How to meet the reporting standards
Here are six steps you can take to help you meet the reporting standards for ESG (Environmental, Social, and Governance):
Understand ESG reporting: Educate yourself on the ins and outs of ESG reporting and explore how reporting on risks and activities will look across the different areas of your business.Identify relevant frameworks: Assess which ESG reporting framework suits the objectives and market of your company the best.Collect ESG data (call in the experts): Compile information on governance, social, and environmental factors. Here, we recommend leveraging software to help you collect the data most efficiently. At Payhawk, for example, our spend management solution can do several significant things to help here, including estimating the CO₂ impact of card spending (together with our partner Lune) and capturing difficult-to-quantify Scope 3 supplier dataReport and disclose: Prepare ESG reports that adhere to the chosen framework's guidelines and present the ESG performance, initiatives, and risks transparently and concisely.Engage stakeholders: Include interested parties in preparing ESG reports.Data management: Improving data management procedures is necessary to guarantee the dependability and correctness of ESG data, which is essential for credibility and compliance.Why ESG standards are important
As the ESG credentials have become a little increasingly interesting to employees, customers, and investors (referring to a survey that says 82% of investors aged 18-34 would be willing to "take a hit" in order to support ethical investments), organisations have since started formalising their scoring, reporting, and communication around it.
The introduction of CSRD means that now investors and other stakeholders can more easily access relevant information to make better assessments of investment risks with respect to ESG and sustainability. There are those reporting provisions, by which, as a business, you get to make reviews of your company's effects and give priority to new initiatives to limit environmental damage as well as ethical decision-making and more.
Challenges in ESG Reporting
There are several challenges in ESG reporting, like:
Data complexity and availability: Ideally, understanding consistent ESG data across departments and supply chains is a dream.Standard confusion: Duplication or inconsistency can arise from multiple frameworks.Regulation requirement: New mandates such as CSRD and SEC climate disclosure rules may require an overhaul of processes. Greenwashing risk: Misrepresenting ESG performance harms reputation and incurs penalties.
Invest anew in ESG knowledge, digital tools and third-party assurance to overcome the challenges.