In the era of sustainable development, businesses around the world are focusing on integrating environmental, social and governance (ESG) standards and frameworks into their business operations
Below are six important standards that businesses should know about to secure their sustainability in the future.
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EU CSRD (ESRS)
: Aligning sustainability reporting with financial standards- Topic: Sustainability and Environmental Reporting
- Participation: More than 50,000 businesses
- Required for: EU companies with 250 or more employees or that are publicly listed
- Effective from: 1 January 2024
- Description: The EU CSRD expands mandatory sustainability reporting for EU companies, moving towards common, financially relevant standards.
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ISSB (IFRS): A global format for sustainability and climate-related reporting
- Topic: General Sustainability Accounting, Risks and Opportunities
- Suitable for: Medium-sized and large businesses
- Stakeholders: Investors, Chief Financial Officers, Finance departments
- Effective from: 1 January 2025
- Description: The IFRS Sustainability Disclosure Standards issued by the ISSB provide a global framework that connects sustainability reporting with financial reporting.
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TCFD: Guidance on disclosing financial risks related to Environment, Social and Governance
- Participation: More than 2,600 supporting organisations
- Suitable for: Large businesses
- Target: Integration into the ISSB standards in 2024
- Description: TCFD guides companies in disclosing climate-related financial risks; it is increasingly used in the financial sector and is endorsed by the SEC, FCA, NAIC and SGX.
4. CDP
Topics: Climate, Supply Chain, Forests, Water
Participation: 23,000 businesses
Suitable for: Medium-sized and large businesses
Description: CDP runs a global environmental disclosure system in which companies disclose information through questionnaires on climate change, forests and water security.
5. GRI (Global Reporting Initiative)
Topic: General
Participation: Around 10,000 organisations
Suitable for: All types of organisations
Description: GRI created the first global standards for measuring sustainability and social impacts, covering economic, environmental and social aspects; they help organisations understand and report on their impacts in a comparable and credible way, thereby increasing transparency about their contribution to sustainable development.
6. SASB (Value Reporting Foundation)
Topic: ESG-related financial risks
Participation: Around 800 businesses
Suitable for: Large businesses
Description: SASB provides non-financial environmental, social and governance disclosure standards, helping businesses integrate information on ESG-related financial risks into their financial reports.
Remarks:
The landscape of ESG reporting standards and guidelines is highly complex; however, a few points deserve attention: – Growing interest in, and resources devoted to, ESG from regions, countries and organisations – A trend towards integration, converging on one or a few common standards and guidelines – When choosing standards and frameworks, pay attention to the ESG reporting requirements of the various parties, and select the appropriate reporting standard accordingly – A rising number of standards related to biology (biodiversity), notably TNFD – Some countries have their own reporting standards, usually issued by the stock exchange and applicable to listed companies
