When deciding which ESG framework to use, companies should consider their specific ESG priorities, industry standards, ease of implementation, and stakeholder requirements. It’s important to choose a framework that aligns with a company’s unique background and priorities. Regional allocation can also be a factor to consider, as certain frameworks may be more widely adopted in certain regions.
A company need not restrict to one definite framework; multiple ones can be referred simultaneously. Infact, it is an encouraged practise. Some prefer to follow one base framework and index the overlapping points with any other complementary framework.
Global Reporting Initiative (GRI): GRI is the most widely adopted framework globally that focuses on sustainability reporting. It provides guidance on reporting a range of ESG issues, including greenhouse gas emissions, human rights, tax strategy and supply chain transparency. It is the most robust set of disclosures and appeals to all stakeholders. GRI is used by companies operating in Europe, North America and the Asia Pacific (APAC).
Task Force on Climate-related Financial Disclosures (TCFD): TCFD was created with the intention to encourage companies to disclose their climate-related financial risks and opportunities. Companies/Investors primarily focussing on the ‘E’ of ESG leverage this guidance note. Plethora of tools and techniques have been proposed by the standard setters- baselining carbon emissions, decarbonization strategies adopted & scenario analysis. TCFD is fastest growing framework and finds acceptance primarily in North America & Europe. For countries like Singapore, Canada, New Zealand, etc, TCFD forms the basis of their domestic statutory ESG doscloures.
Sustainability Accounting Standards Board (SASB): SASB is a standard that provides industry-specific ESG guidance. It is designed to help companies disclose material ESG issues that are relevant to their industry. For the sake of simplicity, SASB has divided companies as per 77 industries across 11 thematic sectors. SASB is primarily used by companies operating in the United States and is very popular among the investor community.
Business Reporting and Sustainability Report (BRSR): BRSR is a framework put forward by the Securities and Exchange Board of India (SEBI), primarily to assist large public entities report on their ESG performance. Although non-binding for private companies, SEBI has suggested them to embark on their ESG journey on a voluntary basis to reap the benefits in the long run. BRSR draws inspiration from the UN SDGs, NGRBCs, GRI & UNGC principles and is a framework designed at the intersection of these standards. Ref :https://thepurposebusiness.com/insights/navigating-esg-reporting-frameworks