ESG Reporting: Deciphering The Alphabet Soup

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The industry is working on standard convergence, but we're not there yet—and the acronym list is daunting. Here's what to do in the meantime.

Expectations abound for most public and private companies to prepare an Environmental, Social and Governance (ESG) disclosure report. With a huge array of reporting standards and frameworks, where do you start? If you are facing regulation or mandates from key stakeholders, the solutions are more prescriptive and require less decision making. But what if you’ve got a variety of customers or stakeholders, each asking for a different reporting framework?

For the past two years, there have been several efforts to consolidate standards, but there are still far too many to choose from. Ultimately, convergence will be achieved in the next two to three years. So, what do you do in the meantime? First, get a handle on the standards and frameworks that are most prevalent. Next, chart a course that meets near-term needs, but also provides optionality as the industry evolves.

What’s in the Soup?

Reporting can fall under many names: Climate Disclosure, Sustainability, Corporate Social Responsibility (CSR), ESG, and the list goes on. In the last several years, some reporting is being more closely tied to corporate financial reports and the associated risk analyses.

There are myriad reporting standards, frameworks and protocols covering everything from greenhouse gas (carbon) reporting to full ESG reporting (see sidebar). Some of these standards are almost a quarter-century old, and others have appeared in the last couple of years. Frameworks and standards are different and often complementary. For example, most CDP reports (a standard) rely on the GHG protocol (a framework). Standards provide specific requirements as to what should be reported, including metrics, while frameworks provide guidance on how information is structured and reported. Many of these standards overlap one another, but no two are identical.

There have been multiple efforts to combine standards and frameworks into a common standard. But despite these attempts, the number of standards and frameworks remains dizzying.

Are Mandates Coming?

The EU has proposed mandatory reporting based on the Commission’s proposed  whose first set of standards would apply to certain large EU companies. The standards are planned to be adopted in October 2022. Gary Gensler, SEC chair, has signaled that climate disclosure rules will be coming for U.S. publicly traded companies soon.

How and When to Start

In the short term, ESG reporting provides company transparency and will satisfy multiple stakeholder groups. In the long term, it will position your company for a potential regulatory mandate or a new requirement from an important partner.

There are several reporting schemes that have broader use and acceptance, such as CDP, GRI, SASB, GHG Protocol and TCFD. If there is no clear mandate for choosing a standard, a company could develop an in-house reporting standard – one that draws from the relevant aspects of a handful standards, based on the company’s unique characteristics.

Prepare for ESG Reporting

1. Understand why you are reporting:

– Is it right thing to do? Does it align with your corporate culture?

– Are there stakeholder requests?

– Are shareholders demanding it? Which reporting standard?

– Are there regulatory requirements?

2. What to report?

– Determine what is material for your company and what is being requested by stakeholders.

  • Review several of the highest utilized standards to understand which reporting elements to consider.
  • Prepare a materiality assessment to evaluate what is important to stakeholders and what is important to business results. Couple this with a risk/impact analysis.
  • Consider developing a stakeholder engagement plan to include: customers, creditors, insurers, key shareholders, suppliers, NGOs, employees, regulators, internal public and governmental affairs team, and the senior leadership team.
3. Compile relevant data.

Do not underestimate the level of effort and complexity involved in this. For carbon reporting alone, it may take several years to understand and quantify the aspects of your business that contribute to GHG emissions.

4. Build the linkages to pull data together.

Develop methodology to turn raw data into reportable metrics. Electronic data gathering is best as manual data entry is fraught with opportunities for error. Many software vendors offer enterprise products (usually SAAS) that can help with data collection and reporting. 

5. Choose frameworks that work best for your stakeholder investors and industry peers.
6. If step five is not an option

build your own reporting standard from the relevant and material elements that are contained within a variety of the more mainstream reporting standards and using the most widely accepted protocols.

(Note: Steps 5 and 6 should be worked in parallel with steps 3 and 4.)

If building your own reporting, it is advisable to develop a checklist of the most likely standards that your company may be called upon to report. Evaluate your own reporting elements against those standards, so you know what gaps you may need to bridge.

7. Publish your report.
8. Prepare for unified reporting standards, possibly promulgated by regulatory agencies.

Keep your ear to the ground and stay informed of developments and how you might have to adjust your data collection and reporting to meet new requirements.

Bringing it all Together

When it comes to ESG reporting, there are a multitude of considerations. Not only is there a wide array of standards and frameworks from which to choose, but there may be many different stakeholders tugging at your sleeve, each attempting to steer you towards their favored standard. These pulls, together with the thought of potential regulatory disclosure requirements, can be almost paralyzing.

The solution begins with understanding the landscape. Take stock of the internal and external forces that are driving towards ESG reporting and compare standards and frameworks that are a good fit for your business and stakeholder expectations. Without an explicit mandate, consider developing your own reporting standard that reflects the impacts and risks associated with your lines of business and utilizes select reporting elements from other standards. If done right, ESG reporting will add value to your company.


  • CDP – (formerly the Carbon Disclosure Project) one of the most broadly used global disclosure systems for environmental impacts,
  • GHG Protocol -Comprehensive global standardized frameworks to measure and manage greenhouse gas (GHG) emissions
  • GRI – Global Resources Initiative is a widely adopted global standard for ESG reporting.
  • SASB – Sustainable Accounting Standards Board provides guidance to set up industry and sector specific ESG reports, covering ESG topics across 5 dimensions
  • TCFD (FSB) – The Task Force on Climate-related Financial Disclosures was set up by the Financial Stability Board (FSB) of the G20 to use when disclosing climate-related financial risks and opportunities
  • ISSB – International Sustainability Standards Board, created by the consolidation of the CDSB and IIRC to form the VRF under the IFRS Foundation
    • CDSB –Climate Disclosure Standards Board is an international consortium of business and NGOs that developed framework for companies to report environmental and climate change-related information
    • IIRC – The International Integrated Reporting Council Framework connects sustainability disclosure to financial reporting
    • – Value Reporting Foundation was previously formed by the consolidation of the CDSB and IIRC
  • UNSDG – United Nations Sustainable Development Goals is a collection of 17 goals adopted by the UN member states to achieve the 2030 Agenda for Sustainable Development.
  • DJSI – The Dow Jones Sustainability Indices, evaluating the sustainability performance of companies trading publicly
  • SECR – Streamlined Energy and Carbon Reporting framework. A UK requirement that requires obligated companies to report on their energy consumption and associated GHG emissions within their financial reporting
  • WEF IBC – World Economic Forum International Business Council Stakeholder Capitalism Metrics
  • PACTA The Paris Agreement Capital Transition measures financial portfolios’ alignment with various climate scenarios consistent with the Paris Agreement.
  • NGFS – The Network for Greening the Financial System’s goal is to accelerate the scaling up of green finance and develop recommendations for central banks’ role for climate change
  • UNGC 10 Principles – UN Global Compact 10 Principles
  • NFRD – Non-Financial Reporting Directive provides EU Guidelines on reporting climate-related information:
  • UN PRI – The United Nations Principles for Responsible Investment launched in 2006 to help investors incorporate ESG factors into their investment and ownership decisions.

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