Overview

There is a dizzying array of acronyms when it comes to sustainability frameworks and whilst progress is being made to harmonize them it is useful to know the main ones:

• ESG - Evironmental, Social, and Corporate Governance is the all-encompassing term used to describe sustainability reporting by companies. Depending on your jurisdiction, ESG reporting has been voluntary, centered around companies’ annual sustainability or “corporate social responsibility” (CSR) reports. ESG reporting will soon become a mandatory requirement and as such it will be imperative to calculate carbon footprint correctly. Depending on your business area you may be required to report under an array of different frameworks but for the environmental component in measuring your actual carbon footprint, ImpactScope will assist agnostically.

• GRI - The Global Reporting Initiative, formed in 1997, developed the first and most widely adopted global standards for sustainability reporting. The GRI Standards are broader in scope than some of the other frameworks.

• SASB - The Sustainability Accounting Standards Board in 2018 published a set of standards for 77 different industries, which identify the minimal set of financially material sustainability topics and their associated metrics for a typical company in a given industry. Focusing on financially material issues for specific industries, SASB is more granular in scope than some of the other frameworks.

• TCFD - The Task Force on Climate-related Financial Disclosures, chaired by former New York City mayor Michael Bloomberg, was set up in 2015 by the Financial Stability Board (FSB) of the G20 to develop voluntary guidelines for companies, banks, and investors to use when disclosing climate-related financial risks and opportunities to their stakeholders. TCFD-based reporting became mandatory in 2020 for all asset owners and managers signed on to the UN Principles for Responsible Investment.

• CDSB - The Climate Disclosure Standards Board (CDSB) is an international consortium of business and environmental NGOs that has set forth a framework for companies to report environmental and climate change-related information in their corporate financial reporting, such as the annual report.

• CDP - CDP (formerly the Carbon Disclosure Project) is a UK-based non-profit that runs a global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts. Over 8,400 companies, 800 cities, and 120 states and regions have reported through CDP on climate change, water security, and deforestation.

• UN SDGs - The United Nations Sustainable Development Goals is a collection of 17 goals adopted by the UN member states in 2015 to achieve the 2030 Agenda for Sustainable Development. The SDGs provide a blueprint for countries to achieve a more sustainable future, including ending poverty and hunger, improving health and education, combating climate change, and protecting oceans and forests. While the SDGs were created for UN member states, the UN Global Compact and GRI have joined forces to help businesses report on the SDGs.

• UN PRI - The United Nations in 2006 launched the Principles for Responsible Investment, to help investors incorporate ESG factors into their investment and ownership decisions. The international network of investor signatories has grown from 100 to over 2,300, representing over $80 trillion in assets under management. The six principles are a set of voluntary investment principles, supported by 35 possible actions, that investors can use to integrate ESG into investment practice. The PRI has specifically aligned its work with the UN SDGs and has also made TCFD-based reporting mandatory for its signatories in 2020.

• EU Guidelines on reporting climate-related information: In June 2019, the European Commission published guidelines on reporting climate-related information. The guidelines aim to give practical recommendations to around 6,000 EU-listed companies, banks, and insurance companies that must disclose non-financial information under the Non-Financial Reporting Directive (NFRD). They incorporate the TCFD recommendations as well as the “EU taxonomy”, a classification system to identify the parts of a business that have a significant positive impact on climate.

• EU Taxonomy - The European Commission’s Technical Expert Group on sustainable finance (TEG) has developed a classification system, or taxonomy, for environmentally-sustainable economic activities. The group screened activities across a wide range of sectors to compile a framework to identify the parts of a business that have a significant positive impact on climate. The taxonomy also provides guidance on the boundaries of negative impact with do-no-harm criteria. Companies that are obliged to report under NFRD will be required to disclose the share of their business/capex/assets that is taxonomy aligned.