ESG (Environmental, Social, and Governance) is a vast sector with several reporting standards and a plethora of terminology and acronyms to fill a dictionary. With so many alternatives accessible, it might be difficult to know where to start or how to plan your next steps.

First, in many nations, ESG reporting is voluntary, therefore there is no one standard imposed by the government. Instead, hundreds of ESG reporting standards exist, the majority of which are international and produced and administered by private groups. Each of these private businesses has approached what is crucial in ESG disclosure in a somewhat different way.

There are three general types of ESG standards:

• Questionnaire standards: They do not require the disclosing corporation to submit a report, but rather to reply to a set of industry-specific questions. The CDP was one of the first widely utilized ESG questionnaire standards (formerly the Carbon Disclosure Project). The criteria for questionnaires are deceptively easy. While there is no requirement to create an individual report, the questions are hard and designed to elicit a high level of information from firms.

• Leveraged information reports: such as the Newsweek Green Rankings, are "reverse reports" in the sense that the normal operator does unpleasant research on a firm, then writes a report to offer to the company with an "invitation" to respond with modifications before the report is released. Defending against unfavourable remarks in these reports is sometimes a company's first exposure to ESG disclosure.

• Reporting frameworks: it gives extensive rules relevant to important sectors that may be used to construct a company's own report. Typically, these frameworks provide for a wide variety of disclosure outcomes by providing for freedom in how extensively the items in the guideline must be covered. The reporting structure is the most widely used of the three types of ESG standards.

The Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) frameworks are the two most extensively used ESG reporting frameworks that may be applied to almost any firm. SASB and GRI tackle ESG from quite different viewpoints, and as a consequence, firms usually employ both to be extremely inclusive.

The SASB's viewpoint is centered on how ESG standards affect a company's financial position, operating performance, and risk profile. SASB can also be used to merge a company's annual financial report and environmental, social, and governance reports into a single document.

The GRI viewpoint focuses on how ESG standards affect a company's environmental and social contributions, as well as its self-governance style (both positive and negative). The GRI framework requires a corporation to identify and disclose the ESG implications of issues that are of main relevance to an organization's stakeholders (called material issues).

Despite their divergent approaches to sustainability disclosure, the SASB and GRI standards share a similar foundation for assessing organizations' environmental performance.

As illustrated, both the SASB and GRI sustainability disclosure frameworks address greenhouse gas emissions, air quality emissions, energy, water consumption and wastewater, materials and waste management, and biodiversity indicators.

The significance or amount of risk that any one environmental indicator bears for a specific organization is determined by the industrial sector, regional legislation, stakeholder interest, and business strategy of the organization.

Aside from SASB and GRI, there are other specialized ESG reporting frameworks. The Task Force on Climate-Related Financial Disclosures is one such specialized ESG reporting framework (TCFD). This standard focuses primarily on the risks and possibilities created for a company by climate change, as well as the financial consequences of these risks and opportunities for the organization.

The International Petroleum Industry Environmental Conservation Association (IPIECA) is another example of a customized ESG reporting structure that exclusively applies to corporations in the oil and gas industry.

SLR's ESG team works with firms who are handling ESG reporting to find which ESG standard(s) operate effectively inside their sector and with their specific corporate management system. SLR has the knowledge to assist organizations in selecting the appropriate standards for their company the first time they disclose and developing plans for enhancing disclosure over time.

To learn more about strategic sustainability reporting using SASB, GRI, TCFD, or IPIECA for your organization, get in touch with Oren.