Evolution of ESG Reporting Frameworks

I- The current ESG reporting framework has changed significantly over the years

Despite or perhaps because of the existence of hundreds of ESG reporting frameworks, there is a real lack of harmonization between them.

Indeed, this inconsistency even pushes some companies to suspend ESG reporting, for lack of being able to agree on a viable framework.

Understandably, companies, financial institutions and public stakeholders have started to ask for a more streamlined ESG reporting framework, to improve their ability to monitor and seize opportunities.

There was a growing demand for a global consensus, preferably a consensus that would not "reinvent the wheel", but would build on existing reporting frameworks to provide consistent standards for organizations around the world interested in ESG.

The wide variety of companies involved in reporting is the main cause for the growing number of ESG reporting frameworks.

Different industries have different ESG aspects and impacts, so it is understandable that they will have to report on different metrics.

Likewise, different stakeholders such as investors, regulators and customers are interested in different types of information.


II- The existence of many different ESG reporting frameworks

We will provide an introduction to some ESG reporting frameworks.

These frameworks are designed to help the company understand the implementation of these frameworks and to which industries they apply.

But before building the ESG program begins, the company should ensure to research the latest news and frameworks that apply.


Going forward, the world of ESG reporting remains fragmented and confusing, unlike financial performance reporting, which should have a clear format and content.

Each framework presents its own issues, and overlapping frameworks require complex cross-checking of responses.

There are currently more than a dozen leading ESG reporting frameworks, each with their own metrics, methodologies and rating systems.

These reporting frameworks form the basis of how companies define their KPIs, what they measure and what information is included in the sustainability reports they produce.

III- Strengths and weaknesses of the different ESG reporting standards

It is important to note that each of these types of ESG reporting frameworks is designed to meet the needs of their target audience.

This makes them weak to meet the needs of other groups.

For example, governments cannot effectively use ESG reporting frameworks designed for investors.

Similarly, ESG frameworks designed for governments cannot be used by management.

In fact, one of the leading audit firms estimates that there are hundreds of ESG frameworks and standards globally.

Some are specific to particular sectors or countries.

Others are widely applicable to many operations, but no universal basis has been found.

One of the key considerations for ESG reporting is the ability to provide meaningful data that is comparative to data from other companies in an industry or portfolio.

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