ESG reporting and frameworks are intended tp promote transparency and sustainability. However, with an estimated 600 frameworks and standards in existence, navigating this landscape and deciding the right framework can be overwhelming. This article aims to demystify ESG frameworks, making it easier for companies to choose the right one, stay compliant, and leverage sustainability as a competitive advantage.

What does ESG stand for?

ESG stands for the three pillars of sustainability—environmental protection, social responsibility, and ethical governance.

• Environmental: Focuses on how a company’s operations impact the planet, including carbon emissions, resource use, and waste management.
• Social: Relates to how a company manages relationships with employees, suppliers, customers, and communities.
• Governance: Involves corporate policies, leadership, audits, and compliance with laws and regulations.

What are ESG frameworks used for?

ESG are typically high-level guidelines and structures that companies can follow to develop and implement sustainability strategies. They tend to be flexible which makes them adaptable across regions and industries covering: operations, goals, processes and relevant success criteria. The outcomes of evaluating a business against these frameworks or using them implement new sustainability strategies are used in public reports that enable people to fairly compare companies against a common set of standards. By using ESG frameworks, companies not only comply with regulations but also strengthen their relationships with key stakeholders, including investors, customers, and the broader community.

Here are some of the main stakeholders interested in ESG reporting: 

• Regulators use such reports to ensuring companies are adhering to regional environmental and social regulations
• Investors use this information to assess a companies' long-term sustainable and ethical practices and to decide whether a company aligns with their values
• Customers' purchase decisions are increasingly influenced by a company's ethical or sustainable practices
• Employees especially younger generations prefer to work for employers who show a commitment to sustainable and ethical practices
• Suppliers and partners use ESG reports to ensure their supply chains are ethical and sustainable

How to choose the right ESG Framework

Frameworks vary in their focus areas, target audience, and level of detail. For instance, GRI is more comprehensive and can be used by any organisation, while SASB is industry-specific and focuses on financial materiality and TCFD is specialized in climate-related disclosures. When selecting an ESG framework, companies need to think about:

• Industry relevance: Choose a framework that aligns with your industry. For example, SASB is ideal for companies looking for industry-specific guidance, while GRI is more general.
• Regulatory requirements: Ensure the framework meets any mandatory reporting requirements in your region. For example, if your company operates in the EU, aligning with CSRD is essential.
• Stakeholder expectations: Understand what your investors and other stakeholders prioritize. If climate risk is a significant concern, TCFD might be a good fit.
• Company size: Larger companies may need to use multiple frameworks to cover all aspects of their operations, while smaller companies might opt for simpler, more focused frameworks.

Overview of the most common ESG Frameworks

All ESG frameworks have the same goal but are developed to answer different questions and have their own relevant information set. Each framework has unique metrics, reporting formats, and frequency requirements. Some are voluntary, but others pertain to mandatory regulation compliance.The most popular voluntary ESG frameworks are: 

• Global Reporting Initiative (GRI): offers guidance over various sustainability issues. Organizations often use GRI standards to guide the creation, execution, and development of an organization’s internal sustainability reports.
• Taskforce on Climate-Related Financial Disclosures (TCFD): focuses on climate-related risks and opportunities, encouraging companies to disclose how they manage these issues in their governance, strategy, and risk management.
• Climate Disclosures Standards Board (CDSB): focuses on disclosing climate-related and environmental information to investors in a consistent and comparable manner.

Different regions also have different regulatory ESG frameworks: 

• Corporate Sustainability Reporting Directive (CSRD): mandates large and listed companies to report their sustainability performance, starting in 2025. It emphasizes double materiality, meaning companies must report both on how sustainability issues affect them and how their operations impact the environment and society.
• Streamline Energy and Carbon Reporting (SECR): mandates large companies operating in the UK report their energy use, carbon emissions, and energy efficiency actions in their annual financial filings, aimed at increasing transparency and encouraging energy efficiency improvements.

What's the difference between ESG frameworks and ESG Reporting Standards?

While ESG frameworks usually provide broad strategic guidance, ESG reporting standards provide detailed, specific criteria for how companies should disclose their ESG data. These standards ensure that the information reported is consistent, comparable, and reliable across different organizations and industries. They also offer specific instructions on how to measure and report various ESG factors.Common reporting standards are: 

• Sustainability Accounting Standards Board (SASB): focuses on financially material sustainability factors specific to various industries, providing investors with comparable and reliable data.
• International Sustainability Standards Board (ISSB): Working on global sustainability reporting standards to harmonize ESG reporting.
• European Sustainability Reporting Standards (ESRS): Designed to standardise how European companies disclose ESG performance and impacts (used for CSRD reporting)
• Carbon Disclosure Project: Focuses on climate-related disclosures, particularly carbon emissions, and environmental impact.

What ESG framework should I use for my CSRD report?

CSRD reporting must be aligned to European Sustainability Reporting Standards (ESRS) cover the following ESG topics:

• Environmental: Climate change, pollution, water and marine resources, biodiversity and ecosystems and resource use and circular economy
• Social: Own workforce, workers in the value chain, affected communities, consumers and end-users
• Governance: Business conduct

The ESRS also includes a strong emphasis on double materiality, which means reporting on both the impact of sustainability factors on the company and the impact of the company on society and the environment. They are also designed to be interoperable with other global frameworks such as the GRI and TCFD which enables companies to use their existing ESG reporting in their CSRD reports as well.

For more information on CSRD reports, download our FREE cheat sheet.

ESG and the Circular Economy

ESG frameworks not only promote sustainability but also encourage the adoption of circular economy principles—where resources are reused, recycled, and repurposed, minimizing waste. For example, adopting circular practices can help companies reduce their environmental impact (E), create local jobs (S), and ensure transparent, ethical operations (G).

Practical Advice for Companies

1. Start with a Comprehensive Framework: If you're new to ESG reporting, begin with a general framework like GRI to cover all bases.
2. Incorporate Industry-Specific Standards: As you mature in your sustainability journey, consider adding industry-specific standards like SASB to provide more detailed and relevant data.
3. Stay Updated on Regulations: Keep an eye on regulatory changes, especially if you operate in regions with strict reporting requirements like the EU.
4. Leverage Technology: Use digital tools to automate data collection and reporting processes with platforms like Resourcify for more accurate data and easier compliance

Final Thoughts

Navigating the ESG landscape can be complex, but by choosing the right framework, companies can turn sustainability into a strategic advantage.  ESG reporting isn't just about compliance—it's about building a resilient, forward-thinking business. Read more about the business advantages for environmental compliance here.

If you’re ready to optimize your ESG strategy, book a demo with Resourcify to see how we can help you manage waste and recycling more efficiently and start building a more circular future.