Learning Outcomes

By the end of this lesson, learners should be able to:

  • Explain the purpose of global ESG reporting frameworks.
  • Describe the Global Reporting Initiative (GRI) Standards.
  • Explain the IFRS Sustainability Disclosure Standards (IFRS S1 & IFRS S2).
  • Understand the role of the International Sustainability Standards Board (ISSB).
  • Describe the Sustainability Accounting Standards Board (SASB) Standards.
  • Explain the European Sustainability Reporting Standards (ESRS).
  • Understand the purpose of the Integrated Reporting (<IR>) Framework.

Introduction

As ESG reporting became increasingly important, organizations faced a major challenge: different companies reported sustainability information in different ways. Without common standards, investors and other stakeholders found it difficult to compare ESG performance across organizations and industries.

To address this issue, several international organizations developed ESG reporting frameworks and standards that provide guidance on what information organizations should disclose, how it should be measured, and how it should be presented.

These frameworks promote transparency, consistency, comparability, and reliability in sustainability reporting. While some frameworks focus on broad sustainability impacts, others emphasize information that is financially material to investors.

Today, many organizations use one or more of these frameworks to prepare ESG reports that meet stakeholder expectations and regulatory requirements.

1. Global Reporting Initiative (GRI) Standards

The Global Reporting Initiative (GRI) is one of the world’s most widely used sustainability reporting frameworks. Established in 1997, GRI helps organizations report their economic, environmental, and social impacts in a standardized manner.

Unlike frameworks designed primarily for investors, GRI adopts a stakeholder-oriented approach, encouraging organizations to report information that is important to a broad range of stakeholders, including employees, communities, customers, regulators, investors, and civil society.

The GRI Standards are organized into three main categories.

Universal Standards

These apply to all organizations regardless of industry and include:

  • Organizational profile
  • Governance
  • Strategy
  • Ethics and integrity
  • Reporting practices
  • Material topics

Sector Standards

These provide industry-specific guidance for sectors such as:

  • Oil and gas
  • Agriculture
  • Mining
  • Financial services
  • Energy

Sector Standards help organizations identify sustainability topics that are particularly significant within their industries.

Topic Standards

These provide detailed reporting requirements for specific sustainability topics such as:

  • Climate change
  • Biodiversity
  • Waste
  • Occupational health and safety
  • Human rights
  • Diversity and equal opportunity
  • Anti-corruption

Benefits of Using GRI

  • Promotes transparency.
  • Improves stakeholder communication.
  • Supports sustainable decision-making.
  • Enhances corporate credibility.
  • Facilitates global comparability.

2. IFRS Sustainability Disclosure Standards (IFRS S1 & IFRS S2)

The IFRS Sustainability Disclosure Standards, developed by the International Sustainability Standards Board (ISSB), establish a global baseline for sustainability-related financial disclosures.

These standards are primarily intended to provide investors and capital market participants with information about sustainability-related risks and opportunities that could affect an organization’s financial performance.

IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information

IFRS S1 establishes the general requirements for reporting sustainability-related risks and opportunities.

Organizations are expected to disclose information about:

  • Governance of sustainability risks
  • Strategy
  • Risk management
  • Metrics and targets

The objective is to help investors understand how sustainability issues influence an organization’s enterprise value.

IFRS S2 – Climate-related Disclosures

IFRS S2 specifically focuses on climate-related risks and opportunities.

Organizations disclose information on:

  • Climate governance
  • Climate strategy
  • Physical climate risks
  • Transition risks
  • Greenhouse gas emissions
  • Climate targets
  • Climate resilience

IFRS S2 builds upon the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Benefits of IFRS Sustainability Standards

  • Improves global consistency.
  • Enhances investor confidence.
  • Supports international comparability.
  • Integrates sustainability with financial reporting.
  • Facilitates capital allocation decisions.

3. International Sustainability Standards Board (ISSB)

The International Sustainability Standards Board (ISSB) was established by the IFRS Foundation in 2021 to develop a globally consistent set of sustainability disclosure standards.

Its primary objective is to improve the quality and comparability of sustainability-related financial information provided to investors.

The ISSB works closely with regulators, standard-setters, investors, and organizations worldwide to promote consistent ESG reporting.

Objectives of the ISSB

  • Develop high-quality sustainability disclosure standards.
  • Improve global consistency in ESG reporting.
  • Support investor decision-making.
  • Reduce reporting fragmentation.
  • Promote international adoption of sustainability standards.

The ISSB standards are increasingly being adopted or referenced by governments, regulators, and stock exchanges around the world.

4. Sustainability Accounting Standards Board (SASB)

The Sustainability Accounting Standards Board (SASB) developed industry-specific sustainability disclosure standards that identify ESG issues most likely to affect financial performance.

Unlike GRI, which focuses on an organization’s impacts on society and the environment, SASB emphasizes financial materiality—that is, sustainability issues that are likely to influence investor decisions.

SASB standards cover more than 70 industries across sectors such as:

  • Healthcare
  • Technology
  • Banking
  • Transportation
  • Manufacturing
  • Consumer goods

Examples of SASB Topics

For an airline:

  • Fuel efficiency
  • Carbon emissions
  • Passenger safety

For a bank:

  • Data security
  • Customer privacy
  • Financial inclusion

For a mining company:

  • Water management
  • Community relations
  • Occupational safety

Benefits of SASB

  • Industry-specific reporting.
  • Focus on financially material ESG issues.
  • Better comparability among peer companies.
  • Supports investor-focused disclosures.

5. European Sustainability Reporting Standards (ESRS)

The European Sustainability Reporting Standards (ESRS) were developed by the European Financial Reporting Advisory Group (EFRAG) to support the implementation of the Corporate Sustainability Reporting Directive (CSRD) in the European Union.

ESRS requires organizations to report comprehensive sustainability information covering environmental, social, and governance matters.

A key feature of ESRS is the concept of double materiality, which requires organizations to consider:

  • How sustainability issues affect the company financially.
  • How the company’s activities affect society and the environment.

ESRS Reporting Areas

Environmental

  • Climate change
  • Pollution
  • Water resources
  • Biodiversity
  • Circular economy

Social

  • Workforce
  • Human rights
  • Communities
  • Consumers

Governance

  • Business conduct
  • Ethics
  • Corporate culture
  • Risk management

Benefits of ESRS

  • Standardized reporting across the European Union.
  • Improved transparency.
  • Greater accountability.
  • Better comparability.
  • Stronger stakeholder confidence.

6. Integrated Reporting (<IR>) Framework

The Integrated Reporting (<IR>) Framework encourages organizations to combine financial and non-financial information into a single integrated report.

Rather than producing separate financial and sustainability reports, integrated reporting demonstrates how an organization creates value over the short, medium, and long term.

The framework recognizes that value creation depends on multiple forms of capital.

The Six Capitals

  • Financial capital
  • Manufactured capital
  • Intellectual capital
  • Human capital
  • Social and relationship capital
  • Natural capital

Integrated reporting explains how these capitals interact to support sustainable business performance.

Guiding Principles of Integrated Reporting

  • Strategic focus
  • Connectivity of information
  • Stakeholder relationships
  • Materiality
  • Conciseness
  • Reliability
  • Consistency
  • Future orientation

Benefits of Integrated Reporting

  • Provides a holistic view of organizational performance.
  • Connects financial and sustainability information.
  • Improves strategic decision-making.
  • Enhances stakeholder confidence.
  • Demonstrates long-term value creation.

Comparison of Major ESG Reporting Frameworks

Framework Primary Focus Main Audience Key Feature
GRI Sustainability impacts Broad stakeholders Impact-based reporting on environmental, social, and governance issues
IFRS S1 & S2 Sustainability-related financial disclosures Investors Global baseline for financially material ESG information
ISSB Global sustainability standards Investors and regulators Develops IFRS sustainability disclosure standards
SASB Industry-specific ESG issues Investors Focuses on financially material topics by industry
ESRS Comprehensive sustainability reporting Investors and stakeholders Double materiality and EU regulatory compliance
Integrated Reporting (<IR>) Value creation Investors and stakeholders Combines financial and non-financial reporting

Key Takeaways

Global ESG reporting frameworks provide standardized guidance that improves the consistency, transparency, and comparability of sustainability disclosures across organizations and industries.

The GRI Standards focus on an organization’s impacts on the economy, environment, and society and are widely used by organizations reporting to a broad range of stakeholders.

The IFRS Sustainability Disclosure Standards (IFRS S1 and IFRS S2) establish a global baseline for sustainability-related financial disclosures, helping investors understand how ESG issues affect enterprise value.

The ISSB develops internationally recognized sustainability disclosure standards designed to improve consistency and reduce fragmentation in ESG reporting.

The SASB Standards provide industry-specific guidance on financially material ESG issues, enabling investors to compare companies within the same sector.

The ESRS support sustainability reporting under the European Union’s Corporate Sustainability Reporting Directive (CSRD) and emphasize the principle of double materiality.

The Integrated Reporting (<IR>) Framework combines financial and non-financial information to explain how organizations create value over the short, medium, and long term.

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