How to get started?
The key objective of ESG reporting is to give confidence to your audience that your ESG reporting is comprehensive (nothing hidden or unreported), accurate, and consistent period over period.
Everyone is on the race to ESG reporting, but what standards are more reputable to adopt for small businesses, and how to get started?
The first thing would be to try and follow a well-established reporting standard and conduct a materiality analysis with those standards. This will serve as a baseline for you to be able to compare period over period, the progress that your company is making.
Today, there are three sets of standards that are more comprehensive than others, that can help small businesses get started with their reporting needs.
Global Reporting Initiative (GRI)
The GRI was founded in 1997, and in 2000 they published the first iteration of its guidelines. In the next 22 years, they have been working on corporate transparency. By 2016, the first set of standards related to sustainability reporting was published as well.
The GRI Standards are based on 3 key universal standards (GRI 101-103) that provides a common foundation for companies that want to use their standards. It covers the reporting principles, general disclosures and management approach. Then depending on which industry and sector is relevant, companies can follow one or more of the 34 topic-specific standards that cover overarching subjects between economics, environmental and social areas.
All of their standards are free to adopt and can be downloaded from their website.
Sustainable Accounting Standards Board (SASB)
The SASB was founded in 2011. Its mission is to create a global set of sustainability accounting standards as influential as the Financial Accounting Standard Board is for international financial accounting standards.
On the SASB website companies can also obtain their standards for free.
International Organization for Standardization (ISO)
We certainly cannot talk about standards without touching ISO standards. The ISO standards, whilst are not free, are fully mapped against the SDG goals and are easy for users to search against.
More directly related to ESG reporting, ISO had set up a technical working group that works together on discussing and establishing the necessary standards. So far, they have published their first set of standards related to the basic financial concepts under ESG reporting. We can certainly anticipate more from ISO in the near future as they make progress.
Sustainable Development Goals (SDG)
The Sustainable Development Goals are rather a global objective and set of goals than a reporting standard. However, it is a very good baseline for smaller companies to get started by mapping their impact against these 17 SDG goals because it is more relatable to the wider audience and gives a solid start point in doing so.
GRI had published a guideline that helps companies get started with integrating their reporting with the SDGs. The guide uses three simple steps to guide the reader through how to get started and can be found here.
Things to consider
Whilst these standards are the ones we mention in this article, there are actually over 100s of standards out these to choose from. It’s important to understand the features of the standards and to find one that is suitable for your reporting purpose.
In this guideline created by ESG Navigator, some very useful questions are proposed to help guide our thinking towards how to choose the right standard. As a summary there are 5 key areas to consider:
- Are there any regulatory or applicable sustainability reporting requirements that you might be (or soon to be) subject to?
- Purpose of the reporting, other than just reporting…what can you do with this information? Can it help you, or someone else make better decisions?
- Are there any standards that have better emphasis or get into more specifics for your industry?
- How about the specific issues related to your company and your processes, which one addresses them best?
- Who is the reporting written for? Investors? Employees? Customers?
Once a standard is selected, the next task is to identify how to measure your impact against them, following the units and mechanisms in these standards truthfully.
In the final article, we will look at what are the key elements to creating a good ESG report that is practical and pleasant to read.