Standard setters play a pivotal role in advancing sustainability reporting and accounting practices worldwide. Among these prominent organizations, the Global Reporting Initiative (GRI) stands out as the first and most widely adopted global standards for sustainability reporting. GRI provides a comprehensive framework that enables companies to disclose their environmental, social, and governance (ESG) performance, empowering stakeholders with valuable information about their sustainable practices. As businesses increasingly recognize the importance of transparency in today’s global landscape, adhering to GRI standards has become a hallmark of responsible corporate citizenship.
Standard Setters: GRI and SASB
- Global Reporting Initiative (GRI): The first and most widely adopted global standards for sustainability reporting.
- Sustainability Accounting Standards Board (SASB): Established in 2011, SASB provides industry-specific sustainability accounting standards for 77 industries in 11 sectors. These standards help companies disclose material, decision-relevant information to investors in a cost-effective manner, strengthening sustainability practices.
International Goals and Guidance: UN SDGs and TCFD
- Sustainable Development Goals (SDGs): Developed by the United Nations, the SDGs consist of 17 goals supported by 169 targets. They offer a comprehensive blueprint for companies to address global challenges and contribute positively to society and the environment.
- Task Force on Climate-related Financial Disclosures (TCFD): Established by the Financial Stability Board (FSB) in 2015, TCFD focuses on promoting effective climate-related disclosures. It emphasizes assessing financial impacts of climate-related risks and opportunities for organizations, enabling informed decision-making and sustainable investments.
Disclosure-Based Sustainability Scores: Dow Jones Sustainability Index and CDP
- Dow Jones Sustainability Index (DJSI): Representing the top 10% of the largest 2,500 companies (approximately -300 companies), DJSI scores are developed from S&P Global’s Annual Corporate Sustainability Assessment (CSA). This index recognizes companies with outstanding sustainability performance, reinforcing their commitment to responsible corporate citizenship.
- CDP (Formerly Carbon Disclosure Project): CDP requests data on environmental performance through five questionnaires from companies, cities, states, and regions. This disclosure platform promotes transparency and accountability, encouraging organizations to improve their environmental practices and enhance sustainability reporting.
Standard setters like GRI and SASB have been instrumental in advancing sustainability reporting and accounting practices worldwide, fostering transparency and responsible corporate behavior. Aligning corporate strategies with international goals, such as the UN SDGs, and complying with the recommendations of organizations like TCFD, ensures that businesses contribute positively to addressing global challenges and climate risks. Embracing disclosure-based sustainability scores, like DJSI and CDP, reinforces the importance of sustainability performance, guiding organizations towards a more sustainable and resilient future. By adhering to these standards and frameworks, companies can play a significant role in creating a positive impact on society and the environment while maintaining financial viability and long-term success.
