Sustainability Frameworks - A Snapshot

Sustainability: the future of corporate reporting. Companies are under increasing pressure to demonstrate greater commitment to long-term, sustainable value creation which incorporates the wider demands of people and planet. However, the current landscape of sustainability standards and standard setting is crowded, fragmented, changing fast, and can be hard to follow.

This publication sets out the types of sustainability disclosures that companies might think about publishing, provides a high level overview of a number of the most well established existing sustainability standards and frameworks, and looks at current and future expected developments. Sustainability reporting is not new, and can be traced as far back as the 1940s. However, a key point was in 1987 when the Brundtland Report ‘Our Common Future’ was published, which defined sustainable development as being development that ‘meets the needs of the present without compromising the ability of future generations to meet their own needs’. This report called for all sectors (including public and private) to consult, report on progress, and reach decisions for a global sustainable development strategy.

Subsequently, the 1990s saw the first formalised attempts to measure and report companies’ environmental and social impacts, including the launch of the Global Reporting Initiative (GRI) and the publication of its first sustainability reporting framework in 2000. Government interest in sustainability issues also started in earnest, with focus on corporate accountability for material issues including globalisation, greenhouse gas emissions and human rights. This extended to regulation on sustainability reporting and support for voluntary disclosures, in particular in Europe and North America. The first decades of the 21st century then saw an explosion in global reporting frameworks, concepts, methodologies, ratings and metrics for sustainability which were intended to meet growing demands for information from the investor community, and in response to wider public expectations about the role of business in society.

A number of global summits have spurred additional developments, including the 2015 Paris Agreement which was the first legally binding international treaty on climate change. We are now only a few months away from COP 26. At the moment, it is estimated that over 500 formal and informal sustainability reporting standards and frameworks exist, depending on industry, location and the issue(s) covered. A number of (mainly large) companies have chosen to publish sustainability information, which is mainly in accordance with more prominent reporting frameworks which include the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) which have now merged to form the Value Reporting Foundation (VRF), and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD); others include CDP (formerly the Carbon Disclosure Project), the Climate Disclosure Standards Board (CDSB), the UN Sustainable Development Goals and the UN Global Compact.

However, the reporting is inconsistent due to the differing requirements of those frameworks and, because they are voluntary, there is inconsistency in their application. Entities can also choose to report using only some elements of a number of different frameworks, leading to a perceived (and real) risk that companies will focus and report on metrics that portray them in a positive light, leading to suggestions of so-called ‘greenwashing’. As the clamour for better quality and more consistent sustainability reporting has grown, the past 12 months have seen some significant developments.