Welcome to the jungle. The three most dominant sustainability reporting frameworks and their ability to truly inform share- and stakeholders about the sustainability performance of a company

Master's Thesis, 2020

48 Pages, Grade: 1,3



List of tables

List of abbreviations

1. Introduction

2. Research Objective

3. Development of the sustainability movement for companies
3.1. Link between Sustainability and CSR
3.2. Link between Sustainability and ESG

4. Reporting on Sustainability
4.1. Organizations
4.2. Countries
4.3. Rating Agencies
5. Most Dominant Reporting Frameworks

5.1. Global Reporting Initiative (GRI)
5.2. Sustainability Accounting Standards Board (SASB)
5.3. Task-Force on Climate-Related Financial Disclosures (TCFD)

6. Share- and Stakeholders
6.1. Definition
6.2. Information demand representatives
6.2.1. World Wide Fund for Nature (WWF)
6.2.2. European Union (EU)
6.2.3. BlackRock
6.2.4. Norges Bank Investment Management (NBIM)

7. Analysis on how sustainability reporting frameworks meet information needs
7.1. View on materiality
7.1.1. View on materiality - GRI
7.1.2. View on materiality - SASB
7.1.3. View on materiality - TCFD
7.2. Sustainability performance information
7.2.1. Sustainability Performance - GRI
7.2.2. Sustainability Performance - SASB
7.2.3. Sustainability Performance - TCFD

8. Result and Discussion

9. Conclusion

Reference list/ Bibliography

Appendix 1: UN Sustainable Development Goals (SDGs)

Appendix 2: Double Materiality Perspective of the European Union

Appendix 3: Mapping table of the SDGs to the reporting framework categories

Appendix 4: Mapping table of the SDGs to the GRI Performance Indicators

Appendix 5: SDGs mapping table GRI to share- and stakeholders

Appendix 6: SDGs mapping table SASB to share- and stakeholders

Appendix 7: SDGs mapping table TCFD to share- and stakeholders

List of tables

Table 1: History of ESG Data Vendor Consolidatio

Table 2: BIS Engagement Priorities mapped to the SDG

Table 3: UN Sustainable Development Goal

Table 4: Overview requirements towards materiality of information by Share- and Stakeholder

Table 5: Overview Share-/ Stakeholder Reporting Categorie

Table 6: General expectations of the Share-/ Stakeholder representative

Table 7: SASB Universe of Sustainability Issue

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten


Today, the information demand about the sustainability related performance of companies is higher than ever. Share- as well as stakeholders require transparent information to be able to evaluate and compare companies on the basis of their sustainability performance.

The research aim of this thesis is to distinguish the three most dominant reporting frameworks in 2020 on the extent of their ability to provide share- and stakeholders with comprehensive insights about the sustainability performance of companies. The frameworks considered are GRI, SASB and TCFD.

The expectations of share- and stakeholders towards sustainability information have been defined on the basis of four chosen representatives (WWF, EU, BlackRock and Norges Bank Investment Management) alongside the UN Sustainable Development Goals. Their expectations have been compared to the three reporting frameworks, on their ability to meet these.

Based on the analysis, the GRI reporting framework shows the most comprehensive format of the three compared frameworks. Compared to SASB and TCFD, GRI is also the only framework that does have a global reach and covers all aspects of the triple bottom line of sustainability reporting. SASB is limited with it´s focus on the financial filing format for public companies in the U.S. and TCFD with it´s focus on the financial impact of climate change.

1. Introduction

The demand for comparable and measurable information about sustainability performance of companies by share- as well as stakeholders is at an all-time high today.

In January 2020, the CEO of the largest investment company BlackRock, announced that they see their fiduciary duty to help their clients to manage climate risk, as it is investment risk. Hence, they ask all of their investee companies to publish a disclosure in line with Sustainability Accounting Standards Board (SASB) guidelines (or similar) and climate-related risks in line with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations (Fink 2020, 2) to show their preparedness. They believe, that “greater transparency on questions of sustainability will be a persistently important component of every company´s ability to attract capital” (2020, 4).

Already in 2013, KPMG concluded “the debate is over” on the question whether firms should issue sustainability reports. When they presented their “KPMG Survey of Corporate Responsibility Reporting”, their report showed that 93% of the world’s largest 250 companies already published corporate sustainability reports (Herriott 2016, XIII).

Although the debate might be over, crucial issues are still unresolved in 2020. Herriott stated in 2016 that the science of sustainability is not even near the point, where a fully connected reporting based on conceptual frameworks and measurement systems is becoming a reality (2016, XIV). There is no common alignment on the reporting items, the weighting of reported items and the framework format within the information should be reported, in 2020 either.

In this thesis, the expectations of share- and stakeholders will be analyzed with regards to information about the sustainability performance of companies and their expectations will be compared to the three most dominant reporting frameworks today, on their ability to meet these expectations.

The thesis is structured in the following way: The development of the sustainability movement will be briefly introduced in chapter three and common terms related to sustainability, namely Corporate Social Responsibility (CSR) and Environment, Social and Governance (ESG) will be distinguished there.

Before the selected reporting frameworks will be detailed in chapter five, the history of reporting on sustainability will be portrayed in chapter four.

In chapter six, share- and stakeholder definitions will be distinguished and the selection of the chosen four representatives explained. Followed by the analysis in chapter seven on how the reporting frameworks meet the information needs of the share- and stakeholders. In chapter eight the results are discussed and in chapter nine the paper concludes.

2. Research Objective

Whilst reporting on financial performance is highly standardized and measurable (therefore comparable across companies), reporting on sustainability issues like Environmental (Planet), Social (People) and Governance issues is neither.

With the growing demand for measurable and comparable sustainability reporting, required by e.g. the signatories of the United Nations- Principles for Responsible Investment (UN-PRI) and share- as well as stakeholders, the need for a comprehensive reporting framework today is higher than ever.

In this paper, the term sustainability will be distinguished from similar terms in use, all of which describe aspects of sustainability. Based on this distinction, the three most dominant sustainability reporting frameworks in 2020 will be compared to the information needs of selected share- and stakeholder representatives, about the sustainability related performance of companies.

The focus is on the level of materiality of information considered and sustainability indicators expected by each representative. The sustainability indicators are analogue to the Sustainable Development Goals (SDGs) of the United Nations.

The research aim is to distinguish the three reporting frameworks on the extent of their ability to provide share- and stakeholders with comprehensive insights towards the sustainability performance of companies.

3. Development of the sustainability movement for companies

The evolution of sustainability and corresponding events has produced countless written information about it since it came into existence. Citing them all would exceed the purpose of this paper, therefore the focus in this paper is on selected developments, which have had a direct or indirect impact on companies.

According to Clark, Feiner and Viehs, the awareness as well as momentum of “sustainability” built up over time. Sustainability, Environment & Social and Governance (ESG) and Corporate Social Responsibility (CSR) topics have been significant trends for share- and stakeholders already for decades (2015, 10).

The growing awareness towards environmental changes and some impacts caused by companies across industries, has received more and more attention by scientists and the press. The momentum accelerated after 1987 with the work of the Brundtland commission.

In 1987, the World Commission on Environment and Development (WCED) also known as the “Brundtland Commission” defined in their report “Our Common Future” the now classic definition of sustainability as follows: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” (Herriott 2016, 198)

In 1991, Lélé wrote in his critical review of Sustainable Development, that it “has become the watchword for international aid agencies, the jargon of development planners, the theme of conferences and learned papers, and the slogan of developmental and environmental activists.” (1991, 2) By 2005, the United Nations Principles for Responsible Investment (UN-PRI) have been established with the aim to understand the investment implications of ESG factors for investment and ownership decisions (UN-PRI 2020 A, 4). The principles were defined by a group of the world´s largest institutional investors with support of the United Nations (UN) (Gibson, et al. 2020, 2).

In 2015, the Sustainable Development Goals (SDGs) have been adopted by the United Nations with a globally agreed framework for a more sustainable world by 2030. They aim to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity. The 17 goals are integrated, as the outcome of one will affect outcomes in others. Social, economic, and environmental sustainability development has to be balanced. (UNDP 2020)

By 2020, the number of signatories of UN-PRI has risen to 3.038 and the value of total assets under their management to 103,4 trillion US$ (UN-PRI 2020 A, 5). Signatories range from investment managers to asset owners and service providers (Gibson, et al. 2020). From 2020 onwards signatories are mandatorily required to report on certain TCFD climate indicators of their portfolio companies, though disclosure will still stay voluntary (UN-PRI 2020 B).

By today, the term “sustainability” has fully arrived in the economical world and has initiated resolutions, guidelines, reporting frameworks, principles, legislations, and evaluations affecting companies, with the aim to achieve overall sustainability, as summarized by the Brundtland Commission.

The focus of this paper will be on the general concept of sustainability which differs from definitions of Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG).

3.1. Link between Sustainability and CSR

With the growing attention towards “sustainability” it became evident, that there is no one understanding about what the term means. Bell & Morse wrote about the complex origins and found that “In its original form, sustainability was closely associated with maintenance of environmental quality” (2008, 6).

Whereas according to Crane et.al. in 2008, sustainability is seen as complementary to Corporate Social Responsibility, with an initial definition of the natural environment, growing into a broader concept, embracing the larger social and stakeholder environment (2008, 36).

Based on her contextual analysis of the evolution of terminology, Dragu found that the concepts of sustainability and CSR started in the 1950s when they were two different concepts initially. (Dragu 2019, 77)

The first concept focused on social aspects like the societal impact of companies and turned in the year 2000 into Corporate Social Responsibility (CSR). Whereas the second one focused on environmental concerns and on how to develop the resources on the planet rationally. Until the year 2000 corporate sustainability was still included in sustainable development (2019, 77-79).

Both concepts share the aspects of social and environmental dimensions. They stay separated due to their additional individual characteristics. Ultimately sustainability focuses on the overall social, environmental, and economic impact, whereas CSR focuses on social and environmental performance of companies.

3.2. Link between Sustainability and ESG

ESG includes sustainability elements as it considers environmental and social as well as corporate governance elements (Dragu 2019, 79).

However, “ESG does not represent sustainability” as profits are not integrated in standard ESG Frameworks (Herriott 2016, 201). Furthermore, Herriott argued, that “Only the integration of ESG measures with financial measures of performance and risk can genuinely be called sustainability reporting.” (2016, 202)

In that sense, ESG is a part of sustainability as it shares the environmental, social and governance aspects but ultimately lacks the economical aspect.

4. Reporting on Sustainability

4.1. Organizations

Compared to sustainability reporting, the requirements for reporting on financial accounting information, are highly standardized and structured and therefore comparable. The International Financial Reporting Standards (IFRS) define in 144 jurisdictions worldwide (including fifteen out of twenty G20 economies) financial reporting (IFRS Foundation 2018, 2). Still, they have not existed forever, in the United States they came into existence upon creation of the Securities and Exchange Commission (SEC) in 1934. For the reporting of sustainability information, there is no such globally accepted and utilized standard available by today (Eccles and Stroehle 2018, 30).

Scandals like the Exxon Valdez Oil spill in 1989 accelerated the focus on sustainability as it e.g. triggered the “Coalition for Environmental Responsible Economies” (CERES) formed by social investment professionals subsequently (Rupley, Brown and Marshall 2017, 173). The creation of CERES lead to the “Global Reporting Initiative” (GRI), the most used sustainability reporting framework by large companies today, according to a KPMG survey (Blasco and King 2017, 4).

In order to meet the demand for information on sustainability performance, there are various organizations like the International Integrated Reporting Council (IIRC), United Nations Global Compact (UNGC) and the Financial Stability Board (FSB), to name just a few, who became involved to provide a solution. They all started initiatives to develop reporting frameworks for companies to report on their performance with regards to sustainability.

The formation of the IIRC has been announced by GRI and A4S (Accounting for Sustainability) in 2010, at that time it was named the “International Integrated Reporting Committee” and is known today as the “International Integrated Reporting Council”. Members of the IIRC are regulators, investors, companies, standard setters and the accounting profession and non-governmental organizations (Eccles, Krzus and Ribot 2015, 70).

The <IR> Framework is different from existing CSR reports and financial statements, as it integrates financial, economic, governance and social aspects of a company and by doing so, satisfies the needs of multiple stakeholders. South Africa was the first country to require all publicly traded companies to issue IRs (Rupley, Brown and Marshall 2017, 174).

Further organizations where companies disclose sustainability information are e.g. the Climate Disclosure Standards Board (CDSB), who launched in 2010 the first edition of “Climate Change Reporting Framework”. Ultimately the reporting framework seeks to understand the impact of climate change on a company’s financial performance. The latest update to the framework was launched in 2018 (CDSB Framework 2020 A). By 2020, the CDSB is aligned with TCFD, supports the European Union (EU) Non-Financial reporting directive and builds on the CDP, GRI, SASB and IFRS formats (2020 B).

The Carbon Disclosure Project (CDP) supports companies, cities, states, and regions to measure and manage their risks and opportunities. By 2020, about 8.400 companies reported through CDP on climate change, water security and deforestation. The CDP collaborates with the CDSB, GRI, SASB and <IR> and RobecoSam reporting frameworks and standards (CDP Worldwide 2020) (Eccles, Krzus and Ribot 2015, 74).

As well, governments stepped up and started to establish regulations and recommendations for companies to report on their sustainability performance.

4.2. Countries

In 2011, South Africa became the first country which required a combined reporting of financial and nonfinancial (integrated) information. The regulation required companies to report this information on a “apply or explain” basis. The Johannesburg Stock Exchange (JSE) added the King Code of Governance (King) III to its listing requirements as well (Eccles, Krzus and Ribot 2015, 1). King III was developed because in the previous versions of I and II sustainability continued to stay isolated from strategy and corporate governance. By emphasizing on “a holistic and integrated representation of the company´s performance in terms of both its finances and its sustainability” (Eccles, Krzus and Ribot 2015, 7) the concept of Integrated Reporting (IR) evolved.

Concrete steps to encourage listed companies to use sustainability reporting have been taken by the Stock Exchanges of Brazil BM&FBOVESPA and India´s Bombay Stock Exchange (Eccles, Krzus and Ribot 2015, 19).

India made the reporting of CSR spending and disclosure compulsory for certain types of companies (large and profitable concerns), by issuing the Section 135 of the Company´s Act in 2013 (Bose 2018, 107).

In 2014, the European Commission amended the existing directive 2013/34/EU (the non-financial reporting directive (NFRD)) which defined rules on disclosure of non-financial and diversity information by large companies to include non-financial statements in their annual reports from 2018 onwards. Companies are allowed to choose the format in which they want to report (European Commission 2020).

In Germany, the CSR Implementation Act (CSR Richtlinie Umsetzungsgesetz (CSR-RUG)) was implemented in April 2017. With the act it became binding for certain German companies and corporations of public interest to start with their CSR reporting from 01.01.2017 (Ewelt-Knauer, Schneider and Blaß 2018, 1677).

In the United States, there is no ESG disclosure mandated by the SEC, therefore public companies provide this information in voluntary sustainability reports mostly. Now, in 2020 the SEC issued the “Metrics Guidance” for the Management´s Discussion and Analysis (MD&A) section. Those companies which do disclose ESG data in that section are now asked to ensure that the ESG metrics do not lead to misinformation and the companies are asked to consider if additional disclosure is needed (SEC 2020, 4). Again, companies stay free to choose how they want to report their information to their share- and stakeholders. So, this regulation does not change the actual situation for share- and stakeholders, that information about sustainability performance is up to the issuing company.

4.3. Rating Agencies

Due to the differences of the existing reporting frameworks and the lack of measurable information in the reports of companies, so called “rating agencies” and complementary providers aim to fill the information gap for share- and stakeholders by developing their own sustainability ratings for companies (Delmas and Blass 2010, 256). For example, Sustainability Asset Management Group (SAM) provides an index which ranks companies on their sustainability performance, ASSET4 provides a database in which the largest organizations are listed with information about their performance on environment, social and governance, MSCI ESG ratings measure the resilience of companies to long-term, financial relevant ESG risks.

Over the past years there has been a consolidation movement in the market of data vendors, where acquisitions and mergers took place. For example, Kinder, Lydenberg, and Domini (KLD) Research & Analytics Inc. who delivered Socially Responsible Investing (SRI) research and connected services for institutional investors already since 1988 and provided environmental ratings, has been acquired by RiskMetricsGroup in 2009. Just one year later in 2010 MSCI acquired RiskMetricsGroup. Following the acquisition MSCI installed the “MSCI ESG STATS” as environmental rating, replacing the former KLD Research & Analytics rating (Semenova and Hassel 2015, 249).

Abbildung in dieser Leseprobe nicht enthalten

Table 1: History of ESG Data Vendor Consolidation (Brown and Wallace 2018, 6)

Due to their differences in interpretation and weighting of information, rating providers do not provide consistent results of a company’s sustainability performance (Wong, Brackley and Petroy 2019, 34). According to research data vendors diverge most when they have either a value- or values-based approach. The value-driven approach focuses to inform for investment decisions, the values-driven approach focuses on the aim to change the world (Eccles and Stroehle 2018, 29, 31).

Sustainability Raters need to keep their approach to measurement as well as weighting of information at least in part untransparent to the outside world. Their evaluations and rankings are their proprietary product and the lever to earn money based on their consultancy they provide based on their evaluations (Herriott 2016, 211).

Therefore, rating agencies provide a first level of comparability to share- and stakeholders within their rating system but do not contribute to an overall comparability of sustainability performance information.

5. Most Dominant Reporting Frameworks

The market on sustainability reporting is thriving, over the past 20 years dozens of reporting frameworks serving the market have been created. By 2015, more than 140 organizations with varying scopes and quality to report on sustainability existed and provided rankings (Eccles, Krzus and Ribot 2015, 75). Most of them are specialized towards certain aspects of sustainability, depending on the founding body. Reporting frameworks have been initiated and/ or created by institutions, environmental organizations, governments for local and global markets.

Out of these reporting frameworks, the three most relevant for in 2020 for global or large local companies have been chosen for the analysis.

Of the three frameworks considered in this paper, GRI has the widest adopted usage globally in large corporations according to a KPMG survey in 2017 (Blasco and King 2017, 29).

Both the Sustainability Accounting Standards Board (SASB) and Task Force on Climate-Related Financial Disclosures (TCFD) have gained momentum in the public awareness. Especially, since the CEO and Chairman of BlackRock, Larry Fink announced in January 2020 that they require all their investee companies to report via the SASB (or similar) on sustainability information and to report climate-related risk via the TCFD framework (Fink 2020).

With that announcement from the world’s largest asset management firm, both reporting frameworks immediately received a push to the top of the list. As companies in most jurisdictions are legally still free to choose how to report sustainability information, it makes sense to use the one requested by the largest asset management firm, as it is highly unlikely that a company’s board wants to risk to be voted against them, as stated by BlackRock that they will do so for non-compliant boards.

Support towards SASB and TCFD is also provided by institutions like the Norges Bank Investment Management (NBIM), UN-PRI, and the EU. NBIM encourages companies to use SASB metrics to report on financially material risks and opportunities and refer to GRI for broader disclosures (Norges Bank Investment Management 2020 C, 1). Furthermore, they recommended a closer alignment with TCFD recommendations on reporting standards for climate change to the 2020-2022 GRI Work Programme (Norges Bank Investment Management 2020 B).

In the 2019 EU Guidelines on non-financial reporting supplement on reporting climate-related information, it is stated that: “The TCFD recommendations are widely recognized as authoritative guidance on the reporting of financially material climate-related information, and the Commission encourages companies to implement them.” (European Commission 2019, 2) Furthermore, the support of the recommendations of various governments have been listed, like Australia, Canada, Hong Kong, Japan, Singapore, and South Africa. (2019, 2)

As well, UN-PRI signatories must report on certain TCFD indicators from 2020 onwards (UN-PRI 2020 B).

For global companies using the GRI framework, little needs to change as the SASB is not a stand-alone format, but complements global initiatives like the GRI (SASB 2018). The focus of the SASB format is on public companies listed in the United States of America (U.S.), to complete their 10-K or 20-F form and therefore not only country specific but for listed companies only. Compared to the GRI, SASB see themselves as the floor and the GRI as the ceiling. (Rupley, Brown and Marshall 2017, 173)

5.1. Global Reporting Initiative (GRI)

The GRI framework is the most commonly used worldwide, according to the KPMG survey of corporate responsibility reporting in 2017. About 75% of the world’s 250 largest companies and 63% of the top 100 companies in 49 countries were using it at that time (Blasco and King 2017, 29). That information shows that sustainability reporting has become accepted globally by larger organizations and that the GRI format dominates all other reporting frameworks in that group, making it the most relevant.

GRI has been launched twenty years earlier, in 1997 by CERES and the Tellus Institute as an independent organization (GRI 2020 A) with the aim to integrate and unify economic, governance and CSR reporting standards into a single sustainability framework.

The single mission at that time, was to generate consensus on corporate sustainability attributes that should be measured and how these attributes should be reported. The first guidelines were published in the year 2000. Over time the guidelines were adapted to follow new developments (Rupley, Brown and Marshall 2017, 173) (Eccles, Krzus and Ribot 2015, 71). By today, normative and widely recognized frameworks such as the United Nations Guiding Principles on Business and Human Rights, the ILO Conventions, UN Global Compact Ten principles and OECD Guidelines for Multinational Enterprises have been included in the GRI standards (Bartels, et al. 2016, 25).

The GRI framework is targeted towards companies in all sectors, for specific sectors though own versions were developed. The sectors concerned are: Airports, Real Estate, Electric Utilities, Financial Services, Event Organizers, Food Processing, Media, Mining and Metals and Oil and Gas. The first sector guidelines were released in 2008 for the Financial Services Sector, compiled by multi-stakeholder groups, they are intended to cover the unique sustainability issues of an industry (GRI 2020 A).

In 2016, the first global standards for sustainability reporting based on the G4 guidelines were launched by the Global Sustainability Standards Board (GSSB). Initiated by the UN Secretary-General, GRI joined forces with United Nations Global Compact (UNGC) and the World Business Council for Sustainable Development (WBCSD). The aims were to affirm mutual collaboration and develop private sector guidance to help companies to manage and report their sustainability undertakings by consideration of global sustainable development goals and targets. The standards are aimed towards all organizations to report on their economic, environmental, and social impacts and how the contribute towards sustainable development. As well, they are used as reference for policy makers and regulators (GRI 2020 A).

GRI does not provide a reporting framework per se, instead it provides a system for disclosure for companies, based on guidelines which do cover ESG elements and how to report on their impact as well as policies and practices of the company to address them. As well, GRI does not evaluate the performance of a company and therefore does not aim to provide comparable information on the sustainability performance (Herriott 2016, 4). In their “Consolidated Set of GRI Sustainability Reporting Standards” they published the set-up of the GRI standards. (GRI 2020 B)

The GRI Standards consist of a set of Universal Standards (GRI 101-103) and three Topic-Specific Standards, namely GRI 200 – Economic, GRI 300 Environmental and GRI 400 Social are equivalent to the triple bottom line items (people, planet, profits). Each standard does have distinct subtopics, in total there are 37, whereas the GRI 400 Social standard owns with 19 topics the largest amount of subtopics. Behind each subtopic are distinct items for disclosure listed.

In the GRI Universal standards, GRI 101 Foundation does apply to any organization that wants to report on their economic, environmental, and/ or social impacts. Overall, the standards are aimed to enhance the global comparability and quality of information of economic, environmental, and social impacts, positive as well as negative.

Governance aspects are considered in GRI 102 – General Disclosures, next to information about the profile of the organization, it´s strategy, ethics and integrity, stakeholder engagement practices and reporting process.

For each disclosure item there are reporting requirements provided, which are mandatory. The reporting principles outlined in GRI 101 define the required report content (Stakeholder Inclusiveness, Sustainability Context, Materiality, Completeness) as well as report quality (Accuracy, Balance, Clarity, Comparability, Reliability and Timeliness). (GRI 2020 B)

In a statement in 2018, the Chief Executive of GRI Tim Mohin, explained that the GRI and SASB standards are designed for different, but complementary purposes. While GRI looks at the impact a company has on the world, the SASB looks at the impact of the world on a company. Together, both frameworks can provide a comprehensive view on how a business can create shareholder value. Overall, the GRI framework has a broader focus to determine material issues by looking at the impact of a company on economy, environment, and society. (GRI 2018)

5.2. Sustainability Accounting Standards Board (SASB)

In 2011, the Sustainability Accounting Standards Board (SASB) was founded as a non-profit organization, with the aim to create for companies traded on the U.S. Stock Exchanges “industry-based sustainability standards for the recognition and disclosure of material environmental, social and governance impacts” (Eccles, Krzus and Ribot 2015, 73).

According to SASB about 75% of information addressed in sustainability reporting is already covered in SEC filings provided by companies and does not need to be repeated in the SASB format (LaBella, et al. 2019, 2) In reverse, that implies that SASB “only” considers 25% of remaining ESG information in their reporting framework for all companies reporting outside of the U.S. With the U.S. based focus, the use of the SASB format is targeted towards companies listed on U.S. stock exchanges,

What makes SASB reporting unique is their focus on industries. For more than 77 industries (identified by the SEC) in 2017 an industry-specific sustainability reporting guidance for material risks and opportunities have been created. To be able to understand these related financial risks, SASB identified a range of sustainability issues with potential impact on financial performance (Rupley, Brown and Marshall 2017, 173).

Their standard setting process is consisting of evidence-based research, industry working groups which are comprised of corporations, investors, and other stakeholders, a 90-day comment period and review by an Independent Standards Council. For that SASB received accreditation by the American National Standards Institute (ANSI), due to the rigor of their methodology for their sustainability accounting standards (Eccles, Krzus and Ribot 2015, 73).

The focus of the SASB framework is targeted towards shareholders, as it emphasizes the need to consider information identified as material. According to SASB, material information is information which are relevant if they do provide a significant meaning to the rational investor. Therefore, the main focus is on financial impact on an organization, not on the environmental dimension (Ewelt-Knauer, Schneider and Blaß 2018, 1679) (Busco, et al. 2020, 119). The SASB standard is targeted to disclose material sustainability information to the MD&A section of the 10-K and 20-F forms mandated by the SEC (SASB 2017, 9).

In a statement, the founder and executive director of the SASB Jean Rogers, emphasized that their design focus is indeed on the 10-K Form filed by SEC registrants. They consider themselves as providing the minimum set of things that are highly material and recognized by the SEC as such (Rupley, Brown and Marshall 2017, 173).

5.3. Task-Force on Climate-Related Financial Disclosures (TCFD)

In December 2015, TCFD has been set-up by the Financial Stability Board (FSB) to provide recommendations on how companies should report on financial risks initiated by climate change (Blasco and King 2017, 30). The task force was created, when the FSB was asked by the G20 Finance Ministers and Central Bank Governors, “how the financial sector can take account of climate-related issues” (TCFD 2017, 2).

For that purpose, a global group of 32 members from organizations that prepare financial data or use these data (like large banks, insurance companies, asset managers, pension funds, large non-financial companies, accounting and consulting firms and credit rating companies) was formed. They produced a singular, accessible framework for climate-related financial disclosure in June 2017, which claims to provide investors, lenders and insurance underwriters with information needed to assess and price climate-related risks and opportunities (2017, iv).

In their reporting framework TCFD elaborated on the damaging economic and social consequences climate-change caused by continued greenhouse gas emissions. They also explained financial challenges and opportunities caused to organizations and investors by climate-change (2017, ii).

Based on these findings, they created recommendations for organizations to include material climate-related financial information in their annual financial filings


Excerpt out of 48 pages


Welcome to the jungle. The three most dominant sustainability reporting frameworks and their ability to truly inform share- and stakeholders about the sustainability performance of a company
Hamburg School of Business Administration gGmbH
Executive Master of Business Administration - Sustainability reporting frameworks for businesses
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ISBN (eBook)
ISBN (Book)
Sustainability, Reporting, GRI, SASB, TCFD, CDSB, UN SDGs, WWF, BlackRock, NBIM, EU, Reporting framework, Non-financial reporting, Materiality, Triple-Bottom Line, Double Materiality, Sustainability performance, Shareholder, Stakeholder, ESG, Environment, Social, Governance, CSR
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Saskia Dorbandt (Author), 2020, Welcome to the jungle. The three most dominant sustainability reporting frameworks and their ability to truly inform share- and stakeholders about the sustainability performance of a company, Munich, GRIN Verlag, https://www.grin.com/document/974480


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