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. Their ability to provide share- and stakeholders with comprehensive insights about the sustainability performance of companies will be analysed. 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.
Contents
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
Research Objectives and Core Themes
This master's thesis aims to evaluate and distinguish the three most dominant sustainability reporting frameworks (GRI, SASB, and TCFD) regarding their ability to provide share- and stakeholders with comprehensive insights into a company's sustainability performance. The research focuses on the level of materiality and expected sustainability indicators, utilizing the UN Sustainable Development Goals (SDGs) as a comparative benchmark to analyze how these frameworks meet the information demands of specific representatives.
- Comparison of the three dominant reporting frameworks: GRI, SASB, and TCFD.
- Analysis of share- and stakeholder information requirements based on four representatives: WWF, EU, BlackRock, and NBIM.
- Examination of materiality concepts across different reporting standards.
- Evaluation of framework coverage using the 17 UN Sustainable Development Goals.
- Discussion on the challenges of cross-company comparability and the fragmented landscape of sustainability reporting.
Excerpt from the Thesis
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.
Summary of Chapters
1. Introduction: Presents the high demand for comparable sustainability information and outlines the thesis structure, including the comparison of the GRI, SASB, and TCFD frameworks.
2. Research Objective: Defines the core aim of distinguishing the three reporting frameworks based on their capacity to satisfy the information needs of specific share- and stakeholder representatives.
3. Development of the sustainability movement for companies: Details the historical evolution of sustainability, CSR, and ESG concepts to provide a contextual foundation.
4. Reporting on Sustainability: Explores the history and development of sustainability reporting practices at the organizational, national, and rating agency levels.
5. Most Dominant Reporting Frameworks: Introduces the three primary frameworks selected for analysis: Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and Task-Force on Climate-Related Financial Disclosures (TCFD).
6. Share- and Stakeholders: Defines the target audiences for sustainability reporting and introduces the four chosen representatives: WWF, EU, BlackRock, and NBIM.
7. Analysis on how sustainability reporting frameworks meet information needs: Executes a detailed comparison of the frameworks' materiality concepts and their coverage of the UN Sustainable Development Goals.
8. Result and Discussion: Summarizes the findings, highlighting that GRI offers the most comprehensive coverage, while SASB and TCFD serve more specialized, complementary roles.
9. Conclusion: Synthesizes the final analysis and suggests that while GRI provides the best match for stakeholder needs, the current reporting landscape remains fragmented and lacks the standardization necessary for easy comparison.
Keywords
Sustainability Reporting, GRI, SASB, TCFD, Materiality, ESG, Corporate Social Responsibility, Stakeholder Theory, UN Sustainable Development Goals, SDGs, Financial Filings, Climate Change, BlackRock, Investment Stewardship, Sustainability Performance.
Frequently Asked Questions
What is the primary purpose of this master's thesis?
The thesis aims to analyze and compare the three most dominant sustainability reporting frameworks (GRI, SASB, and TCFD) to determine how effectively they inform share- and stakeholders about the sustainability performance of companies.
What are the central themes discussed in the work?
The work revolves around the definitions of sustainability, CSR, and ESG, the development of reporting standards, the information needs of key representatives, and the application of UN Sustainable Development Goals (SDGs) as a framework for assessing reporting comprehensiveness.
What is the core research question addressed by the author?
The research question focuses on distinguishing the extent to which GRI, SASB, and TCFD provide comprehensive insights into a company's sustainability performance to meet the diverse expectations of share- and stakeholders.
Which scientific methods were applied in this study?
The thesis employs a comparative analysis approach, mapping the content and materiality focus of each reporting framework against the specific information expectations of four representative entities (WWF, EU, BlackRock, and NBIM) using the 17 UN Sustainable Development Goals.
What does the main body of the text cover?
The main body covers the development of the sustainability movement, detailed definitions of the reporting frameworks, the identification and characterization of key share- and stakeholders, and an analytical comparison of how these frameworks align with materiality and performance reporting requirements.
Which keywords characterize this publication?
The paper is characterized by terms such as Sustainability Reporting, GRI, SASB, TCFD, Materiality, SDGs, ESG, and Stakeholder Engagement.
Why did the author choose BlackRock and NBIM as representatives for shareholders?
BlackRock was chosen as the largest asset manager globally, representing shareholder interests in sustainable growth and risk management. NBIM was selected because it represents the Norwegian Government Pension Fund, combining the interests of a global shareholder with the need for a sustainable future for future generations.
What is the significance of the "double materiality" perspective mentioned in the appendix?
The double materiality perspective, supported by the EU, highlights that information should be disclosed not only based on its financial impact on the company but also based on the impact of the company's activities on the environment and society.
- Quote paper
- 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
