22TAIMLDE25

ESG Analytics

Module - 4

Dr. K. S. Arvind
Associate Professor – AIML
Jain University
Module 4: ESG Reporting Frameworks and Standards
• Global Reporting Initiative (GRI) framework,

• Sustainability Accounting Standards Board (SASB) framework,

• CDP (formerly Carbon Disclosure Project) framework,

• EU Non-Financial Reporting Directive (NFRD),

• Other ESG reporting frameworks and standards (e.g. IIRC, CFA Institute)
Global Reporting Initiative (GRI) framework
• The Global Reporting Initiative (GRI) is an international body that provides
standards for sustainability reporting.

• Established to help organizations be transparent about their impact on the economy,

environment, and society.

• Encourages comparable, consistent, and credible sustainability disclosures.

• Used by thousands of organizations worldwide.

Global Reporting Initiative (GRI) framework
Evolution of GRI

• 1997 – GRI founded to promote global sustainability reporting.

• Early versions evolved through G1, G2, G3, and G4 guidelines.

• In 2016, GRI launched the modular GRI Standards for easier use and updates.

• Latest updates ensure alignment with international frameworks and SDGs.

Global Reporting Initiative (GRI) framework
Structure of the GRI Standards

Three series:

• Universal Standards – Core principles and disclosures for all organizations.

• Topic-Specific Standards – Focus on key sustainability topics such as Economic,

Environmental, and Social aspects.

• Sector Standards – Industry-specific guidelines addressing sectoral impacts and

priorities.

• Organizations select relevant standards based on material topics.

Global Reporting Initiative (GRI) framework
Reporting Principles
• For defining report content:
• Stakeholder Inclusiveness – Identify and engage key stakeholders.
• Sustainability Context – Present performance in the broader sustainability context.
• Materiality – Focus on topics that have significant impacts.
• Completeness – Cover all relevant information and boundaries.

For ensuring report quality:

• Balance, Comparability, Accuracy, Timeliness, Clarity, Reliability.
Global Reporting Initiative (GRI) framework
GRI Disclosures
• General Disclosures: Organizational profile, strategy, ethics, and governance.
• Management Approach: How sustainability topics are managed.
• Topic-Specific Disclosures:
• Economic: Anti-corruption, economic performance, market presence.
• Environmental: Energy, emissions, waste, biodiversity.
• Social: Labor practices, human rights, diversity, community.
Global Reporting Initiative (GRI) framework
Materiality and Boundaries
• Materiality identifies topics that are most relevant to an organization’s impacts and
stakeholders.
• Boundary defines where the impacts occur – within the organization or its value chain.
• Helps focus reporting on what truly matters and improves report relevance.

Benefits of GRI Reporting

• Promotes transparency and accountability.
• Enhances brand reputation and stakeholder trust.
• Enables benchmarking and performance improvement.
• Supports compliance with sustainability regulations and investor demands.
• Facilitates data-driven decision-making and ESG analytics.
Global Reporting Initiative (GRI) framework
GRI and ESG Data Analytics
• GRI provides measurable sustainability indicators useful for ESG analytics.
• Data collected through GRI reports can be analyzed for:
• Trend analysis of sustainability performance.
• Industry benchmarking.
• Risk assessment and predictive analytics.
Sustainability Accounting Standards Board (SASB) framework
Introduction to SASB
• The Sustainability Accounting Standards Board (SASB) develops standards for
sustainability disclosure that are financially material.
• SASB helps organizations report sustainability information relevant to investors.
• Focuses on how environmental, social, and governance (ESG) issues affect financial
performance.
• SASB is now part of the Value Reporting Foundation (VRF), which has merged into
the International Sustainability Standards Board (ISSB).
Sustainability Accounting Standards Board (SASB) framework
Purpose of SASB Framework
• Provides a structured approach to report sustainability data that influences business
value.
• Enables companies to identify and communicate financially material sustainability
topics.
• Helps investors make informed decisions by comparing performance across industries.
• Bridges the gap between traditional financial reporting and sustainability reporting.
Sustainability Accounting Standards Board (SASB) framework
Key Features of SASB
• Focus on financial materiality — issues that impact enterprise value.
• Industry-specific standards – tailored for 77 industries across 11 sectors.
• Designed for comparability and consistency of disclosures.
• Complements other sustainability frameworks like GRI and TCFD.
Sustainability Accounting Standards Board (SASB) framework
Structure of SASB Standards
• Each SASB Standard includes:
• Disclosure Topics – Key sustainability issues relevant to the industry.
• Accounting Metrics – Quantitative and qualitative measures for each topic.
• Technical Protocols – Guidelines for collecting and reporting data.
• Activity Metrics – Business data that provides context (e.g., production volume,
employee count).
Sustainability Accounting Standards Board (SASB) framework
Thematic Focus of SASB
• SASB Standards cover five broad sustainability dimensions:
• Environment – Emissions, resource use, waste management.
• Social Capital – Customer welfare, data privacy, product quality.
• Human Capital – Labor practices, employee health and safety, diversity.
• Business Model & Innovation – Product design, lifecycle impact, resource efficiency.
• Leadership & Governance – Risk management, ethics, competitive behavior.
Sustainability Accounting Standards Board (SASB) framework
Reporting Principles
• The SASB reporting principles guide organizations in preparing disclosures:
• Fair Representation – Accurate and balanced reporting.
• Relevance – Focus on material issues that affect value creation.
• Completeness – Cover all significant sustainability aspects.
• Verifiability – Ensure disclosures are supported by reliable data.
• Neutrality – Avoid bias or selective disclosure.
Sustainability Accounting Standards Board (SASB) framework
Industry-Specific Approach
• SASB recognizes that sustainability risks and opportunities differ across industries.
• Example:
• For Automobile manufacturers, emissions and fuel efficiency are key.
• For Technology companies, data privacy and cybersecurity are critical.
• For Healthcare, product safety and access to medicine are vital.
• Each industry’s SASB standard outlines relevant disclosure topics and metrics.
Sustainability Accounting Standards Board (SASB) framework
Example – SASB Metrics
• Industry: Software & IT Services
Topic: Data Privacy & Security
• Metric: Number of data breaches and records affected.
Topic: Energy Management
• Metric: Total energy consumed and percentage from renewable sources.
Topic: Employee Diversity & Inclusion
• Metric: Percentage of gender and ethnic group representation.
Sustainability Accounting Standards Board (SASB) framework
Benefits of SASB Framework
• Improves communication between companies and investors.
• Enhances comparability of sustainability performance across industries.
• Helps identify ESG risks that impact financial returns.
• Encourages integration of sustainability metrics in corporate strategy.
• Facilitates consistent ESG data analytics for investment assessment.
Sustainability Accounting Standards Board (SASB) framework
Integration with Global Frameworks
• SASB complements frameworks such as:
• Task Force on Climate-related Financial Disclosures (TCFD) – Climate risk
reporting.
• Global Reporting Initiative (GRI) – Comprehensive sustainability reporting.
• ISSB – Unified global sustainability disclosure standards.
• Encourages harmonization of ESG reporting globally.
CDP (Carbon Disclosure Project) framework
Introduction to CDP
• CDP (formerly Carbon Disclosure Project) is a global non-profit organization.
• Encourages companies, cities, and governments to disclose their environmental
impacts.
• Focuses on climate change, water security, and deforestation.
• Helps investors and stakeholders assess environmental performance and risks.
CDP (Carbon Disclosure Project) framework
Purpose of the CDP Framework
• Promote transparency on environmental performance.
• Encourage organizations to measure and manage their environmental impacts.
• Provide standardized data for investors and regulators.
• Drive sustainable transformation and accountability in business operations.
CDP (Carbon Disclosure Project) framework
CDP Reporting Areas
• The CDP framework has three major disclosure programs:
• Climate Change – Greenhouse gas emissions, climate risks, and mitigation strategies.
• Water Security – Water usage, risks, and conservation efforts.
• Forests – Impact of commodities such as timber, palm oil, and soy on deforestation.

Climate Change Disclosure

• Focuses on corporate greenhouse gas emissions and energy management.
• Key topics:
• Scope 1, 2, and 3 emissions.
• Climate-related risks and opportunities.
• Carbon reduction targets and renewable energy adoption.
• Encourages companies to align with net-zero goals.
CDP (Carbon Disclosure Project) framework
Water Security Disclosure
• Measures corporate performance in sustainable water use.
• Key topics:
• Total water withdrawal and discharge.
• Water-related risks in operations and supply chains.
• Strategies for water conservation and recycling.
• Aims to build corporate resilience against water scarcity and pollution.
CDP (Carbon Disclosure Project) framework
Forests Disclosure
• Addresses the impact of business supply chains on forest ecosystems.
• Key topics:
• Deforestation risk from agricultural commodities.
• Policies for responsible sourcing.
• Supplier engagement and traceability efforts.
• Promotes sustainable production and biodiversity protection.
CDP (Carbon Disclosure Project) framework
CDP Disclosure Process
• Questionnaire Distribution – Companies receive tailored questionnaires for climate,
water, and forests.
• Data Collection & Submission – Companies measure, record, and report sustainability
metrics.
• Scoring & Evaluation – CDP assesses performance and assigns scores.
• Public Disclosure – Results are shared with investors, customers, and the public.
CDP (Carbon Disclosure Project) framework
CDP Scoring System
• CDP scores companies based on transparency, awareness, management, and leadership.
• Score levels:
• D / D-: Disclosure – basic reporting.
• C / C+: Awareness – recognizing environmental issues.
• B / B+: Management – taking measurable actions.
• A / A-: Leadership – implementing best practices and innovation.
• The A List recognizes top-performing organizations globally.
CDP (Carbon Disclosure Project) framework
Key Components of CDP Reporting
• Governance: Management oversight of environmental issues.
• Strategy: Integration of sustainability into business planning.
• Targets: Measurable and time-bound emission reduction goals.
• Metrics: Quantitative data on energy use, emissions, and water consumption.
• Verification: Independent third-party assurance of reported data.
CDP (Carbon Disclosure Project) framework
Benefits of CDP Participation
• Improves corporate reputation and stakeholder trust.
• Provides access to investor networks seeking sustainable companies.
• Identifies risks and opportunities from environmental issues.
• Encourages operational efficiency and innovation.
• Contributes to achieving global sustainability goals (e.g., SDGs, Paris Agreement).
EU Non-Financial Reporting Directive (NFRD)
Introduction to NFRD
• The EU Non-Financial Reporting Directive (NFRD) was introduced in 2014
(Directive 2014/95/EU).
• Requires large public-interest companies to disclose non-financial and diversity
information.
• Aims to increase corporate transparency and accountability on social and
environmental issues.
• Represents one of the first regional ESG reporting mandates in the world.
EU Non-Financial Reporting Directive (NFRD)
Purpose of NFRD
• To ensure investors, consumers, and stakeholders have access to reliable ESG data.
• To encourage companies to adopt sustainable and responsible business practices.
• To promote long-term value creation beyond financial performance.
• To align EU companies with the European Green Deal and UN Sustainable
Development Goals (SDGs).
EU Non-Financial Reporting Directive (NFRD)
Scope of NFRD
• The NFRD applies to:
• Large public-interest entities (PIEs) including:
• Listed companies.
• Banks and insurance firms.
• Other companies designated by member states as public-interest entities.
• Companies must have:
• More than 500 employees, and
• Either €20 million in total assets or €40 million in turnover.
EU Non-Financial Reporting Directive (NFRD)
Key Areas of Disclosure
• Companies must disclose information on:
• Environmental matters – impacts on climate, energy use, emissions, biodiversity.
• Social and employee matters – working conditions, equality, diversity, human rights.
• Human rights – policies for due diligence and preventing violations.
• Anti-corruption and bribery – risk management and preventive measures.
• Board diversity – gender, age, and professional diversity in governance bodies.
EU Non-Financial Reporting Directive (NFRD)
Reporting Principles
• Companies must describe:
• Their business model.
• Policies and due diligence processes related to non-financial areas.
• Outcomes of these policies.
• Risks and their management approaches.
• Non-financial key performance indicators (KPIs).
• Reports must be clear, concise, and comparable across entities and sectors.
EU Non-Financial Reporting Directive (NFRD)
Formats of NFRD Reporting
• Organizations can publish non-financial information in:
• The management report (main annual report), or
• A separate sustainability report.
• The report can follow recognized frameworks such as:
• GRI (Global Reporting Initiative).
• UN Global Compact.
• OECD Guidelines or ISO 26000.
EU Non-Financial Reporting Directive (NFRD)
Formats of NFRD Reporting
• Organizations can publish non-financial information in:
• The management report (main annual report), or
• A separate sustainability report.
• The report can follow recognized frameworks such as:
• GRI (Global Reporting Initiative).
• UN Global Compact.
• OECD Guidelines or ISO 26000.
Other ESG reporting frameworks and standards (e.g. IIRC, CFA
Institute)
Introduction
• ESG reporting has evolved through multiple global frameworks developed by
different organizations.
• Each framework focuses on specific aspects like financial integration, investor
relevance, or performance measurement.
• Apart from GRI, SASB, CDP, and NFRD — two key global frameworks are:
• International Integrated Reporting Council (IIRC)
• CFA Institute’s ESG Disclosure Standards
Other ESG reporting frameworks and standards (e.g. IIRC, CFA
Institute)
The International Integrated Reporting Council (IIRC)
• IIRC was formed in 2010 to create a principles-based framework that integrates
financial and non-financial performance.
• Its main publication: The International <IR> Framework (Integrated Reporting
Framework).
• Objective: To help organizations communicate how strategy, governance, and
performance create value over time.
Other ESG reporting frameworks and standards (e.g. IIRC, CFA
Institute)
Purpose of IIRC Framework
• To integrate financial, manufactured, intellectual, human, social, and natural
capital into one holistic report.
• To link sustainability and financial outcomes in strategic decision-making.
• To provide investors with a comprehensive understanding of how organizations
generate long-term value.
Other ESG reporting frameworks and standards (e.g. IIRC, CFA
Institute)
The Six Capitals of Integrated Reporting

Type of Capital Meaning / Examples

Financial Capital Funding, equity, and financial performance
Manufactured Capital Physical assets like buildings, machinery
Intellectual Capital Knowledge, patents, R&D, innovation
Human Capital Employee skills, experience, motivation
Social & Relationship Capital Trust, community engagement, partnerships
Environmental resources like water, energy,
Natural Capital
biodiversity
Other ESG reporting frameworks and standards (e.g. IIRC, CFA
Institute)
Key Components of Integrated Reporting
[Link] Overview
[Link] Structure
[Link] Model
[Link] and Opportunities
[Link] and Resource Allocation
[Link]
[Link]
[Link] of Presentation (Reporting Boundary)
Other ESG reporting frameworks and standards (e.g. IIRC, CFA
Institute)
Benefits of IIRC Framework
• Promotes holistic decision-making.
• Strengthens the connection between financial performance and sustainability.
• Enhances investor confidence through integrated insights.
• Encourages transparency and accountability across all business dimensions.