ESG Guide for SMEs Part 9: Preparation of an ESG report: Standards and frameworks
The aim of this guide is to help small and medium-sized companies (SMEs) improve their corporate sustainability and responsibility in the environmental, social and governance (ESG) fields in practice. With the development of the ESG market, legislative updates and changes in the expectations of customers, partners and investors, the field of sustainability plays an increasingly important role in building a strong and competitive business.
In part 8 of our ESG guide, we guided you through writing an ESG report. Now, in part 9, we'll look at ESG reporting standards and frameworks. Understanding these will help you ensure your ESG reporting is aligned with best practices and recognized by stakeholders globally.
Standards and frameworks
Internationally agreed standards and frameworks make it possible to access and compare the information in sustainability reports and thus identify truly responsible businesses. Below is a brief overview of the most well-known international standards:
This standard, which the EU has prepared, is based on the so-called double materiality principle for multiple interested parties (including investors). The European Financial Reporting Advisory Group (EFRAG) cooperated with the GRI organisation to create the standard. This is currently the most relevant standard in the EU as it is mandatory for all but the smallest unlisted companies.
The GRI creates a comprehensive framework for sustainability reporting that is widely used worldwide. The framework sets out principles and standard information organisations can disclose about their economic, environmental and social results and impacts. Applying the GRI guidelines is voluntary, allowing companies to register on the GRI website and submit their reports. GRI is intended for companies of any size and field of activity.
SABS standards enable businesses to identify, manage and communicate financial sustainability information to their investors. It is a set of globally applicable 77 standards that identify financially significant sustainability topics and their associated metrics for a typical company in an industry.
The International Organization for Standardization launched ISO for Sustainability in 2009, which guides social responsibility. ISO 26000 is a recognised international framework that gives guidance voluntarily, so it is not a certification. It targets all types of organisations regardless of their activities, size or location.
In 2000, the UN Global Compact was launched. It is a United Nations initiative created to encourage businesses worldwide to adopt sustainability and socially responsible corporate policies and to report regularly on activities related to this issue. It is a basic framework for entrepreneurs based on ten principles in human rights, working conditions, the environment and anti-corruption measures.
Next, we'll move to the 10th and final part of our guide, the guiding questions checklist and ESG glossary. This section will provide you with clear definitions and explanations of common ESG terms, helping you navigate the world of ESG with greater ease.