Navigating the complex landscape of sustainability reporting is crucial for businesses aiming to meet their environmental goals and remain competitive. Compliance is essential, with frameworks, standards, and protocols guiding businesses towards key requirements, regulations to follow, and sustainability ratings to achieve.
Understanding these key concepts helps ensure your business stays on track in the rapidly evolving sustainability landscape.
1. Frameworks
Definition:
Frameworks are conceptual structures that provide guidance on what topics or areas to report on and how to think about sustainability-related disclosures.
Purpose:
They offer an overarching approach to sustainability reporting, often including principles, themes, and indicators, but they may not prescribe exact metrics or formats.
Think of it as:
A roadmap for what to cover.
2. Standards
Definition:
Standards are detailed, prescriptive requirements—they specify what must be reported and often how it should be measured and presented.
Purpose:
They bring consistency, comparability, and rigor to sustainability disclosures by providing rules or benchmarks that companies must follow if they adopt them.
Think of it as:
The rules for playing the game once you’ve chosen the field (framework).
3. Protocols
Definition:
Protocols are technical methodologies or calculation tools that guide how to measure specific ESG factors.
Purpose:
They provide detailed procedures for calculating or assessing sustainability metrics, ensuring accuracy and reproducibility.
Think of it as:
The calculator or formula used to get the numbers.
4. Regulations
Definition:
Regulations are legally binding rules established by governments or regulatory bodies that organisations must comply with.
Purpose:
To mandate certain sustainability-related disclosures or behaviors, often with legal penalties for non-compliance.
Think of it as:
The law you must follow.
5. Ratings
Definition:
Ratings are third-party assessments that evaluate an organisation’s ESG performance, typically for investors and stakeholders.
Purpose:
To benchmark and compare companies based on ESG criteria, helping stakeholders assess risk and ethical performance.
Think of it as:
The grade or score given by an outside observer.
