ESG Frameworks: An Overview

The growing ESG investing movement has given rise to several independent, non-profit organizations that strive to set standard practices. The efforts of these organizations have shaped the landscape of current ESG reporting and will continue to have a material impact on the future.

This is a brief overview of some of the major players in the space.

The Sustainability Accounting Standards Board (SASB)

Founded in 2011, SASB is one of the biggest names in the space, developing ESG standards across 77 industries. These standards aim to surface information that is financially material and decision-useful. In 2021, SASB merged into the Value Reporting Foundation in the name of simplifying the corporate sustainability disclosure landscape.

https://sasb.org/

The International Labour Organization (ILO)

The ILO dates back to 1919. It aims to bring together the governments, employers and workers of 187 member states. Focusing more on the "S" of ESG, the ILO's mission is to "promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue on work-related issues."

https://www.ilo.org/

Task Force on Climate-Related Financial Disclosures (TCFD)

The TCFD was formed in 2015 to assess and price climate-related risks and opportunities. It is comprised of 29 representatives from various financial and non-financial companies across the G20. They published a set of recommendations that are designed to solicit decision-useful, forward-looking information that can be included in mainstream financial filings.

https://www.fsb-tcfd.org/

The Global Reporting Initiative (GRI)

GRI was created in 1997 in response to the Exxon Valdez disaster. Similar to SASB, they have developed a system of standards that apply to industry sectors, along with universal standards and topic standards. These standards are designed to help organizations understand their outward impacts on the economy, environment and society, including human rights.

https://www.globalreporting.org/

Navigating an approach to these standards

Because of the complexity of the topics within ESG, the application and interpretation of these programs requires a non-trivial investment of time and talent. Our latest ESG whitepaper-ESG is Essential to Fundraising and Investor Retention-explores the context around these standards and how fund administrators can play an important role in developing an approach to their adoption. Download a copy of the whitepaper today.

Alternative Investments, EMEA, Fund Administration, Regulation

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