ESG Evolution and Best Practice:

A Practical Guide for Corporate Reporting

se.com/sesb
 ESG Evolution and Best Practice: A Practical Guide for Corporate Repor ting

How to Use This Guide

This guide is intended for use Introduction ▶
by commercial and industrial What is ESG? ▶
organizations seeking to build
and/or improve their ESG Seeking to standardize ▶

reporting practice. The trends Clarifying the role of ESG organizations ▶

and concepts discussed in
Basic-Better-Best Guide ▶
this guide can also be used
as input for investors to gain a A Technology-forward Approach ▶
better understanding of the ESG Appendix ▶
landscape and the challenges
that companies face when
seeking to create visibility into
ESG risks and performance.

ESG EVOLUTION AND BEST PRACTICE 1

 Introduction
Companies around the world are being pressed The purpose of this guide is to help to simplify
to provide greater transparency about their the complex world of ESG reporting into an
environmental, social, and governance (ESG) risks understandable and relatable Basic-Better-Best
and opportunities by reporting their progress, but the framework. It will first review key trends around ESG
competing standards for disclosure of ESG data and reporting and define the common categories of
performance can be confusing and time-consuming. voluntary and mandatory reporting schemes. Then,
With so many different reporting frameworks, raters it will break down best practices for companies
and rankers, certifications, data aggregators, and depending on ambition level and goals, to help report
regulatory authorities for ESG reporting, the so-called what and where it matters most.
“alphabet soup” can be overwhelming. And when
companies are largely left to decide for themselves
which standards to report against, stakeholders’ – from
employees to customers to investors – ability to assess
and compare ESG performance is constrained.

ESG EVOLUTION AND BEST PRACTICE 2

 What is ESG?
Breaking down the ‘E’, ‘S’, and ‘G’
ESG is transforming the conversation around sustainability reporting. The letters alone – standing for environment, social, and
governance – might not mean much, but together they convey an entity’s behavior on environmental issues, its engagement with
society, and the strength of its governance.

E = Environment, covering metrics related S = Social, which looks at criteria related to G = Governance, which examines a company’s
to a company’s impact on the natural world, a company’s people-related impacts such as decision- and policy-making procedures
concentrating on greenhouse gas emissions how responsibly a company manages worker and the effectiveness of its ethics obligations
and climate change, natural resource rights, health and safety in its operations for the board of directors, managers, and
use, energy, waste, water, pollution, and and supply chain, its practices on employee shareholders. The assessment of organizational
deforestation and biodiversity. Environment relations and diversity and inclusion, its values governance concentrates on how a company
can also include a company’s exposure to around corporate giving and volunteering, and creates transparency in accounting and how
environmental and climate change-related local community engagement such as how a it polices itself on tax strategy, philanthropy,
risks, such as flooding, drought, wildfire, and company takes into the account the interests of executive renumeration, political lobbying, and
other extreme weather, and compliance with external stakeholders (who may be directly or potential conflicts of interest.
government regulations, such as limitations on indirectly impacted by its operations).
the management of hazardous waste.

ESG EVOLUTION AND BEST PRACTICE 3

 Why is ESG treated with such importance and urgency?
The terms “triple bottom line” or “three Ps” (people, ESG reporting is growing in importance and Increasing market scrutiny has led companies to feel
planet, and profit) have been in play for quite urgency as the risks of climate change, social the pressure to become more transparent in their
some time as a way for organizations to place unrest, human risks, and reputation impacts from business dealings and ESG performance. But the
the full scope of sustainability at the core of the unethical conduct become more evident. These lack of clarity as to how to be more transparent can
business mission and strategy. In recent years, this risks are driving investors to examine the long-term lead to paralysis. The next sections will explore the
concept has shifted toward ESG as a simplified resilience of the companies they invest in — from points of confusion companies are grappling with
way to talk about corporate sustainability. Today, an environmental, social, ethical, and financial and then outline action steps to get organizations on
as investor interest in the responsibility of their perspective. Investors and organizations are also track with ESG best practices.
funds has skyrocketed, ESG is being adopted to recognizing the value of ESG beyond mitigating
assess the impacts a company can have on people, risks: Sustainability is a company’s passport to
communities, and the environment. the future, a way to drive innovation, and a lever
“As stewards of our clients’ capital, we ask
to create a competitive advantage.
However, there is remaining confusion in the market businesses to demonstrate how they’re
on what companies mean when they say ESG, While companies across industries and geographies going to deliver on their responsibility to
and whether their so-called ESG and sustainability are responding to the increased demand for shareholders, including through sound
programs fully address the E, the S, and the G. transparency in ESG, the pathway to disclose this environmental, social, and governance
information is often unclear. For example, for several practices and policies […] It’s up to you to
years, BlackRock has urged CEOs to make ESG chart your own course and to tell us how
For the purposes of this guide, the definition for core to business strategy, to set net-zero emissions you’re moving forward.”
ESG reporting or sustainability reporting are goals, and to provide this information via investor- — Larry Fink, Chairman and CEO, BlackRock
synonymous, encompassing environment, social, focused SASB and TCFD-aligned disclosures. But, as
and governance as equally weighted parts. evidenced in CEO Larry Fink’s latest 2022 letter, further
guidance on how to approach the wider universe
of ESG disclosure mechanisms is largely left up to
companies to determine for themselves.

ESG EVOLUTION AND BEST PRACTICE 4

 Seeking to standardize
Companies everywhere are experiencing so-called “survey fatigue” from the need, or desire, to respond to
an ever-increasing body of ESG reports and rankings. In response, governments and reporting organizations
are working to standardize what, where, and how companies disclose to streamline this reporting burden
and create an equitable basis for comparison across reports.
Is a “universal” ESG reporting standard getting closer?
In September 2020, five of the major global the collaboration is to reduce the burden on both
reporting organizations came together to form a individual reporting organizations and companies
comprehensive reporting group, signaling their that report by ending redundant and overlapping
intent to work towards a common framework with disclosures, and to improve accessibility for users
a single set of global reporting standards. The of ESG reporting data, ensuring that stakeholders
group brings together frameworks that reference can base their decisions on consistent and
or build on the GHG protocol, including GRI, CDP, comparable information.
the CDSB, the IIRC, and the SASB. The goal of

ESG EVOLUTION AND BEST PRACTICE 5

 Seeking to standardize, cont’d

Other recent points of intersection between ESG reporting organizations include:

• In its climate questionnaire, CDP has • SASB and IIRC merged to create the Value • At COP26, IFRS introduced a new ISSB to
embedded recommendations of the TCFD, Reporting Foundation. develop a comprehensive global baseline of
which was created following COP21 to increase sustainability disclosure standards. The formation
• The IIRC convened the Corporate Reporting
the amount of reliable information on financial of the ISSB includes a commitment from CDSB
Dialogue Better Alignment Program, joined by
institutions’ exposure to climate-related risks and the Value Reporting Foundation (which
CDP, GRI, SASB and other participants,
and opportunities. CDP is also coordinated with houses the Integrated Reporting Framework
aimed at intensively collaborating to align on
the SBTi, and starting in 2022, will also include and SASB Standards) to consolidate into the
TCFD principles.
questions aligned with the RE100 as well as a new board.
subset of questions specifically formulated for • The World Economic Forum launched the
financial institutions. Measuring Stakeholder Capitalism Initiative
seeking to accelerate convergence among the
• The PCAF and CDP are collaborating to
major ESG standard setters.
increase financial institutions’ ability to assess
and disclose financed emissions, in line with
TCFD recommendations.

ESG EVOLUTION AND BEST PRACTICE 6

 Seeking to standardize, cont’d

Simultaneously, legislative action around the world is mandating sustainability reporting:

• In 2020, the European Commission mandated • The EU Green Taxonomy Regulation, which • Japan, the UK, and New Zealand are making
the EFRAG to create the ESRS. The resulting entered into force in 2020, introduces a TCFD reporting mandatory for large companies,
CSRD, launched in 2021 in the EU, evolves the classification system and performance requiring them to report GHG emissions and other
NFRD to introduce even more detailed reporting thresholds to establish which economic climate-related disclosures beginning in 2022.
requirements for large companies, including activities are considered environmentally
• In the United States, the Securities and
an obligation for companies to digitally tag sustainable. Paired with the SFDR, the
Exchange Commission is taking a number of
reported information. taxonomy requires financial market participants
steps to enforce ESG compliance in response to
in the EU, and companies required to provide
investor demand for more robust and transparent
non-financial reporting under the CSRD, to
climate and environmental disclosures. This
disclose how and to what extent their business
includes the formation of a task force to identify
operations are associated with environmentally
and address ESG reporting misconduct, a
sustainable activities. The implications of SFDR
review of climate-related disclosures in public
will be wide-sweeping, as compliance is a
company filings, and a proposal of rules that
requirement for not only EU-headquartered
would enhance disclosures of climate-related
companies, but all financial service companies
risk for publicly traded companies in the US.
marketing products in the EU.
It is likely that an ESG reporting mandate will be
issued in the US, potentially as early as 2022.

ESG EVOLUTION AND BEST PRACTICE 7

 The debate about materiality
Materiality assessments have historically been Following the relatively recent explosion of interest Ultimately, both approaches to materiality are
foundational to the development of an ESG strategy from investors and analysts on company ESG important and communicate different priorities
and reporting plan. A materiality assessment helps performance, the emphasis placed on the holistic depending on the stakeholder, which is why many
a company identify where it has the most significant view of materiality has shifted. As investors have companies choose to use both standards. In 2021,
economic, environmental, and social impacts and become a priority audience for ESG reports, GRI and SASB jointly published a guide about
risks and the topics that have the greatest influence reporting standards have evolved to meet the needs how these standards complement each other
on decision-making of stakeholders both inside of this audience, which is inherently more focused for corporate sustainability reporting. This guide,
and outside of the organization. This exercise helps on the financial outcomes of ESG performance. which included results from a survey of reporting
companies take a holistic approach to discovering Standards like SASB, which have emerged to organizations, showed that the largest group of
both the overt and subtle impacts they have, enabling specifically address investors, have taken a very respondents use both GRI and SASB together.
them to prioritize actions and communications that different approach to determining financially material
address the most material aspects of their business. information.

Certain frameworks and disclosure regulations, For instance, for SASB, materiality means topics
such as GRI, also require companies to conduct a that are “reasonably likely to impact the financial
materiality assessment for framework compliance. performance of a typical company in an industry”.
GRI pushes companies to broadly consider all This approach removes the onus from companies to
stakeholders that may be directly or indirectly conduct their own in-depth materiality assessments
affected by their operations, underscoring the in favor of pre-defined, industry-specific standards.
importance of using materiality assessments to It is also oriented to “speak the language” of capital
create transparency for a global, diverse, and markets, answering with data presented precisely to
multi-stakeholder group. meet investor requirements.

1 It is important to remember that investors are only one stakeholder group, and that
ESG EVOLUTION AND BEST PRACTICE narrowly defined materiality may inadvertently ignore the needs of other stakeholders. 8
 Is GRI losing steam to SASB and TCFD?
GRI is the most widely used global framework GRI’s recently updated standards have moved
among the largest organizations in the world. In our to decouple the link between ESG and financial
own research at Schneider Electric, we found that value creation. This deviates from other popular
59% of respondents to our survey were reporting frameworks like SASB, which still focuses primarily
to GRI versus 36% that were reporting to SASB. on consequences from a business perspective, such
However, there is a growing perception that GRI as financial costs, industry-specific considerations,
may be losing its position of dominance. In our or reputational risks. Rather, GRI is evolving to
sustainability reporting and consulting practice at emphasize that ESG reporting and financial reporting
Schneider Electric, we’ve observed that reporting are two distinct but equally important pillars, instead
requests almost always include alignment with SASB of ESG performance mattering to the extent that it
and TCFD standards, with an increasing number drives financial performance. GRI appears to be
deprioritizing GRI (especially outside of Europe). This reinforcing the notion that although ESG can be
shift is no doubt influenced by some of the world’s good for a company’s bottom-line, the true value
largest asset managers’ – including BlackRock, of reporting lies within the process of conducting a
Vanguard, and State Street – recent but strong push thoughtful inward and outward look at positive — but,
for companies to disclose in line with SASB and more importantly, negative — impacts and using that
TCFD guidelines. look to make meaningful progress year over year.

No matter the framework that a company uses, it’s

GRI is evolving to emphasize that ESG reporting important to remember that ESG reporting was
and financial reporting are two distinct but equally never meant to be a “feel-good” or “check-box”
important pillars. exercise, and that although investors are key, they
are just one of many categories of stakeholders for
companies to consider.

ESG EVOLUTION AND BEST PRACTICE 9

Clarifying the role of ESG organizations

Ratings and rankings, certifications, data

aggregators, and frameworks
 Clarifying the role of ESG ratings and rankings,
certifications, data aggregators, and frameworks
Ratings, rankings, frameworks, and
certifications — what do they require, 5 Types of organizations in the ESG reporting ecosystem
how do they work, and why do they
Guidance Data Ratings & Accreditations, Regulatory
matter? And most importantly, why Frameworks Aggregators Rankings Certifications, Authorities
are there so many of them – and why GRI GRESB MSCI & Target-setting UK ETS
is there such confusion? The easiest RE100
SASB CDP ISS EU ETS
answer is this: they are intertwined with SBTi
SDGs Bloomberg Sustainalytics NFRD
each other and each serves a slightly EP100
TCFD Refinitiv FTSE CSRD
different purpose. EV100
CDSB S&P CSA Vigeo Eiris SFDR
To unravel this mystery, let’s first define IIRC B Analytics Corporate Knights LEED EED
the types of sustainability and ESG GHG Protocol EcoVadis BREEAM SECR
reporting organizations a company UNGC CSRHub ENERGY STAR EU Taxonomy
might encounter. COSO ERM B Corp BEGES
ISO Décret tertiaire

ESG EVOLUTION AND BEST PRACTICE 11

 Clarifying the role of ESG ratings and rankings, certifications, data aggregators, and frameworks

1. Organizations that issue sustainability and/or ESG disclosure guidance.

Frameworks, such as CDSB, IIRC, GRI, Some frameworks, like SASB, provide
SASB, and TCFD, are sets of standards disclosure guidelines that are specific to a
companies can use to guide their ESG company’s industry. Some, like GRI, aim to
reporting and disclosure efforts. These capture a broad range of information that
organizations typically issue voluntary describe a company’s holistic performance on
guidance that companies can choose to follow ESG issues. Still others, like COSO ERM, seek
in full, partially, or not at all. to integrate ESG into existing organizational
governance and risk management systems
These frameworks do not typically receive to improve understanding of ESG risks and
company information directly or assess to effectively manage and disclose them.
a company’s performance against their The overarching goal that unites these
standards. Rather, they exist to streamline frameworks is to help companies produce
the disclosures a company could/should high-quality, reliable data and reports that
make that are important to a stakeholder’s can be used by others in the sustainability
understanding of ESG performance. They also disclosure ecosystem.
enable transparent, like-for-like comparison
across organizations.

ESG EVOLUTION AND BEST PRACTICE 12

 Clarifying the role of ESG ratings and rankings, certifications, data aggregators, and frameworks

2. Organizations that aggregate sustainability and/or ESG data.

Data aggregating organizations, like CDP, Data aggregators may source their data either
GRESB, the S&P CSA, and Bloomberg, from direct surveys or requests delivered to
compile company ESG data and present it in each company, or by reorganizing publicly
a way that makes it accessible for a variety available data or third-party information about
of stakeholders and users of this information, a company into a single common platform.
including investors, customers, NGOs, the Investors use both qualitative and quantitative
public, and ESG “raters and rankers”. data sourced from aggregators and directly
from companies to track and compare
company performance on ESG. The raters and
rankers (to be discussed in the next section),
use the information from aggregators to
augment their ESG scoring systems.

ESG EVOLUTION AND BEST PRACTICE 13

 Clarifying the role of ESG ratings and rankings, certifications, data aggregators, and frameworks

3. Organizations that create sustainability and/or ESG ratings and rankings.

Ratings and rankings agencies, such as Some raters will score companies with no prior
Sustainalytics, MSCI, and JUST capital, are notice or confirmation of their information, and
external third-parties that scour information others will give companies the opportunity to
available in the public domain, such as annual review and confirm or amend the information
ESG reports, news, website information, or used to make their assessment prior to
other public disclosures (like a CDP score), publishing. These ratings scores are then used
to generate a company’s ESG rating or by stakeholders as a quick reference on a
ranking. These organizations each use their company’s ESG performance.
own methodology and materiality indices
and may accept data directly submitted
by companies being ranked. Beyond the
methodology, some raters and rankers rely
more on quantitative data and others more
on qualitative information. Depending on a
company’s industry and investor expectations,
understanding which information is most
important to make available to the raters
and rankers will guide which organizations a
company stands out to.

ESG EVOLUTION AND BEST PRACTICE 14

 Clarifying the role of ESG ratings and rankings, certifications, data aggregators, and frameworks

4. Organizations that provide accreditations, certifications, and target-setting support.

These organizations provide both guidance in organizational emissions reduction and net- Work program, which honor companies that
and verification on specific ESG indicators, zero goals. The PCAF specifically targets demonstrate excellence in their commitments
which tend to be narrower in scope and GHG emissions measurement and disclosure to, and follow through on, social and
provide assurance on a company’s ESG claims. from financial institutions. And the RE100 and governance best practices.
CEBA are two more organizations dedicated
Many of these bodies have emerged to advancing corporate net-zero emissions
specifically to address the environmental goals through the activation of clean energy
impacts of ESG, aiming to accelerate the low- market and policy solutions.
carbon transition. The SBTi, for example, is
an NGO developed in partnership by CDP, Numerous programs recognizing progress
the UNGC, the WRI, and the WWF that in society and governance also exist, such
has established guidance and verifications as the Ethisphere’s World's Most Ethical
specifically to drive ambition and transparency Companies and Forbes’ Best Places to

ESG EVOLUTION AND BEST PRACTICE 15

 Clarifying the role of ESG ratings and rankings, certifications, data aggregators, and frameworks

5. Regulatory authorities that mandate ESG data and performance disclosure.

Governments and jurisdictions around the Although reporting regulations are most
world are consistently moving toward stronger common in Europe, other countries are
requirements when it comes to ESG policies catching up, with around 25 regions
and disclosure regulations. In Europe, for introducing some form of ESG disclosure
instance, pioneering changes in legislation mandate, including Australia, China, South
on climate change are triggering various Africa, Japan, and the United Kingdom.
disclosure obligations, including the advent Likewise, some countries are writing into
and subsequent evolution of the NFRD into law requirements to report against the
the CSRD. Mandatory sustainability reporting previously voluntary frameworks, such as the
in Europe is still evolving, with a new set of UK’s, Japan’s, and New Zealand’s plans to
standards to be released in April 2023. begin to mandate TCFD reporting for large
companies. As the urgency and awareness
of climate change risks grow, new regulatory
requirements are sure to emerge.

ESG EVOLUTION AND BEST PRACTICE 16

ESG repor ting:

Basic-Better-Best Guide
 Basic-Better-Best guide to ESG reporting
To simplify the path towards credible
ESG reporting, we’ve developed an Foundational components of an ESG program
indicative guide to Basic, Better, and Any corporate ESG or sustainability program – at any level of maturity – should have five
Best ESG reporting practices. Our foundational components:
advice is grounded in our experience
1. Strategy and commitment: objectives that
with our ESG reporting clients, 1. Strategy and commitment: drive programs forward and ensure continual
our insights on what investors are improvement of performance on ESG issues.
looking for in ESG reports, and our
•  Objectives & Goals
own experience as a leading global 2. Codes and policies: •  Materiality
corporation reporting ourselves in line
•  Risk management framework (incl. ESG risk)
with many of these frameworks.
•  ESG Board oversight
While the exact approach and chosen 3. Programs and initiatives: •  Alignment with globally accepted standards
reporting outlets will vary based & frameworks

on organization size, industry, and

location, this guide is intended to 4. Stakeholder engagement:
help benchmark where a business is
today and build consensus on what is
needed to improve ESG reporting and 5. Reporting and disclosure:
communications programs, regardless
of industry.

ESG EVOLUTION AND BEST PRACTICE 18

 Basic-Better-Best guide to ESG reporting
To simplify the path towards credible
ESG reporting, we’ve developed an Foundational components of an ESG program
indicative guide to Basic, Better, and Any corporate ESG or sustainability program – at any level of maturity – should have five
Best ESG reporting practices. Our foundational components:
advice is grounded in our experience
2. Codes and policies: enterprise-wide systems
with our ESG reporting clients, 1. Strategy and commitment: to operationalize and embed ESG into processes
our insights on what investors are and business strategies.
looking for in ESG reports, and our
•  Codes of Conduct or Ethics
own experience as a leading global 2. Codes and policies: •  Supplier Code of Conduct
corporation reporting ourselves in line
•  Sustainability Policies (e.g. human rights, compliance,
with many of these frameworks. animal welfare, procurement, sourcing, EH&S)

While the exact approach and chosen 3. Programs and initiatives: •  Company-wide deployment of sustainable principles

reporting outlets will vary based

on organization size, industry, and
location, this guide is intended to 4. Stakeholder engagement:
help benchmark where a business is
today and build consensus on what is
needed to improve ESG reporting and 5. Reporting and disclosure:
communications programs, regardless
of industry.

ESG EVOLUTION AND BEST PRACTICE 19

 Basic-Better-Best guide to ESG reporting
To simplify the path towards credible
ESG reporting, we’ve developed an Foundational components of an ESG program
indicative guide to Basic, Better, and Any corporate ESG or sustainability program – at any level of maturity – should have five
Best ESG reporting practices. Our foundational components:
advice is grounded in our experience
3. Programs and initiatives: action steps and
with our ESG reporting clients, 1. Strategy and commitment: roadmaps to achieve commitments and validate
our insights on what investors are efforts by external third-party.
looking for in ESG reports, and our
•  Action planning/roadmaps
own experience as a leading global 2. Codes and policies: •  Environmental and social management programs
corporation reporting ourselves in line
•  Management system certifications
with many of these frameworks.
•  Renewable energy
While the exact approach and chosen 3. Programs and initiatives: •  Awards & recognition
reporting outlets will vary based
on organization size, industry, and
location, this guide is intended to 4. Stakeholder engagement:
help benchmark where a business is
today and build consensus on what is
needed to improve ESG reporting and 5. Reporting and disclosure:
communications programs, regardless
of industry.

ESG EVOLUTION AND BEST PRACTICE 20

 Basic-Better-Best guide to ESG reporting
To simplify the path towards credible
ESG reporting, we’ve developed an Foundational components of an ESG program
indicative guide to Basic, Better, and Any corporate ESG or sustainability program – at any level of maturity – should have five
Best ESG reporting practices. Our foundational components:
advice is grounded in our experience
4. Stakeholder engagement: collaboration both
with our ESG reporting clients, 1. Strategy and commitment: inside and outside of an organization to understand
our insights on what investors are and address business impacts.
looking for in ESG reports, and our
•  Industry collaborations and membership
own experience as a leading global 2. Codes and policies: •  Value chain engagement on ESG matters
corporation reporting ourselves in line (customers, suppliers, employees)
with many of these frameworks. •  Community relations & corporate giving

While the exact approach and chosen 3. Programs and initiatives:

reporting outlets will vary based
on organization size, industry, and
location, this guide is intended to 4. Stakeholder engagement:
help benchmark where a business is
today and build consensus on what is
needed to improve ESG reporting and 5. Reporting and disclosure:
communications programs, regardless
of industry.

ESG EVOLUTION AND BEST PRACTICE 21

 Basic-Better-Best guide to ESG reporting
To simplify the path towards credible
ESG reporting, we’ve developed an Foundational components of an ESG program
indicative guide to Basic, Better, and Any corporate ESG or sustainability program – at any level of maturity – should have five
Best ESG reporting practices. Our foundational components:
advice is grounded in our experience
5. Reporting and disclosure: a communications
with our ESG reporting clients, 1. Strategy and commitment: strategy to disseminate data and ESG information,
our insights on what investors are aimed at making data accessible to the
looking for in ESG reports, and our stakeholders that need it most.
own experience as a leading global 2. Codes and policies: •  Integrated report
corporation reporting ourselves in line •  Sustainability report
with many of these frameworks. •  Mainstream report

While the exact approach and chosen 3. Programs and initiatives: •  Dedicated webpage

reporting outlets will vary based •  Other topic-specific reports

(water, climate, deforestation)
on organization size, industry, and
•  Data accessibility
location, this guide is intended to 4. Stakeholder engagement:
help benchmark where a business is
today and build consensus on what is
needed to improve ESG reporting and 5. Reporting and disclosure:
communications programs, regardless
of industry.

ESG EVOLUTION AND BEST PRACTICE 22

 Basic-Better-Best guide to ESG reporting
The Basic-Better-Best framework The following Basic-Better-Best recommendations
that follows focuses primarily on for ESG reporting will provide guidance on:

reporting and disclosure but will also • Priority topics to address:

touch on the other four elements of a The minimum areas of ESG a reporting program
should measure and disclose on, and the level
comprehensive ESG program as they of ambition in ESG goals.
relate to reporting best practice. For
• Level of materiality:
a more in-depth guide to corporate How extensive the exercise should be to
decarbonization actions, download our determine what ESG topics matter most for
Basic-Better-Best guide to net-zero. the business.

• Depth and frequency of disclosure:

The amount of information that is typically
shared through an ESG reporting mechanism
and how often this information is released.
For the purposes of this guide,
recommendations will primarily focus on the • Ratings and rankings guidance:
global voluntary frameworks that companies How consideration of ratings and rankings
should focus on at a Basic, Better, and fits into the ESG program and how ESG
Best level. The appendix contains a more information is made available for these rating
comprehensive, although not exhaustive, and ranking organizations.
Levels of ESG reporting exist on a continuous spectrum. As trends and stakeholder needs

accounting of the various mandatory and • Key frameworks and certifications:

change, so too will the elements of what is considered Basic, Better, and Best. This guide is
meant to be indicative and is simplified into a Basic-Better-Best framework to allow companies
voluntary standards, data aggregators, raters What specific frameworks a company should to benchmark themselves and identify actions for improvement. On their journey to Best ESG
reporting, organizations may find themselves in between levels. This guide is only intended to
and rankers, and certification organizations. be reporting to and what certifications they be used as a reference to grow and mature corporate reporting programs. Companies with
should pursue. specific questions about their program should seek the assistance of an advisor or attorney.

ESG EVOLUTION AND BEST PRACTICE 23

 Select a path to Best

explore the three

• Considered essential for enterprise-wide excellence
• Measurable commitments across all focus areas +
Better integrated into long term strategy

levels of ESG • Understood as risk management issue + • Integrated reporting + impact reporting
value opportunity • Comprehensive 3rd party assurance of all key data
• Proactive and measurable commitments • Enterprise-wide materiality + with annual risk review

reporting • Comprehensive disclosure

• 3rd party assurance of select data
+ externally validated

• Enterprise-wide materiality + integrated Explore best

with strategy & risk reviews

Basic Explore better

• Understood as risk management issue

• Reactive statements/some commitments
• Limited disclosure of activities or
achievements
• No 3rd party assurance
• Limited materiality

Explore basic

Compliance
• Compliant-focused • No commitments
• Broad policies • No disclosure

ESG EVOLUTION AND BEST PRACTICE 24

 ESG Repor ting:

Basic
At the Basic level, a company is likely beginning its ESG journey or starting to feel pressure from
external stakeholders to provide greater ESG transparency. Companies in this category may be
small- to medium-sized enterprises, start-ups, or privately owned, and may not yet have a dedicated
sustainability team in place. Large and/or multinational public companies at this level are likely
laggards compared to peers and competitors.

Companies producing Basic-level ESG reports may not For example, companies which have set ambitious
yet feel significant pressure from external stakeholders Scope 3 emissions reduction targets are actively
to disclose but may be starting to hear demands from screening suppliers based on ESG performance.
either upstream or downstream customers for greater Companies not advancing quickly enough run the risk
ESG transparency. A company at this level may be of being disqualified from procurement processes.
a supplier to a buying organization with ESG best
practices, who will be actively seeking to increase Producing a Basic ESG report – and aspiring to a
transparency from their upstream suppliers. Better or Best level of reporting – will help a company
keep its license to operate and avoid penalization
from stakeholders for lack of ESG transparency.
However, companies at the Basic level of reporting
may be challenged to move away from a siloed
approach to ESG data management in favor of more
integrated practices.

ESG EVOLUTION AND BEST PRACTICE 25

ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Priority topics to address

Basic
Using topics identified during the materiality
assessment as a guide, companies should begin
• Alignment on ESG program goals and
centralizing all the information that will be needed
material topics
to gain a better understanding of the scope and
• ESG data management impact of those material topics for the business.
An enterprise-level resource management system
• Movement beyond pure compliance
Priority topics to address can prove invaluable.

Once a centralized data management system is

in place, Basic level ESG is typically rooted in risk
For a company at the Basic level seeking to
Level of materiality management. Response to ESG issues is typically
begin a modest program, the priority should be
focused on responding to customer and regulator
understanding what ESG topics are the most material
demands for information only as needed. For
– or relevant – to their organization. The areas of ESG
example, companies at this level may only make
uncovered during this materiality assessment (to be
Depth & frequency of disclosure external disclosures of ESG information on a reactive
discussed more in the next section) should inform
basis, such as when pressured by NGO scrutiny.
the second priority: the development of a centralized
data measurement and tracking system. Commitments to address ESG issues may be loose
Ratings & rankings guidance or not publicly available, and any policies around
Centralized, accurate data gives a company the
ESG governance are broad.
ability to streamline ESG reporting activities and
promotes collaboration to maximize the effectiveness
of ESG programs. Understanding who in the business
Key frameworks & certifications
owns existing environmental, social, and governance
data, how that data is tracked, and where it is stored
is a critical first step to enabling a business to make
reliable and credible disclosures.

Explore other levels

26
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Level of materiality

Basic
on industry characteristics, but also local/regional
considerations, shareholder structure, etc. Using this
• Internal ESG stakeholders identified
list of material topics, the company should then gain
• Limited materiality, focused on internal alignment on and prioritization of shortlisted topics
alignment on material issues with the identified internal stakeholders.
• Standard industry materiality guidance via At the Basic level, companies may also begin to
Priority topics to address SASB and GRI standards engage certain external stakeholders such as key
clients, suppliers, or business partners, but likely
will not have a comprehensive view from all external
Level of materiality At the Basic level, companies should perform a stakeholders. Basic materiality may be mostly
limited materiality assessment exercise to identify top qualitative, based on interviews and workshops,
sustainability topics. The first step is to identify who rather than quantitative with a complete survey.
in the business holds information and responsibilities Aligning on material topics and clarifying who has
Depth & frequency of disclosure related to ESG. This usually includes engaging the information pertinent to reporting at a Basic level
members of facilities management, risk management, lays the cross-functional groundwork required for
operations, and organizational leadership. higher levels of ESG reporting. In the Better and
Ratings & rankings guidance Once the internal set of stakeholders has been Best reporting levels, companies will develop and
identified, the company should shortlist potentially refine a materiality matrix and use this matrix to start
material topics based on their industry by consulting reporting on and addressing material issues across
GRI sector standards, the SASB Materiality Matrix, stakeholders by setting clear targets, KPIs, and an
Key frameworks & certifications action plan.
and other high level materiality navigators. They may
also benchmark their regional competitors’ identified
material issues, as materiality is based not only

Explore other levels

27
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Depth and frequency of disclosure

Basic
Though external reporting may not be mature at this
level, companies should begin to communicate to their
• Disclosure of activities or achievements
stakeholders what material topics were identified. It is
limited, performed upon request
also best practice to conduct a baseline assessment
• Information typically reported annually on where the company currently stands in respect
to its material impacts. Though targets and KPIs
• No third-party assurance
Priority topics to address may not be set against these topics yet, it is a good
time to start thinking about what the company can
do to improve its related performance, so that at
At the Basic level, a company’s reporting frequency higher levels of reporting, the company will be better
Level of materiality and the volume of information disclosed is generally prepared to communicate goals and baselines.
dictated by compliance deadlines or ad hoc
information requests. The level of detail provided
is usually limited to what is specifically requested.
Depth & frequency of disclosure
Responding to ad hoc requests and compliance
cycles typically means reporting information on an
annual or biannual cadence.
Ratings & rankings guidance

Key frameworks & certifications

Explore other levels

28
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Ratings and rankings guidance

Basic
Regardless of whether a company appears in the
rankings or discloses to a certain framework, it is
• Familiarization with rating and ranking
important to understand these frameworks, because
programs
eventually all companies will be benchmarked against
• Mock CDP assessment their peers or competitors. Completing a mock CDP
rating without disclosing the score, for example,
Priority topics to address can help a company understand how it compares
against competitors, peers, and customers from
Companies at the Basic level should begin to
an environmental sustainability perspective, and
familiarize with the different ESG standards, ratings,
can give an organization a sense of what scores to
Level of materiality rankings, and certification frameworks. Because
anticipate once it is prepared to publicly disclose.
these companies may be in the value chain of Better
and Best reporting companies, it is important to
understand what reporting requirements customers
Depth & frequency of disclosure or suppliers may be looking for.

Programs like CDP, EcoVadis, and RE100,

for example, are common frameworks many
Ratings & rankings guidance suppliers are learning about from their customers.
Understanding what reporting frameworks customers
are using and the types and volume of information
they are disclosing can put suppliers in a good
Key frameworks & certifications position once ready to, or asked to, disclose.

Explore other levels

29
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Key frameworks and certifications

Basic • Reference GRI, SASB, and other global

reporting programs

• Map regional and industry-specific initiatives

and regulations
Priority topics to address

Becoming familiar with GRI and SASB disclosure

Level of materiality guidelines should be the priority at the Basic stage.
In addition, companies may begin to align with
industry-specific frameworks to begin to address
the material topics that will become more granular
Depth & frequency of disclosure at higher levels of ESG reporting. There may also be
regional certifications and standards that are less
daunting to tackle at this stage. For example, ENERGY
STAR in the US is a common program used to improve
Ratings & rankings guidance energy efficiency and save on energy costs, which is a
great way to build a business case for future initiatives
and demonstrate that ESG is not just about risk
management, but also about value creation.
Key frameworks & certifications

Explore other levels

30
 ESG Repor ting:

Better
Companies at the Better level may be in a transitional stage of their ESG reporting program.
They have matured beyond basic compliance and disclosure but are still working their way
up to full alignment with global standards and industry best practice.

A company at this level is becoming more

proactive and less siloed when it comes to
assessing and disclosing ESG data, and its
commitments should be taking shape in the form
of measurable targets. However, there may still
be a limited scope across the spectrum of ESG
issues and companies may prioritize addressing
internal risks and impacts over impacts on external
or indirect stakeholders.

ESG EVOLUTION AND BEST PRACTICE 31

ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Priority topics to address

Better
resources to set concrete goals against all ESG topics
may be limited, companies can begin to consider
• Energy consumption and Scope 1 and
what near-term targets can be put in place to assess
2 GHG emissions reporting
not only qualitative but also quantitative performance
• Measurable near-term goals developed against all three focus areas of ESG, based on
for all three ESG areas identified material topics.
Priority topics to address
Companies at the Better level may also begin
to create stronger objectives around their social
Voluntarily reporting energy use and Scope 1 and 2 criteria. For instance, while companies at the Basic
Level of materiality GHG emissions at a minimum is typical for companies stage of ESG reporting may disclose worker and
at this level. There are a multitude of resources, policy data for compliance purposes, at the Better
guidance documents, target-setting frameworks, level, companies may start to develop ambitions
and trusted advisors in this category. Companies for improvement in areas such as worker health
Depth & frequency of disclosure may also begin reporting on water consumption, and safety, diversity and inclusion, and community
wastewater, and waste management at this level. engagement or philanthropy.
Continuous improvement of data quality and Organizations may also begin to disclose some
Ratings & rankings guidance completeness at this level facilitates the ability to set information about how their company is governed
measurable goals for material ESG topics. Making and how decisions are made, such as organizational
quantitative environmental commitments, such as charts or charts of authority. This may include
setting emission reduction and renewable energy how oversight of ESG issues and performance is
Key frameworks & certifications procurement targets, ensures that the business starts integrated into board and executive responsibilities.
to embed ambition into its ESG programs and seeks
to advance from the Basic level. While data and

Explore other levels

32
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Level of materiality

Better
This traditional approach to materiality might initially
focus on the financial significance of ESG issues.
• Comprehensive internal and external
However, as the program develops, it should seek
materiality assessment
to view these impacts through the broader lens of
• Enterprise-wide exercise integrated with how ESG issues may influence the assessments and
strategy and risk reviews decisions of stakeholders and how the company
Priority topics to address • Standard industry materiality supplemented generates external impacts on the world. At the Better
with organization-specific surveys level, ESG is treated not only as a risk management
issue, but as a more proactive opportunity to create
value for stakeholders. For this reason, materiality
Level of materiality should be integrated with broader enterprise-wide
A Better ESG reporting program warrants a deeper strategy setting and risk reviews.
assessment of material topics. At the Basic level,
companies should have reached internal consensus
Depth & frequency of disclosure on material topics and may have engaged select
external stakeholders. At the Better level, companies
should consider the needs and concerns of all
internal and external stakeholders through a
Ratings & rankings guidance
comprehensive materiality survey. This more inclusive
approach to determining material impacts aids in the
evolution and sophistication of the information that
Key frameworks & certifications feeds the development of a materiality matrix.

Explore other levels

33
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Depth and frequency of disclosure

Better
to provide information against as many metrics for
which there is data. It is also essential at the Better
• Publish comprehensive, annual ESG report
level to identify any gaps in data, internal/external
• Reference global standards, but may not be storytelling, or materiality that will need to be filled to
fully compliant with all disclosures mature the report in future years.
• Third-party assurance of environmental data, At the Better level, it is also important to begin to
Priority topics to address at a minimum reference SASB guidelines. As a company matures in
its ESG program, it will want to capture the attention
of investors, and SASB is specifically designed
Level of materiality A key differentiation between the Basic and Better to respond to investor needs. At this level, it is not
ESG levels is the approach to addressing key issues expected that reporting be fully compliant with either
that appear in a materiality assessment. Knowing the GRI or SASB, but rather that the organization begin
material issues and sharing them with stakeholders to understand the disclosure recommendations and
Depth & frequency of disclosure is no longer enough. At the Better level, companies start to use them to guide reporting efforts.
must start to proactively communicate their goals to At the Better level, it is essential that environmental
mitigate negative material impacts and risks, and the data, at a minimum, also receive third-party assurance
Ratings & rankings guidance action plans to achieve those goals. for validity. Companies may also consider assurance
ESG data and the qualitative context for that data for social and governance data at this level.
should be disclosed through an in-depth reporting
mechanism, such as a yearly ESG report that is GRI-
Key frameworks & certifications
referenced. To create this type of report requires an
understanding of the GRI standards and should aim

Explore other levels

34
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Ratings and rankings guidance

Better • Make information publicly available for raters

and rankers

• Use baseline position in ratings and rankings

to identify improvement opportunities
Priority topics to address

Although a company at the Better level may not yet

Level of materiality be among the leaders of ESG ranking programs, it
may begin to appear in select ratings and rankings.
These should be viewed as feedback that can
deepen the disclosure practice and improve the ESG
Depth & frequency of disclosure program. The ESG information that is available should
be visible and easy to find by external stakeholders
(hosted on a website, for example). Companies
should inspect the top ratings and rankings lists for
Ratings & rankings guidance comparison against peers and competitors with the
aim to meet (or even leapfrog) the actions of these
comparators with the growth of the ESG program.

Key frameworks & certifications

Explore other levels

35
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Key frameworks and certifications

Better
A company at the Better level of reporting may not
yet be ready to fully adopt TCFD recommendations
• SASB and GRI
for climate-related risk, but it is important to recognize
• CDP disclosure(s) that ESG and climate issues are not only risks, but
also opportunities for value creation. By becoming
• Early alignment of disclosures to TCFD
familiar and beginning to align with TCFD, companies
Priority topics to address take an important step towards satisfying the
expectation for data that investors are looking for from
Disclosing emissions (and potentially also water and high-performing companies.
deforestation data) to CDP is an important step in
Level of materiality maturing an ESG program. Because CDP considers
TCFD and SBTi recommendations in the formation
of its questionnaires, they are a good opportunity to
become familiar with these more advanced frameworks
Depth & frequency of disclosure
and get benchmarked scores to compare against over
time as the ESG reporting program matures.

Ratings & rankings guidance

Key frameworks & certifications

Explore other levels

36
 ESG Repor ting:

Best
Companies at the Best level of ESG reporting are those organizations where natural and human
resource practices are intertwined with the mission and the purpose of the business. At this level,
companies excel in their corporate responsibility and climate action programs. They are leading
organizations that are at the vanguard of key trends in corporate ESG, creating competitive
advantage based on their transparency and stewardship.

For these companies, consideration of ESG issues is ESG is not relegated to a sustainability- or HR-specific
core to the business, integrated into operational and arm or initiative. Environmental sustainability, diversity
strategic decision-making, embedded in performance and inclusion, ethical practices, and other ESG-related
and conversations across the organization, and efforts are cross-functional and top-to-bottom with
essential for enterprise-wide excellence. These support led by a strong executive vision and enabled
organizations usually seek to make a clear connection by the staff on the ground who are making it happen
between their purpose, the impact they create every day.
with their business, and the key areas of their ESG
program, all combined in an integrated strategy.

Integrated reporting equals

integrated thinking

ESG EVOLUTION AND BEST PRACTICE 37

ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Priority topics to address

Best
Companies at the Best level are actively improving
and demonstrating year-over-year progress against all
• Integrated disclosure of information
ESG goals. Sophisticated environmental topics should
on advanced topics across all focus
areas of ESG, linking financial performance be added to the list of initiatives, such as embodied
to ESG performance carbon, biodiversity, and circular economic practices.
Social topics like workforce and management diversity
Priority topics to address • Energy consumption and Scope 1, 2, and inclusion should evolve and become more
and 3 GHG emissions reporting ambitious and may include influencing or financing
• Measurable near-term and long-term efforts outside a company’s own operations (such
targets across all focus areas of ESG as support for local workforce development efforts).
Level of materiality embedded into overall business strategy Companies at the Best level also begin to go beyond
simply including human rights requirements in their
• Supply chain ESG performance
Supplier Code of Conduct to assessing human rights,
auditing suppliers on their practices, and censoring
Depth & frequency of disclosure
suppliers for rights infractions.
The Best ESG reporting programs will go beyond the
Governance practices and structures are clear,
standard emissions, natural resource consumption
transparently disclosed, and reach across all
Ratings & rankings guidance and conservation, and workforce metrics and policies
business units and geographies, all the way down
that most companies are tracking today. They should
to local decision-making levels. A clear tie to ESG
have measurable near-term and long-term targets and
for Board of Director and executive governance
a clearly defined roadmap to reach goals across all
and compensation is common and is critical to
Key frameworks & certifications ESG focus areas. These goals should be integrated
demonstrate the embedded nature of ESG in
into the core business strategy.
the business.

Explore other levels

38
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Level of materiality

Best
Materiality should also be revisited frequently, as
information that is material may change in today’s
• Comprehensive, externally validated,
rapidly evolving marketplace, and businesses
double and dynamic materiality assessment
may practice double materiality, focusing their
• Materiality combined with overall assessments equally on financially material issues
enterprise risk management and impact AND the external impacts on the world. Maintaining
Priority topics to address review processes a dynamic approach to materiality illustrates the
• All key internal and external nuanced interplay between environmental and social
stakeholders involved issues with financial materiality and recognizes
that the market’s understanding of ESG is not
Level of materiality static. Annual risk reviews and external validation
reinforce that the most important ESG risks are
As the number and complexity of topics addressed being included in a company’s risk management
through ESG programs increase, materiality should framework and strategy.
Depth & frequency of disclosure be assessed using a comprehensive, dynamic, and
enterprise-wide exercise that includes surveys of all
internal and external stakeholder groups, including
customers, employees, suppliers, and community
Ratings & rankings guidance
members. Focus groups and detailed interviews
provide even deeper insight into company impacts
on key stakeholders.
Key frameworks & certifications

Explore other levels

39
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Depth and frequency of disclosure

Best
Impact reporting can be done through integrated/
universal reporting or through other approaches like
• Annual integrated report supplemented by
separate topic-specific reporting (on climate impact
frequent updates
and action, for example).
• Impact reporting
Best-level reporting should never be treated as a
• Full external visibility of ESG data “feel-good” marketing exercise; rather, it should aim
Priority topics to address
• ESG an integral part of internal and external to create visibility into both successes and failures
communications against baselines and targets, and not attempt to
position a company in a positive light without critically
Level of materiality examining the reasons and remedies for any shortfalls.

Companies at or aspiring to be at the Best level of The external visibility and accessibility of ESG
ESG reporting should produce integrated financial programs is also something companies at the Best
and non-financial reports annually, at a minimum. level must consider.
Depth & frequency of disclosure
More frequent touchpoints, such as quarterly progress •  How many clicks does it take for a viewer of the company
updates, demonstrate to stakeholders that ESG is website to reach its ESG resources page?
not a once-and-done activity, but rather a year-round •  Is it a separate microsite or is it available from the home
Ratings & rankings guidance area of focus. Integrated reporting equals integrated page?
thinking: it demonstrates how ESG drives value
•  Is ESG information buried in an investor relations page, or
creation for a business both now and in the future. is it visible right away for anyone who comes to the site?
Key frameworks & certifications In addition, through the practice of impact reporting, Visibility and accessibility of ESG is also internally
businesses at the Best level should provide a realistic important. A business at the Best level should be
representation of the true impacts of their business on regularly weaving ESG into its internal communications
humans and the environment (including both positive and employee engagement efforts.
success stories and statistics and any negative
externalities or unforeseen consequences).

Explore other levels

40
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Ratings and rankings guidance

Best
Taking the steps outlined already to make information
publicly available and easily accessible can make
• Visibility in the high-quality ratings and
being well-rated more likely. But there are other
rankings that investors and other stakeholders
have interest in proactive ways companies can ensure they are
eligible and visible to raters and rankers. Frequently
• Frequent external collaboration and and publicly communicating about ESG programs,
Priority topics to address communication on ESG topics engaging in working groups on ESG topics,
collaborating with NGOs, driving the conversations
around innovation of ESG programs, and proactively
Companies at a Best level should aim to be engaging with analysts and policy influencers puts
Level of materiality a company on the radar for ratings and rankers and
recognized by as many of the applicable ESG ratings
and rankings as possible. Organizations should pay distinguishes it as a leader in the space.
special attention to investor-focused outlets and to Best companies do not dread being ranked; they
Depth & frequency of disclosure the most highly regarded raters and rankers in a take it as an opportunity and reason to improve, and
company’s industry. view ratings and rankings as a motivator rather than
an obligation.

Ratings & rankings guidance

Key frameworks & certifications

Explore other levels

41
ESG EVOLUTION AND BEST PRACTICE

ESG Repor ting: Key frameworks and certifications

Best
Full implementation of TCFD recommendations
is another Best-level distinction that shows that a
• Fully SASB and/or GRI-compliant
company not only recognizes climate risks, but also
integrated report
understands that these are risks that must be actively
• Full implementation of TCFD recommendations assessed, mitigated, and used to find opportunities
and disclosure through standalone TCFD report for innovation and business transformation.
Priority topics to address • SBTi net-zero targets; CDP A-list Companies at the Best level are also likely to have
• HR-aligned frameworks, such as Bloomberg SBTi-verified emission reduction targets, should
Gender Equality Index be moving towards alignment with the Corporate
Level of materiality Net-Zero Standard, and are expected to report
• Recognition for ethical behavior by programs to CDP for climate, water, and deforestation
such as Ethisphere (depending on their material impact), aiming for
• Reporting to industry-specific and specialty A-level, leadership scoring.
Depth & frequency of disclosure reporting frameworks (e.g. GRESB,
Best level companies also rank for and receive
UNPRI, S&P CSA, regionally based
recognition of their social and governance programs.
HR frameworks, etc.)
It is not uncommon for Best companies to have best-
Ratings & rankings guidance • Comprehensive third-party assurance of all in-class programs for supply chain engagement,
key data diversity and inclusion, training and workforce
development, ethics, philanthropy,
and more.
Key frameworks & certifications
Reporting in an integrated and fully GRI compliant Key data points across the spectrum of ESG
way is a key differentiator between the Better and Best that feeds into the reporting program should be
level, demonstrating that a company is not picking comprehensively assured by a third-party
and choosing guidance to follow, but is addressing
the full scope of ESG issues in its reporting practice.

Explore other levels

42
A Technology-for ward Approach
to ESG Reporting
 A Technology-forward Approach to ESG Reporting
Embarking on any new reporting initiative
comes at a cost, typically in time and Key features of an ESG reporting tool
resources. ESG is no different. Organizations When seeking the appropriate ESG reporting tool, there are several key features to consider:
need to ensure that the value delivered from
ESG reporting outweighs the potential costs.
Adopting a digital-first approach to reporting Degree of flexibility: The best ESG tools are
can help companies reduce these costs Degree of flexibility: the ones that are flexible, with integrations and
and increase the value derived from ESG connections to existing business processes
programs. and systems. The technology should not create
additional work or data management burden,
It is critical that a data strategy aided by digital Speed and ease of delivery:
but should seamlessly integrate with, and aid
tools is designed to both work for the company
in improving, existing processes. For example,
and satisfy voluntary and mandatory reporting if a company already has a centralized HR
obligations. As demands for ESG disclosure management system, an ESG reporting tool
Internal communication facilitation:
have rapidly grown, many companies need should simply consume the existing HR data and
a tool that centralizes data for ESG reporting align it to the appropriate reporting frameworks.
in a streamlined and efficient manner. When Establishing a digital interconnection for ESG
seeking the appropriate ESG reporting tool, Simultaneous external communications: data facilitates collaboration across the business
there are several key features to consider. without adding the burden of inputting ESG
information into yet another platform.

ESG EVOLUTION AND BEST PRACTICE 44

 A Technology-forward Approach to ESG Reporting
Embarking on any new reporting initiative
comes at a cost, typically in time and Key features of an ESG reporting tool
resources. ESG is no different. Organizations When seeking the appropriate ESG reporting tool, there are several key features to consider:
need to ensure that the value delivered from
ESG reporting outweighs the potential costs.
Adopting a digital-first approach to reporting Speed and ease of delivery: An ESG
can help companies reduce these costs Degree of flexibility: reporting tool should be easily and quickly
and increase the value derived from ESG configurable to a company’s stage of ESG
programs. maturity. For companies at the Basic level,
the right tool will provide centralized data
It is critical that a data strategy aided by digital Speed and ease of delivery:
management and allow for the import of data
tools is designed to both work for the company
to preconfigured ESG KPIs. For companies at
and satisfy voluntary and mandatory reporting the Better or Best level, the same tool should
obligations. As demands for ESG disclosure allow the team to create these indicators from
Internal communication facilitation:
have rapidly grown, many companies need scratch. At any stage of maturity, the tool should
a tool that centralizes data for ESG reporting create efficiencies by suggesting standardized
in a streamlined and efficient manner. When KPIs based on common reporting frameworks,
seeking the appropriate ESG reporting tool, Simultaneous external communications: allowing companies to learn from best practice,
there are several key features to consider. and making data easier to understand and
performance more easily benchmarked.

ESG EVOLUTION AND BEST PRACTICE 45

 A Technology-forward Approach to ESG Reporting
Embarking on any new reporting initiative
comes at a cost, typically in time and Key features of an ESG reporting tool
resources. ESG is no different. Organizations When seeking the appropriate ESG reporting tool, there are several key features to consider:
need to ensure that the value delivered from
ESG reporting outweighs the potential costs.
Adopting a digital-first approach to reporting Internal communication facilitation:
can help companies reduce these costs Degree of flexibility: A central repository of all ESG indicators should
and increase the value derived from ESG allow greater access to data and performance
programs. information across the company. Most companies
have multiple organizational levels that want
It is critical that a data strategy aided by digital Speed and ease of delivery:
access to ESG data. In larger or more matrixed
tools is designed to both work for the company
companies, the data is often inaccessible,
and satisfy voluntary and mandatory reporting buried, or otherwise difficult to locate. Tools that
obligations. As demands for ESG disclosure make KPIs visible and available to all internal
Internal communication facilitation:
have rapidly grown, many companies need stakeholders can turn ESG data into an agent for
a tool that centralizes data for ESG reporting meaningful change. Although a centralized ESG
in a streamlined and efficient manner. When reporting tool does not directly drive improvement
seeking the appropriate ESG reporting tool, Simultaneous external communications: of ESG itself, it can help companies embed
there are several key features to consider. ESG performance throughout the business,
accelerating progress and avoiding harmful risks
that could have otherwise gone unnoticed.

ESG EVOLUTION AND BEST PRACTICE 46

 A Technology-forward Approach to ESG Reporting
Embarking on any new reporting initiative
comes at a cost, typically in time and Key features of an ESG reporting tool
resources. ESG is no different. Organizations When seeking the appropriate ESG reporting tool, there are several key features to consider:
need to ensure that the value delivered from
ESG reporting outweighs the potential costs.
Adopting a digital-first approach to reporting Simultaneous external communications:
can help companies reduce these costs Degree of flexibility: Most importantly, a great ESG reporting
and increase the value derived from ESG tool needs to put a company’s data to work.
programs. Companies at the higher levels of ESG
reporting can disclose information to anywhere
It is critical that a data strategy aided by digital Speed and ease of delivery:
from 20-40 different reporting organizations
tools is designed to both work for the company
across mandatory and voluntary schemes and
and satisfy voluntary and mandatory reporting investor and customer requests. Today, many
obligations. As demands for ESG disclosure companies complete these disclosures in a
Internal communication facilitation:
have rapidly grown, many companies need linear process, completing the data collection,
a tool that centralizes data for ESG reporting validation, and submission for each one at
in a streamlined and efficient manner. When a time. As reporting requirements grow, this
seeking the appropriate ESG reporting tool, Simultaneous external communications: approach is no longer practical or feasible,
there are several key features to consider. and wastes time and employee resources.
Furthermore, a linear approach risks rushed or
inaccurate reporting and missed deadlines.

ESG EVOLUTION AND BEST PRACTICE 47

 A Technology-forward Approach to ESG Reporting

In our Sustainability Business, Schneider Electric

consults with our clients on the evolution of their The next generation of ESG tools will take a
ESG reporting strategies by facilitating Best-level comprehensive approach to data collection
corporate reporting with digital tools. We continuously and validation, looking across requirements
build and enhance our digital technologies to allow for all disclosure frameworks at once. For
our expert consultants to work with our clients to write example, if workforce makeup data is
a global playbook of ESG indicators that are pre- needed for 10 different disclosures, once
mapped to the core frameworks and categorized by data is verified in the tool, it will feed the
material topics. We seek to optimize our tools and same information into all relevant reporting
services for ESG to help companies: workstreams. This way, a company can deploy
its resources across reports and complete
• Intuitively and efficiently collect data
them simultaneously – no more asking data
• Navigate complex reporting requirements and owners to find, verify, and submit the same
materiality inventories data multiple times throughout a year to satisfy
• Define and manage ESG KPIs different reporting requirements.

• Engage with internal and external stakeholders

• Respond to multiple disclosures

• Track ESG initiatives and progress

to goals

ESG EVOLUTION AND BEST PRACTICE 48

 Schneider Electric’s 15-year Sustainability Journey
Our purpose is to empower all to make the most of our energy and resources, bridging progress and
sustainability for all. At Schneider Electric, sustainability is at the core of everything we do, in line with
our purpose.
We keep progressing and consolidating our Schneider has received international
position as a practitioner and an expert in recognition as a leader in ESG:
ESG. We have put more resources behind our • Ranked as world’s #1 most sustainable
Sustainability Business and advisory services corporation on Corporate Knights’ Global 100
to help our customers and partners navigate in 2021, and maintained excellent standing as
this landscape and to lead them on a proven #4 in 2022
decarbonization pathway that combines both • Recognized as a CDP A List Company for
strategy and action, while positively impacting ten years in a row
their bottom line. Since 2018, our systems
• Received EcoVadis Platinum medal (top 1%)
business alone has helped save 134 million
tons of CO2 for our customers. • Listed as one of the most ethical companies
by Ethisphere

• Recognized with a Glassdoor 4.0 ranking

ESG EVOLUTION AND BEST PRACTICE 49

 Conclusion
Given the pace at which regulations are Whether a universal reporting framework Schneider Electric can help organizations at
unfolding and developments in voluntary is imminent or not is unknown. But what is any level of ESG maturity assess and report
reporting frameworks are emerging, the topic known is that any universal reporting scheme on their material impacts. For more information,
of corporate ESG reporting is only poised will likely align with the dominant global contact us.
to grow. As harmonization efforts take place standards or frameworks in place today,
among the global standards, and governments particularly those which place an emphasis
around the world assess and develop on communicating financially material Want to know more about
reporting requirements, the private sector sustainability information (SASB and TCFD). tackling the Decarbonization
is likely to be impacted; exactly how and to Proactively understanding these frameworks
what extent remains to be seen. The scope and aligning with Best-level practices for ESG Challenge and the steps to
and influence of ESG reporting frameworks, reporting will benefit companies of all sizes create a holistic climate action
ratings, rankings, and regulations is and industries in the long-term.
expanding, and a broader set of stakeholders
approach for your organization?
than ever before is now using this information Download our paper.
to make decisions about where they invest and
what companies they buy from.

 [email protected] se.com/sesb perspectives.se.com

ESG EVOLUTION AND BEST PRACTICE © 2022 Schneider Electric. All rights reserved. Life Is On Schneider Electric is a trademark and the property of Schneider Electric SE, its subsidiaries and affiliated companies.
Resources:

Appendix
 The table in this appendix contains a thorough, although not exhaustive,
Appendix accounting of the various mandatory and voluntary standards, data
aggregators, raters and rankers, and certification and target-setting
organizations. This includes global and prominent regional schemes.

ACRONYM  NAME TYPE WHAT IT IS WHO REPORTS AUDIENCE HOW IT WORKS NOTES
GRI Global Reporting Framework World’s most widely adopted Large companies and industry Broad stakeholder group Voluntary Updated universal
Initiative sustainability reporting framework groups including customers, standards launched in
investors, regulators, October 2021, going
communities, civil into effect January 2023.
society, consumers, and Includes revised approach
employees to materiality and new sector
standards
GHG Protocol Greenhouse Gas Framework The world’s most widely used Organizations of all sizes follow Investors, purchasers, Voluntary More than 9 out of 10 F500
Protocol standard for GHG accounting, used the GHG Protocol emissions and city stakeholders companies report to CDP
for both mandatory and voluntary calculation methodology to report using the GHG Protocol
frameworks to various other frameworks
UN SDGs United Nations Framework Simple, universal framework with Broad stakeholder group, Voluntary In 2020, 68% of the N100
Sustainable 169 specific targets across 17 especially investors, and 72% of the G250
Development Goals categories to achieve by 2030 regulators, and civil connected their business
society activity with SDGs
UNGC United Nations Framework 10 universal principles of human Any company can participate Broad stakeholder group, Voluntary; there is an application process
Global Compact rights, labor, environment, and anti- especially corporates and and annual contribution ranging from $1,250-
corruption regulators $20,000 depending on company size and level
of engagement. Requires commitment from
CEOs to implement the 10 principles, take
action to support SDGs, and submit an annual
Communication on Progress (COP)
SASB Sustainability Framework Industry-specific framework Any organization Primarily investors and Voluntary Most disclosures appear
Accounting focusing on material sustainability other providers of capital in sustainability reports;
Standards Board topics; compliments GRI standards saw a dramatic increase
in reporters since 2018,
potentially attributed to
BlackRock’s emphasis on
ESG in 2020 letter to CEOs
TCFD Taskforce Framework Established to respond to the threat Organizations from any sector, Primarily investors, Voluntary; requires scenario risk analysis to Includes supplemental
on Climate- of climate change to the stability of especially asset managers and lenders, and insurers genuinely report guidance for certain climate-
related Financial the global financial system owners and companies with more intensive industries; will
Disclosures than $1B in revenues be mandatory in the UK
starting in 2022

ESG EVOLUTION AND BEST PRACTICE 52

ACRONYM  NAME TYPE WHAT IT IS WHO REPORTS AUDIENCE HOW IT WORKS NOTES
COSO ERM Committee of Framework Developed in tandem with the World Any entity facing ESG-related Investors, shareholders
Sponsoring Business Council for Sustainable risks, including startups, non-
Organizations Development (WBCSD), this profits, large corporations,
of the Tradeway governance-focused guidance and government entities, with
Commission guide is designed to apply COSO’s suggested approaches for small
to Enterprise Risk enterprise risk management and medium businesses
Management framework to help companies
integrate ESG risks into ERM
processes
ISO International Framework An independent international Organizations committed to Corporates ISO does not provide certification or
Standards NGO developing voluntary, addressing their energy or conformity assessment. Companies interested
Organization consensus-based, market-relevant environmental impact and in or required to attain certification must have
standards that support innovation reduce workplace risks though a them performed by an external certification
and provide solutions to global systematic procedure body
challenges. Notable standards in
ESG include the ISO14000 family
for environmental management,
ISO50001 for energy management,
and ISO45000 for occupational
health and safety
UN PRI United Nations Framework Six principles offering a menu of Asset owners, investment Investors Voluntary; there is an application and annual Over 4000 organizations
Principles for actions for incorporating ESG issues managers, service providers fee for becoming a signatory to the principles around the world that have
Responsible into investment practice publicly demonstrated their
Investment commitment to responsible
investment
SBTi Science Based Accreditation or Provides a clearly defined, science- Companies from all sectors and Broad stakeholder group, Voluntary; targets must be validated In October 2021, SBTi
Targets initiative certification based path for companies to reduce sizes especially investors, by the SBTi and reported on an annual released their net-zero
emissions in line with the Paris regulators, and civil basis (emissions disclosure through CDP guidance, which is expected
Agreement society recommended). to be the industry standard
for net-zero goals
RE100 Accreditation or A global initiative of The Climate Companies from all sectors and Broad stakeholder group, RE100 member companies must progress
certification Group that brings together sizes with more than 0.1 TWh or especially investors, toward their 100% renewable commitment and
businesses committed to procuring greater electricity use regulators, and civil maintain it year-over-year. Progress must be
100% renewable electricity society reported annually via RE100 reporting and/or
CDP climate change questionnaire. A yearly
membership fee is required

ESG EVOLUTION AND BEST PRACTICE 53

ACRONYM  NAME TYPE WHAT IT IS WHO REPORTS AUDIENCE HOW IT WORKS NOTES
EP100 Accreditation or A global initiative of The Climate Companies span a diverse range Broad stakeholder group, Members must complete annual reporting
certification Group that commits members to of regions and sectors especially investors, forms, due each June. Required information
doubling their energy productivity, regulators, and civil includes qualitative and quantitative data on
rolling out energy management society economic output and energy consumption. A
systems, or achieving zero-carbon yearly membership fee is required
buildings
EV100 Accreditation or A global initiative of The Climate Companies span a diverse range Broad stakeholder group, Members must report annually on progress
certification Group that commits members of regions and sectors especially investors, for the EV100 Progress & Insights Report,
to switching their owned and regulators, and civil develop an individual roadmap toward the
contracted fleets to electric vehicles society chosen goal(s) within the first year of joining,
and installing charging infrastructure and pay a yearly membership fee
B Corp Benefit Corporation Accreditation or A designation governed by B Lab Companies interested in attaining Corporations, civil society To achieve certification, a company must:
certification that a business is meeting high B Corp status report via the B • Demonstrate high social and environmental
standards of verified performance, Impact Assessment performance by achieving a B Impact
accountability, and transparency on Assessment score
ESG factors • Make a legal commitment by changing
their corporate governance structure to be
accountable to all stakeholders
• Exhibit transparency by allowing information
about their performance to be publicly
available
LEED Leadership Accreditation or Green building certification program New and existing buildings, cities, Customers, employees, Voluntary; to be certified, building projects
in Energy & certification and guidance framework run by the neighborhoods cities, investors must meet and have validated green building
Environmental US Green Building Council standards
Design
BREEAM Building Research Accreditation or Method of assessing, rating, New buildings, existing buildings, Investors, developers, Voluntary
Establishment certification and certifying the sustainability refurbishment projects and large and owners
Environmental of buildings, communities, and developments
Assessment Method infrastructure projects
EnergyStar Accreditation or Labeling program run by the US Businesses interested in saving Corporates, civil society Free, voluntary program
certification Environmental Protection Agency money through and being
and US Department of Energy that recognized for superior energy
promotes and identifies energy efficiency
efficient products

ESG EVOLUTION AND BEST PRACTICE 54

ACRONYM  NAME TYPE WHAT IT IS WHO REPORTS AUDIENCE HOW IT WORKS NOTES
EU ETS EU Emissions Regulator/ A cap-and trade scheme for Sectors covered under EU ETS: Governments, European Mandatory. At the end of each year, EU-wide. The number of
Trading System Government emissions management, capping (i) electricity and heat generation Commission participants must return an allowance for every free allowances is gradually
the total volume of GHG emissions (ii) energy-intensive industry tonne of CO2e they emit during that year. If a decreasing
from installations and aircraft sectors including oil refineries, participant has insufficient (free) allowances,
operators (who are responsible for steel works, and production of then it must either take measures to reduce
around 50% of EU GHG Emissions) iron, aluminum, metals, cement, its emissions or buy more allowances on the
lime, glass, ceramics, pulp, market. Participants can acquire allowances at
paper, cardboard, acids and bulk auction, or from each other
organic chemicals (iii) commercial
aviation
UK ETS UK Emissions Regulator/ A cap-and-trade scheme like the EU See EU ETS UK Government See EU ETS Only for UK, began in 2021
Trading System Government ETS; replaced the UK’s participation
in the EU ETS on 1 January 2021

NFRD Non-Financial Regulator/ Establishes the rules on disclosure Large public-interest companies Investors, civil Under Directive 2014/95/EU, large companies In 2021, proposal for a
Reporting Directive Government of non-financial and diversity in the EU with more than 500 society organizations, must publish information related to: Corporate Sustainability
information employees. This covers 11,700 consumers, policy environmental matters; social matters and Reporting Directive (CSRD)
large companies and groups makers and other treatment of employees; respect for human to replace NFRD was
across the EU stakeholders rights; anti-corruption and bribery; and adopted
diversity on company boards (in terms of
age, gender, educational and professional
background)
CSRD Corporate Regulator/ Requires certain large companies See NFRD See NFRD Amends the existing reporting requirements
Sustainability Government to disclose information on the way under NFRD. Key changes are in extending
Reporting Directive they operate and manage social and the companies in scope, requiring third-
environmental challenges party data verification, and adding more
requirements around the reported data
SFDR Sustainable Regulator/ Establishes EU sustainability Financial market participants End-investors Disclosure obligations on integration of Reporting starting in 2022.
Finance Disclosure Government disclosure obligations for (e.g., asset managers, institutional sustainability risks in all investment processes SFDR applies to all financial
Regulation manufacturers of financial products investors, insurance companies, and for financial products that pursue the services companies
and financial advisers toward end- pension funds, etc., all offering objective of sustainable investment. Disclosure marketing products in the
investors financial products where they obligations regarding adverse impacts on EU, not just companies
manage clients’ money) and sustainability matters at entity and financial based in the EU
financial advisors product levels
EED (Article 8) Energy Efficiency Regulator/ Requires large enterprises in all EU Requires reporting by large Governments of countries Perform energy audit once in four years in Countries may have specific
Directive Government member states to comply with the enterprises (non-SMEs) in scope line with country-specific deadlines and name for directive
energy audit obligation every four according to the country specific requirements.
years definition

ESG EVOLUTION AND BEST PRACTICE 55

ACRONYM  NAME TYPE WHAT IT IS WHO REPORTS AUDIENCE HOW IT WORKS NOTES
SECR Streamlined Energy Regulator/ Designed to increase awareness Large unquoted companies that UK government, Obligated companies must include energy UK only. Companies not
& Carbon Reporting Government of energy costs within UK have consumed (in the UK) more investors, other and carbon information within their directors’ fulfilling the qualification
organizations, provide them with than 40,000 kilowatt-hours of stakeholders (trustees’) report, for any period beginning on criteria are encouraged to
data to inform adoption of energy energy in the reporting period or after 1 April 2019 report the energy data on a
efficiency measures, and to help voluntary basis
them to reduce their impact on
climate change
Décret tertiaire French ELAN law Regulator/ Aims to reduce the energy Owners and tenants / operators French government Affected buildings need to report annual Due to the Covid-19 health
and the Tertiary Government consumption of French tertiary of buildings that have 1000 m2 or energy consumption (kWh/m²/a) and reduction crisis, the public authorities
Decree sector buildings. Affected buildings more used for tertiary purposes, in comparison to target trajectory on the online decided to postpone the
will have to declare their energy scope of responsibility should platform OPERAT first deadline of the tertiary
consumption on a yearly basis and be mentioned in the lease decree. Companies will
ensure they reduce it by 60% by agreement have to enter their final
2050, compared to a 2010 baseline energy consumption data for
2020 and 2021 into Ademe’s
OPERAT platform before
September 30, 2022
EU Taxonomy Regulator/ The EU taxonomy is a classification Many large public-interest Investors First reporting on eligible activities (i.e., It is expected that
Government system, establishing a list of companies operating in Europe Taxonomy eligibility) is due during 2022 for companies falling under the
environmentally sustainable (that have reporting obligations the activities in financial year 2021 that were scope of the CSRD will be
economic activities under NFRD) and financial market related to climate change mitigation and required to disclose against
participants offering financial adaptation criteria only. Full reporting on all 6 the EU Taxonomy
products in the EU objectives for both eligibility and alignment will
only be required in 2024 (FY 2023)
BEGES Le Bilan des Regulator/ Obligatory emissions reporting Private entities of more than 500 Government, other Qualifying entities must report publicly on France
Emissions de Gaz à Government FTE based in France (250 in stakeholders their GHG emissions on the ADEME online
Effet de Serre overseas territories of France). platform, first before 31st December of the
The requirement applies at the year following qualification, and then every four
legal entity level and no corporate years going forward
consolidation of subsidiaries is
required
Refinitiv Data aggregator Online database collecting public Information is collected by ESG Investors Data collected on more than
and company-submitted ESG specialists based on publicly 10,000 global companies
data and generating ESG scores available data, such as company
designed to measure a company’s websites and annual reports, or
commitment to emissions reduction, contributed by companies then
environmental product innovation, audited and standardized
human rights, shareholders, and
more

ESG EVOLUTION AND BEST PRACTICE 56

ACRONYM  NAME TYPE WHAT IT IS WHO REPORTS AUDIENCE HOW IT WORKS NOTES
GRESB GRESB (formerly Data aggregator Investor-led organization providing Property companies, real estate Investors Voluntary; Public Disclosure information is
Global Real Estate standardized and validated ESG investment trusts (REITs), funds, initially collected by GRESB. The data is then
Sustainability data to capital markets and developers pre-filled in the online portal for further review
Benchmark) by the relevant listed infrastructure company
or vehicle. GRESB collects publicly disclosed
data provided by participants in good faith
and does not perform any checks on the
quality of this data. It is the responsibility of the
constituent to check the accuracy of this data
and to update any information that is missing,
inaccurate, or out of date.
S&P’s CSA Standard & Data aggregator An annual evaluation of companies’ Large global companies looking Investors, raters and Companies participate on an invitation basis, Assessment makes
Poor’s Corporate industry-specific and financially to establish a sustainability rankers in the financial but any company interested in the CSA that companies eligible for the
Sustainability material sustainability practices baseline and gain independent community, corporations, agrees to make the resulting ESG Score public DJSI and S&P ESG index
Assessment insight into performance NGOs, general public, on S&P Global platforms can be assessed
academia free of charge
CDP CDP (formerly the Data aggregator Global environmental disclosure Most large companies; suppliers Investors, purchasers, Voluntary; Companies must submit their
Carbon Disclosure system supporting companies, to these companies and city stakeholders responses using the Online Response System
Project) cities, states, and regions in by the annual deadline to be eligible for
measuring and managing risks and scoring and inclusion in reports.
opportunities on climate change,
water security, and deforestation
MSCI Morgan Stanley Rater/Ranker ESG rating designed to measure a Uses a rules-based methodology Investors Data used to produce rankings is sourced ESG rating of more than
Capital International company’s resilience to long-term, to identify industry leaders and from specialized datasets (governments, 8,500 companies
industry-material ESG risks laggards on a ‘AAA’ to ‘CCC’ NGOs, etc.), company disclosure (10k,
scale, using AI and machine sustainability and proxy reports), and daily
learning, augmented with a team monitored media sources (global and local
of analysts to assess company news, government, NGO)
disclosures, information in
the media, and government,
regulatory, and NGO datasets
ISS Institutional Rater/Ranker Comprehensive sector-specific Gather information through Investors, shareholders ESG data and analysis is based on corporate
Shareholder research and data to identify media and other public sources; disclosure (online reporting and corporate
Services ESG risks and seize investment conduct interviews; collect and filings such as annual reports, sustainability
opportunities analyze information on company reports, and integrated reports), corporate
policies and practices policies, ESG disclosures to national
authorities, and alternative, non-material data
sources. Data is collected through AI/ML-
driven data mining and can be verified by the
corporate issuer

ESG EVOLUTION AND BEST PRACTICE 57

ACRONYM  NAME TYPE WHAT IT IS WHO REPORTS AUDIENCE HOW IT WORKS NOTES
DJSI Dow Jones Rater/Ranker A family of indices evaluating ESG Companies are invited and Investors Voluntary; Assessment is based on a
Sustainability performance of publicly traded the top 10% in each industry questionnaire administered by DJSI
Indices companies (based on S&P Global Corporate
Sustainability Assessment) are
included in the index
Sustainalytics Rater/Ranker Organization providing ESG risk Scoring covers 12,000 Corporates, banks and Information is drawn from publicly available
ratings, research, and data companies, referred to as the lenders, investors company data and news items. Factors
research ‘universe’. The criterion that are used to inform the assessment
that defines this ‘universe’ is include the companies’ events track record,
determined by 25-30 major structured external data (e.g., CO2 emissions),
global and regional equity and company reporting, and third-party research.
fixed income indices Companies can provide feedback and
additional information during the annual score
update process
V.E Vigeo Eiris Rater/Ranker Part of Moody’s ESG solutions Large and small and medium Investors, public and V.E collects and qualifies information
providing ESG and climate sized companies private organizations published by and about the companies that it
insights, scores, climate data, and researches, including annual and sustainability
sustainability ratings reports, 10Ks, and company public information
submitted directly through their proprietary
platform. The use of confidential information is
prohibited
FTSE4Good Rater/Ranker Global index series of the top FTSE4Good selection criteria are Investors, corporates (for Data is sourced from a wide variety of external
companies in ESG performance designed to reflect strong ESG benchmarking), NGOs reporting agencies, including SASB, the SEC,
risk management practices. To be (for research) GRI, and many more. For a full list, see here.
included in the FTSE4Good Index
Series companies must have an
overall ESG Rating of 3.3 out of
5. Companies with exposure to
“significant controversies” are not
eligible
CSRHub Rater/Ranker Web-based tool that provides Companies for which CSRHub Corporates, investors, Data that informs ratings comes from ESG Currently issues ratings on
access to ESG ratings on most can find the amount of data to consultants, academia, analysis firms, NGOs, government databases, 22,548 companies, with full
major companies in North America, reach their pre-defined threshold NGOs, civil society publications and research reports, and input ratings on 16,983 of these.
Europe, and Asia in a number of categories are from individual CSRHub users
rated.

ESG EVOLUTION AND BEST PRACTICE 58

ACRONYM  NAME TYPE WHAT IT IS WHO REPORTS AUDIENCE HOW IT WORKS NOTES
EcoVadis Rater/Ranker Global provider of business Companies trying to improve Customers, corporates Responses are collected via an online
sustainability ratings, focused their own ESG practices, or questionnaire that is customized to a
on helping companies collect companies who have been company’s industry and geography. Results
information from their suppliers, requested to report as suppliers are published in a scorecard including
enabling greater and more by their customers benchmarks
efficient visibility into supply chain
sustainability performance.
Corporate Knights Rater/Ranker Media outlet with a research division To be eligible for the Global 100 Corporates, investors, Scoring data is collected by looking through
producing corporate rankings based ranking, a company’s gross civil society, NGOs annual reports, sustainability reports and
on sustainability performance, the revenue for the ranked fiscal company websites and in some cases
most notable of which is the Global year must be more than US$1 supplemented with data from third-party
100 Most Sustainable Corporations billion, and the company must be providers. There is no cost with participating,
publicly traded. shortlisted companies will receive data
verification requests

ESG EVOLUTION AND BEST PRACTICE 59