A Guide to

ESG Reporting
Frameworks
2022

Images licensed to Envizi

 Image licensed to Envizi

Table of Contents

01
Introduction

02 03
Select ESG Adopt a dedicated
frameworks ESG reporting
for reporting system

04 05
Prepare for Consult different
future ESG trends sources for guidance

06 Appendix:
Conclusion ESG frameworks
in detail
02
01. Introduction

There’s global consensus among clear expectations on format and

governments, businesses and financial content, the world of ESG reporting is
institutions that environmental, social and still fragmented and confusing. Each
governance (ESG) risk is investment risk, and framework poses its own set of
actions to protect the environment and questions and requirements, and
society through strong governance are critical frameworks cross over each other,
to our future. requiring complex cross-checking of
responses. Most frameworks require the
And just as organizations are required to provision of supporting documentation,
produce reports on financial performance, and many quantitative questions
they are expected — and sometimes required require complex numerical calculations
by law — to disclose their ESG performance. based on multiple data streams.

But how to do this? Unlike financial ESG reporting is now a high-stakes

performance reporting, which is governed by business imperative. Reports must be
clear expectations on format and content, the finance-grade, fully auditable,
world of ESG reporting is still fragmented comparable across periods and
and confusing. Each framework poses its approved by a corporate officer.
own set of questions and requirements, and
frameworks cross over each other, requiring In this publication, we set out to provide
complex cross-checking of responses. Most you with guidelines to assist with your
frameworks require the provision of approach to ESG reporting. We outline
supporting documentation, and many the ESG framework landscape, propose
quantitative questions require complex approaches that organizations can
numerical calculations based on multiple data employ when selecting ESG
streams. frameworks, and consider the future of
ESG reporting as ESG performance
But how to do this? Unlike financial soars to the top of the corporate
performance reporting, which is governed by agenda.
03
 The rise of corporate ESG
The pace at which ESG metrics are being reported on is on an incredible
trajectory. Largely in response to rising investor and community interest, growing
numbers of organizations are focusing their attention on reporting their ESG
performance driven by ESG goals.

“Climate change has become a defining

factor in companies’ long-term prospects.”
—Larry Fink, Chief Executive Officer, BlackRock1

As a result, ESG has moved from the margins to the mainstream, and now more
than ever before, organizations are expected to report their ESG performance.
Failure to take ESG risks seriously could result in many negative impacts for firms,
from shareholder action at annual general meetings to divestment by asset
managers.

The growing importance of ESG means that organizations must report their impact
using an ever-increasing range of different frameworks. But how do these ESG
guidance and reporting frameworks compare, and how can organizations better
prepare in their journey to ESG reporting?

In this ebook, we explore:

How to select Best-practice How to prepare Where to look

which ESG approaches your organization for additional
frameworks when reporting for future ESG guidance
to report to to ESG frameworks reporting trends
04
02.
Select ESG
frameworks
for reporting

The ESG reporting landscape is cluttered with a large number and variety of reporting
frameworks, a number of which are explained in detail in Appendix A. Applying different
lenses to assess and categorize the various frameworks can help with understanding the
options and selecting the appropriate ESG reporting frameworks for your organization.

Lens 1: Potential for impact

Materiality and relevance

The decision on which framework to report to should start
by considering materiality and relevance.

What is materiality in the context of ESG?

The concept of materiality guides organizations to focus on ESG issues that are
relevant to them and will have a measurable impact on their business.

To determine materiality, an organization must first identify its risks and then
assess the consequences of those vulnerabilities. Using a “risk matrix”
approach, organizations can determine which ESG-related risks to prioritize
based on their risk profile, and which of those consequences would have
significant negative impacts on their organization.

Example: A large-cap e-commerce company may choose to focus on packaging

materials and waste (environmental), supply chain labor standards (social) and
business ethics (governance) in its materiality assessment because it
determined these to have the largest risk profiles when it comes to
environmental impact, overall shareholder and consumer confidence, and
regulatory requirements. In this case, the company should look for ESG
reporting frameworks that cover all three ESG categories.
05
Consider assessing double materiality
Double materiality calls on organizations to consider materiality from two view-
points: financial materiality and materiality to the market, the environment and
people.

Double materiality recognizes that an organization is responsible for managing its

own financial risks by looking inward. But it also looks at the outward impacts of its
decisions and operations on people and the environment.

By applying the concept of double materiality, organizations can identify both the
financial and nonfinancial impacts of their operations to help shape a more holistic
ESG strategy.

Impact and influence

The other side of the materiality and
relevance coin is impact and influence. Quick Major
Organizations assessing their ESG reporting Wins Projects
approach may also find it beneficial to
consider the environmental and social
factors that an organization can influence
most directly and rapidly.
Fill Thankless
Using an action priority or impact effort Ins Tasks
Impact

prioritization matrix, organizations can

quickly identify where to focus their initial
efforts and then use these insights to
determine which ESG framework can help Effort Figure 1: Impact effort
with realizing goals that are within reach. prioritization matrix

For example, organizations in the fast-moving consumer goods and retail sectors can
exert influence within their supply chain. In these sectors, an organization’s procurement
choices can have significant impact on the ESG performance of companies in the supply
chain, thus magnifying their ESG impact.
06
Lens 2: Stakeholder expectations
What are external stakeholders looking for?
Organizations may also consider what their stakeholders are looking for and
which ESG frameworks these stakeholders expect to be used. For example,
investors, boards, insurers and creditors may prefer the organization report to
the Task Force on Climate-related Financial Disclosures (TCFD) or
Sustainability Accounting Standards Board (SASB), while employees and
consumers may expect disclosures based on the United Nations Sustainable
Development Goals (UN SDGs), and governments or regulators may prefer
Streamlined Energy and Carbon Reporting (SECR) or National Greenhouse and
Energy Reporting (NGER), depending on the locale.

How will internal stakeholders use the information?

Stakeholders will use ESG disclosures for various reasons, and organizations
should take this into account when developing their ESG reporting strategy.
The risk, compliance and HR teams would be invested in the data to drive
strategic decisions around equity and inclusion, while energy and utilities
would be looking closely at consumption and expenditure across the
organization. Procurement teams, on the other hand, would be using the
data collected to assess their supply chain operations and the risk profile of
suppliers.

Lens 3: Geography
Certain ESG reporting frameworks are only relevant in particular geographies.
In some cases, this is because reporting is mandated by law. In others, it can
be because the framework is specific to local conditions.

Examples include ENERGY STAR in the North America and select other
countries, SECR in the UK and NGER in Australia.

Lens 4: Sector preference

Organizations belonging to a particular sector will find that there is a natural
alignment between their sector and some ESG reporting frameworks, such as
Global Real Estate Sustainability Benchmark (GRESB), which is used to assess
the sustainability performance of real estate and infrastructure portfolios.
07
Organizations interested in assessing which frameworks their peers report to
can find this information by reviewing the websites of reporting frameworks
which often include a sector filter and a list of reporters. Using this information,
organizations can ascertain the relevance of the ESG framework to their sector.
Similarly, organizations can also review sustainability reports along with annual
reports published by their sector peers on their own websites to see how they
have been reporting to their relevant framework.

ESG framework information directory

In Chapter 05 of this eBook, “Consult different sources for guidance”,

we provide a directory of framework websites for organizations to use
when seeking further information on different ESG frameworks.

08
Lens 5:
Framework coverage
Each of the major ESG reporting frameworks has different levels of focus on the key
ESG performance metrics.

Understanding which framework focuses on which indicator can help with

framework selection and provide insights into where organizations may be able to
report to multiple frameworks using existing data.

This matrix illustrates the focus areas for each reporting framework.

Figure 2: ESG framework indicator coverage

09
03.
Adopt a dedicated
ESG reporting system

As the investor community sharpens its capture and manage people data. ESG
focus on ESG metrics, the level of reporting should not be any different.
scrutiny applied to this data intensifies. Organizations can benefit from having
After all, the most valuable commodity in a specialized software platform to
capital markets is reliable and auditable capture their activity data and
data. calculate their emissions data,
sustainability initiatives and supply
Unlike the typical financial data investors chain data to bolster ESG reporting.
are familiar with, ESG data has generally
not been held to the same standards of Nowhere is this more important than
accuracy. It’s often held in disparate for the “E” in ESG, which is the most
systems, and some organizations difficult to report and track, and the
attempt to run their annual greenhouse most essential for organizations
gas (GHG) accounting using risk-laden looking to reduce their carbon
spreadsheets. These approaches are not emissions.
an efficient means of managing ESG
data in the face of stakeholder and The metrics captured within the “E” of
regulatory pressure, especially for ESG generally include environmental
complex global organizations reporting factors such as water, waste,
to multiple frameworks. pollutants and energy, in addition to
the metrics required to support GHG
Organizations have dedicated IT emissions accounting across Scopes
systems to support processes and 1, 2 and 3.
security, accounting systems to securely
store financial data, and HR systems to
10
 Figure 3: GHG emissions by scope, explained

ESG reporting software such as the IBM® Envizi Sustainability Performance

Management suite (Envizi) can help you stay organized by automating data
capture directly from the source and maintaining an emissions factor engine for
nationally recognized carbon emissions factor data tables such as the US EPA
Climate Leaders Program, e-GRID USA, Intergovernmental Panel on Climate
Change (IPCC), IEA National Electricity Factors, Australian National
Greenhouse Accounts, DEFRA (UK), and NZ Ministry for the Environment.

Keep it simple

Envizi simplifies your ESG reporting to different frameworks. All your

responses across multiple internationally recognized frameworks, such as
SASB and Global Reporting Initiative (GRI), are available in a framework
library with one data set and one repository of information.

11
04. Prepare for future ESG trends

AI-driven data scraping by ESG ratings tools

Increasingly, AI and bots are used to evaluate an organization’s ESG performance
through publicly available data. This practice, known as data scraping, presents a
new challenge for organizations because it means that the data being used to assess
access to capital is largely outside their control.

Various firms synthesize ESG data from different sources including ranked and “best
of” lists, product review websites, social media posts and comments, company
databases, and news articles to build an organization’s profile.

Although these scoring systems and the piecemeal data gathered through data
scraping don’t provide the context, methodology used or granular detail required
from most investors, the practices are nonetheless becoming more widespread.
12
How to prepare for an AI-driven ESG valuation
With the practice of data scraping on an upward trend, investment and
sustainability teams should consider the following approach to regain control
of their data and protect an organization’s ESG valuation from the inevitable
downsides of AI-driven ESG data scraping.

Step 1:
Identify which rating agencies you need to target.
Approach your key institutional investors and ask them which ratings agencies they use.

Step 2:
Understand what data the target rating agencies use
and how they go about uncovering it.
Ask the rating agencies directly if possible, or research online to uncover what you can.

Step 3:
Ensure that the data you’re providing and the places where you’re
sharing it meet the needs of the rating agencies.
To accomplish this, follow these tips:

Determine the Employ social Increase publicly available

best keywords listening ESG information

Check your organization’s publicly

available information to ensure Track conversations online to Provide more data in
the data the AI data scraping and determine what has been sustainability action plans and
bots are capturing is accurate. published about the organization reports. Publish supporting
Undertake an analysis of the and attempt to rectify any documents that go into further
terminology used and adjust for inaccurate statements. Examples detail about the organization’s
clarity. This analysis should be include customer reviews, Google ESG performance and efforts.
applied to your organization’s business listings, customer social This data can then be published
website, comparison websites media comments and mentions on your organization’s website,
and company search databases of the organization. social media or other platforms.
such as Bloomberg.
13
 A global standard in ESG reporting
The future of ESG reporting can be seen from at least three perspectives: regulatory
changes, industry coalescence around frameworks, and inter-framework
consolidation. All these perspectives indicate one major directional move: the
harmonization of ESG reporting frameworks.

NOV 2021
IFRS announces creation of the
International Sustainability
Standards Board establishing a MAR 2022
unified corporate reporting system. US SEC announces a
climate disclosure rule
SEP 2020 OCT 2020 proposal to mandate
CDP, CDSB, GRI, IIRC & SASB UK’s Financial Reporting Council emissions disclosures for
publish joint statement of intent published paper on the urgent large companies.
detailing desire to work with need for consistent reporting to
IFRS towards a comprehensive support comparisons of JUN 2021
reporting system. sustainability performance. IIRC & SASB finalize
merger to form the Value
Reporting Foundation.
SEP 2020
IFRS issues a consultation on
sustainability reporting MAR 2021
calling on the creation of MAR 2021 EU Sustainable
Sustainable Standards Board. SEP 2020 World Economic Forum & Finance Disclosure
World Economic Forum & SASB release joint comes into force.
International Business Council statement outlining intent
publish whitepaper with to work together towards
Deloitte, EY, KPMG & PwC. global corporate
JUN 2020 disclosure reporting.
EU Sustainable
Finance Taxonomy
introduced
JAN 2020
Larry Fink Letter to
CEOs “climate isk is
Investment risk”

Figure 4: Timeline of ESG reporting framework harmonization

Regulatory changes

Various progress has been made across national and supranational jurisdictions. The U.S.
Securities and Exchange Commission (SEC) announced a proposal in March 2022 to mandate
ESG disclosure modeled off the TCFD. Similarly, the EU’s sustainable finance package — the
EU Taxonomy and the Sustainable Finance Disclosure Regulation (SFDR), which includes
CSRD — will further require ESG-related disclosures from companies.

Industry sectors coalescing

As the practice of ESG reporting matures, industry sectors are coalescing around their
preferred frameworks. The early movers in this regard were in the property sector, which
favors reporting against the GRESB framework. This trend occurs more recently among the
investment community, with asset managers such as BlackRock encouraging their investees to
report against SASB.

Framework consolidation

These changes are resulting in a reporting landscape in which frameworks are becoming more
specialized, as seen with the International Financial Reporting Standards (IFRS) Foundation
14

and GRI, or are consolidating, as seen with the International Integrated Reporting Council
(IIRC) and SASB.
How to prepare for ESG reporting changes
With progressive steps toward a common language around ESG reporting and
new announcements being made every few months, how can organizations
better prepare for the inevitable changes facing ESG frameworks?

Get the data right

Having an accurate and auditable data
foundation today means avoiding
historical errors and changing processes
when ESG reporting changes come into
effect. Envizi software can help
organizations achieve this with an
auditable data record and accurate
emissions calculations.

The solution is regularly updated in line

with new framework requirements to
Figure 5: Envizi’s ESG reporting
ensure ESG reporting remains current and management solution
with market obligations.

Build ties with the Stakeholder group Example Function

right stakeholders Committees or Environmental Provides viewpoints from various parts of the
subcommittees Steewardship organization and sometimes the wider community

Sustainability leaders should Committee in relation to how certain initiatives are likely to
impact or benefit the group.

look beyond their current Finance Chief Financial Provides financial forecasting and advises on

stakeholder group and consider Officer necessary budget to implement the required
actions to achieve objectives in the Sustainability
Action Plan. They play a key role in advocating for
others who can provide the the organization’s sustainable financial success and
understanding the cost-benefit of implementing

granular data required from energy-saving measures.

different frameworks and Operations Facilities Manager Advises on shared services and utilities such as
telecommunications, water and electricity and

regulatory changes. holds the relationship with these suppliers should

any changes need to be made.

Procurement Procurement Manages an organization’s supply chain and can

Operations therefore advise on partners and practices,
Manager establushed SLAs in line with the Sustainability
Action Plan. Ensures suppliers of goods and
services to the organization reflect any objectives of
the organization’s sustainability commitment.

Risk and compliance Chief Legal and Assists with due diligence process for suppliers
Risk Officer and advises on reputational and regulatory risks
when progressing through the Sustainability
Action Plan.

Energy and utilities Energy Manager Advises on the current state of energy efficiency
for the organization and other conservation and
energy efficiency measures the organization can
take to achieve its objectives.
15

Figure 6: Other stakeholder groups

05.
Consult different
sources for guidance

In the lead-up to key reporting dates and throughout the year, frameworks will
publish updates and guidance to help participants with their ESG reporting.

These updates can be viewed on their various channels, including:

Social media, Electronic Media and blog Webinars and

specifically LinkedIn Newsletter section of their online forums
websites

It’s imperative that sustainability

professionals involved with their
organization’s ESG reporting immerse
themselves in these online
communities and resources.

16

GRESB LinkedIn post announcing webinar

on best practices for GRESB reporting
Here’s a directory of these information sources.
We issue regular updates and guidance throughout the year on emerging trends and
changes in the ESG reporting landscape. Envizi’s position as a global leader in ESG
management software for over a decade gives us unique insight into the sector.

You can access these resources through our website or LinkedIn page.

Main e-newsletter Media/ Social Media

website sign-up blog (LinkedIn)

Available on
CDP cdp.net/en
website
Visit Media page Visit LinkedIn page

CSA spglobal.com/esg Visit sign-up page Visit Media page Visit LinkedIn page

energystar.gov/
ENERGY STAR buildings
Visit sign-up page Visit Media page Visit LinkedIn page

GRESB gresb.com Visit sign-up page Visit Media page Visit LinkedIn page

GRI globalreporting.org Visit sign-up page Visit Media page Visit LinkedIn page

integrated
IIRC reporting.org
Visit sign-up page Visit Media page Visit LinkedIn page

NABERS AU nabers.gov.au Visit sign-up page Visit Media page Visit LinkedIn page

cleanenergyreg
NGERS ulator.gov.au/NGER
Visit sign-up page Visit Media page Visit LinkedIn page

SASB sasb.org Visit sign-up page Visit Media page Visit LinkedIn page

sciencebasedtarg
SBTi ets.org
Visit sign-up page Visit Media page Visit LinkedIn page

www.gov.uk/government/publications/academy-trust-financial-
SECR management-good-practice-guides/streamlined-energy-and-carbon-reporting

SFDR eurosif.org Visit sign-up page Visit Media page Visit LinkedIn page

TCFD fsb-tcfd.org Visit sign-up page Visit Media page Visit LinkedIn page
17
Framework guidance embedded in ESG reporting
Envizi’s ESG Reporting Frameworks solution includes guidance at both the
framework and individual questions level and enables you to record all your
framework responses in one place.

This guidance is regularly reviewed and updated, keeping you up to date

with the latest ESG reporting requirements.

A product screenshot providing an example of the type of guidance provided for framework
questions. This example shows guidance for one question in the TCFD reporting framework.

18
06.
Conclusion

ESG reporting is a complex space, and staying on top of requirements can be a burden
for organizations that need to report to multiple frameworks. However, if organizations
apply a systematic approach, they can stay ahead. The first step is to select the most
appropriate reporting frameworks. This decision is crucial, yet it’s not always simple.
One way to approach the selection decision is to apply numerous analytical lenses.
These lenses may include:

• Where your organization can make the most difference, based on materiality
assessments and its impact and influence across the supply chain

• Stakeholder expectations specific to preferred ESG reporting frameworks and

how different stakeholders will use information from disclosures

• Geography and the relevance of some ESG frameworks to locations and

jurisdictions

• Sector preference, as organizations belonging to a particular sector may find a

natural alignment between their sector and some ESG reporting frameworks

• Framework coverage of each ESG reporting framework pertaining to key

performance indicators (KPIs), including environment, social, governance,
carbon, energy, waste and water

Part of this assessment also includes ensuring a solid data foundation to work
from — one that meets the same standards applied to financial data. Accuracy,
automation and auditability lay at the center of sound ESG reporting practices,
and organizations that adopt these practices through a specialized ESG reporting
solution such as the IBM Envizi Sustainability Performance Management suite
will be best prepared for the swathe of changes facing the ESG landscape.

Learn more about how IBM can support you to achieve your ESG reporting goals.
19
Appendix:
ESG frameworks in detail

In this section, we provide an overview of sustainability performance indicators

used in each ESG framework. To make this list easier to navigate, we’ve grouped
the major ESG reporting frameworks into four categories:

Benchmark Voluntary Regulatory Rating

frameworks frameworks frameworks agencies

CDP, GRESB GRI, TCFD, VFR NGER, SECR, ENERGY STAR,

(SASB + IIRC) SFDR DJSI, NABERS
20
 Benchmark frameworks

Require responses to all questions in the framework and typically

have a scoring element

Carbon Disclosure Project (CDP) Global Real Estate Sustainability

Benchmark (GRESB)
CDP is a framework for companies to
provide environmental information to their GRESB is a global tool used predominately
stakeholders — investors, employees and by investors to assess the sustainability
customers — covering environmental performance of real estate and
governance and policy, risks and infrastructure portfolios and assets
opportunity management, environmental worldwide.
targets, and strategy and scenario analysis.
How GRESB works
How CDP works GRESB Assessments provide investors
CDP offers three questionnaires — climate and asset managers with material insights
change, water and forests — each of into the sustainability performance of a
which is scored using different company’s real assets. These performance
methodologies. Each questionnaire insights are aligned with international
includes general questions alongside reporting frameworks such as the GRI and
sector-specific questions aimed at Principals for Responsible Investment
high-impact sectors. The scoring of CDP’s (PRI). Assessment participants receive
questionnaires is conducted by accredited comparative business intelligence on
scoring partners trained by CDP. where they stand against their peers, a
roadmap with actions they can take to
improve their ESG performance, and a
communication platform to engage with
investors. Investors use the ESG data and
GRESB’s analytical tools to improve the
sustainability performance of their
investment portfolios, engage with
managers and prepare for increasingly
rigorous ESG obligations.
21
 Voluntary frameworks

Allow reporters to select the questions they want to report against,

depending on factors such as their industry of operation and their
materiality. Scoring is typically not included in these frameworks.

Global Reporting Initiative (GRI)

GRI is a globally applicable guidance framework that provides standards detailing
approaches to materiality, management reporting and disclosure for a comprehensive
range of sustainability issues. GRI Standards guide many organizations in the
production of their own sustainability reports.

How GRI works

The modular, interrelated GRI Standards are designed primarily to be used as a set to
prepare a sustainability report focused on material topics. The three universal standards
are used by every organization that reports under the GRI framework. An organization
also chooses from the topic-specific standards to report on its material topics —
economic, environmental or social.

Task Force on Climate-related Financial Disclosures (TCFD)

The TCFD was explicitly designed to address climate risks to the business, falling
squarely within the “E” of ESG reporting. The TCFD helps organizations across the
globe articulate how ESG performance is most likely to materially impact future financial
performance and value creation.

The TCFD was created in December 2015 after the G20 Finance Ministers asked the
Financial Stability Board (FSB) to evaluate the connection between climate-related
issues and the financial sector. The FSB is an international body that makes
recommendations to the global financial system, so the push toward climate-related
finance was significant.
22
How TCFD works
Broken into four pillars, the TCFD addresses disclosure requirements related to:

1. Governance: How does the organization’s governance structure address

climate-related risks and opportunities?
2. Strategy: What are the tangible material impacts of climate-related risks and
opportunities on the whole business, including strategy and financial planning?
3. Risk management: How does the organization define, assess and manage
climate-related risks?
4. Metrics and targets: What are the measurements used to assess material
climate-related risks and opportunities?

Value Reporting Foundation (VRF) – Sustainability Accounting

Standards Board (SASB) and International Integrated Reporting
Council (IIRC)
In June 2021, SASB and IIRC announced their merger to form the VRF, an ESG
guidance framework that sets standards for the disclosure of financially material
sustainability information by companies to their investors.2 The resources they provide
include the Integrated Thinking Principles, the Integrated Reporting Framework and
SASB Standards. In total, the SASB Standards track ESG issues and performance
across 77 industry standards. VRF’s framework is built to support companies in sharing
their outward ESG impacts through the language of investors, debt holders and internal
financial stakeholders.

How the SASB Standards work

Of the other ESG reporting frameworks, the Global Reporting Initiative (GRI) is most like
SASB but supplies more broadly material information for reporting to stakeholders who
are not just from financial portfolios.

Asset management companies such as BlackRock, Goldman Sachs and Morgan Stanley;
manufacturing giants such as GM and Nike; and even specialized industries with
companies such as Merck and JetBlue use SASB Standards to disclose ESG metrics.
SASB also supplies resources to explain how investors across multiple asset classes use
the standards. These tools allow organizations to be specific and report with a system
that allows for transparency and relevancy with their investors.
23
 Regulatory frameworks

Like benchmark frameworks in that all responses are required but not
always scored. These frameworks and reporting requirements are also
required by a government body.

Sustainable Finance Disclosure Regulation (SFDR)

SFDR aims to standardize the reporting of ESG metrics for financial products and entities
within the EU. It does this by mandating that reporters publish a Principal Adverse Impact
(PAI) statement detailing their disclosures. SFDR will act in concert with the EU taxonomy and
the proposed EU Corporate Sustainability Reporting Directive (CSRD) to form the basis for the
EU sustainable finance agenda.

How SFDR works

SFDR’s PAI statement requires financial bodies to report different types of quantitative
indicators, including weighted averages across various ESG metrics for their investments as
well as emissions from their own activities. In practice, this means that organizations must
report the proportion of their investees’ activities that they finance. For example, if an investee
generates 100 metric tons of hazardous waste, and the financial body has 20% of the equity
in that company, the financial body reports 20 metric tons of hazardous waste in its SFDR PAI.

National Greenhouse and Energy Reporting (NGER)

The NGER Scheme is the Australian national framework for reporting and disseminating
company information about GHG emissions, energy production and energy consumption.
Established by the NGER Act in 2007, it is monitored by the Clean Energy Regulator.

How NGER works

The NGER Scheme collects emissions-related data about GHGs such as carbon dioxide
(CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6) and specified kinds
of hydrofluorocarbons and perfluorocarbons. Records of activities must be adequate to
enable the Clean Energy Regulator to ascertain whether the corporation or the person has
complied with its obligations under the NGER Act. This includes information that can be
used to verify the relevance, completeness, consistency, transparency and accuracy of
reported data during an external audit.
24
Streamlined Energy and Carbon Reporting (SECR)
The SECR taxonomy is the UK government’s guidance for organizations required to disclose
their energy use, GHG emissions and related information. The SECR was introduced to take
effect from 1 April 2019 as the previous Carbon Reduction Commitment (CRC) Energy
Efficiency Scheme came to an end. It builds on and extends the previous reporting
requirements faced by quoted companies while adding new mandates for large unquoted
and limited liability partnerships (LLPs).

It can also help all organizations with voluntary reporting on a range of environmental
subjects, including GHG reporting and the use of KPIs. The SECR is central to the UK’s
strategy for improving energy efficiency and reducing CO2 emissions, as set out in the
Climate Change Act 2008. It is expected that an estimated 11,900 companies incorporated
in the UK will need to report on their energy and carbon emissions under the new
framework.3

How SECR works

Quoted companies that report to the SECR are required to disclose their energy use, global
Scope 1 and 2 GHG emissions in metric tons of CO2 equivalent, and at least one emissions
intensity metric of their choosing for current and previous financial years. Scope 3 emissions
remain voluntary but are recommended for emissions sources considered material. Unquoted
large companies and LLPs will also need to report, at minimum, their UK energy use and
associated GHG emissions from electricity, gas and transport fuels as well at least one
intensity metric. Reporting each of these sustainability dimensions and tracking their
progress over time requires access to consolidated, auditable data, which can be more easily
achieved with sustainability reporting software.

ENERGY STAR
ENERGY STAR is a nationally recognized energy rating and benchmarking mechanism in
North America that covers commercial buildings across a diverse group of building use types.
25
How ENERGY STAR works
ENERGY STAR is a U.S. Environmental Protection Agency (EPA) voluntary program that
helps businesses and individuals save money and protect the climate through superior
energy efficiency. Rankings compare the performance of a building against other like
buildings, called a peer group. Buildings can benchmark their performance internally across
their portfolio and externally among similar sectors.

ENERGY STAR scores are based on data from national building energy consumption surveys,
which allows the ENERGY STAR Portfolio Manager tool to control for key variables affecting
a building’s energy performance, including climate, hours of operation and building size. This
means is that buildings from around the country, with different operating parameters and
subject to different weather patterns, can be compared side by side to see how they stack up
in terms of energy performance. The specific factors that are included in this normalization —
hours, workers, climate and more — will depend on the property type. The 1–100 scale is set
so that 1 represents the worst-performing buildings and 100 represents the best-performing
buildings, with 50 representing the average.

Dow Jones Sustainability Indices (DJSI) and the Corporate

Sustainability Assessment (CSA) questionnaire
The DJSI tracks the performance of the world’s leading companies in terms of economic,
environmental and social criteria, and is used by investors who wish to jointly assess financial
and ESG aspects of company performance.

How DJSI works

The DJSI applies a transparent, rules-based component selection process based on the
company’s Total Sustainability Scores resulting from the annual CSA. The CSA compares
companies across 61 industries with questionnaires assessing a mix of 80–100
cross-industry and industry-specific questions. Companies receive scores ranging from 0 to
100 and percentile rankings for approximately 20 financially relevant sustainability criteria
across economic, environmental and social dimensions. Only the top-ranked companies
within each industry are selected for inclusion in the DJSI family. Investors in these indices
gain exposure to the performance potential of well-known common factors — low volatility,
dividend yield, value or momentum — while avoiding ESG-related risks in their portfolios by
directing their investment toward more sustainable companies.
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National Built Environment Ratings Scheme (NABERS) AU
Using a 6-star scale, NABERS helps Australian building owners understand how their asset
impacts the environment, and helps prospective tenants understand how energy-efficient
their leased space is.

How NABERS works

NABERS compares the performance of a building or tenancy to benchmarks that represent
the performance of other similar buildings in the same location. NABERS scores are
calculated by an independent assessor using 12 months of real, measurable information
about a building or tenancy, such as energy and water bills or waste consumption data as the
basis of their rating. NABERS ratings are available for commercial office buildings, tenancies,
hotels, shopping centers and data centers. NABERS announced in 2019 a plan to expand to
all major building types. Under Australia’s Building Energy Efficiency Disclosure Act, all
buildings for sale or under lease over 10,000 sq ft must receive a NABERS rating.
Governments are required to lease space in buildings with ratings of 4.5 or higher.

Learn more about how IBM can support you to achieve your ESG reporting goals.

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1 A Fundamental Reshaping of Finance, BlackRock letter to CEOs.

2 IIRC and SASB form the Value Reporting Foundation, providing comprehensive suite of tools to assess, manage and
communicate value, Value Reporting Foundation press release, 9 June 9 2021.
3 New digital tool enables easier energy and carbon reporting, GOV.UK press release, 13 March 2020.