Sustainability Disclosure Frameworks and Standards Characteristics Flashcards
Scope of Information
Environmental Information: Relates to natural resources such as air, water, energy, and biodiversity. Environmental information includes climate information such as GHG emissions, but climate information does not necessarily include all environmental information.
Social Information: Relates to social and human capital issues.
Operational Governance Information: Sustainability related insights into how a business is run (bribery , supply chain management, etc)
Economic Information: Captures financial inpits or info about the economic impacts of the company related to esg governance based practices, often in the context of overall financial performance.
ex. monetary losses as a result of legal proceedings associated with labor law violations.
Phsyical assets: physical assets and goods owned, leased or controlled by an organization in order to produce its product.
Intellectual Assets: Intangible assets that lend insights into a company’s future earning potential and competitive advantage, such as subject-matter expertise, and intellectual property.
Types of Guidance
Frameworks: set of concepts and principles for how information is structured and prepared, what broad topics are covered. Help promote consistency if information, both between reporting entities and over time.
Standards: a set of specific, replicable and detailed guidance for what should be disclosed. Standards such as SASB and GRI make frameworks actionable. Where Frameworks enable high-quality disclosure due to guidance on how to prepare information standards allows apples to apples comparison.
Primary Audience
Of the organizations that issue sustainability disclosure frameworks and standards, some focus specifically on investors and providers of capital while others focus on a broad range of stakeholders including, but not limited to, investors.
Scope of Materiality
Two materiality concepts are relevant to sustainability disclosure frameworks and standards: (1) materiality in the context of enterprise value creation, and (2) materiality in the context of significant impacts on the economy, environment, and people. Often called “double materiality” thus dual focus of materiality further differentiates the organization issuing disclosure guidance.
Industry Agnostic or Industry Specific
Industry Agnostic disclosure guidance aims to capture performance on a set of criteria that can be ubiquitously applied to any company, regardless of the industry in which it operates. Frameworks such as those provided by the CDSB and IIRC are nearly always industry agnostic.
Industry Specific disclosure guidance establishes criteria that are relevant to companies in a specific industry. Companies with different business models and oeprating environments often face different sustainability opportunities and risks.
Time Horizon
Organizations that issue sustainability standards and/or disclosure guidance can be characterized based on the time horizon on which sustainability topics and subsequent impacts, are likely to materialize. Notably, each of the six organizations evaluates sustainability related issues on short-, medium-, and long-term harizons, which is to say that none of the six framewokrs standards is solely focused on the short or medium term.
Governance Model
Governance Documents: Set forth the formal, systemized procedures and principles applied to the development of sustainability disclosure guidance. They provide stakeholders with transparency into an organizations approach to the development of frameworks or standards articulate due process activities, and clarify rules regarding public participation and open observation. The use of core governance documents among sustainability standard setters and framework developers is consistent with their use of accounting standards.
Conceptual Framework: Defines the principles and characteristics of the standard setting process. Ensures all standards are developed consistently, helps resolve questions that emerge throughout the standard setting process, and allow users of the standards to understand the process and have confidence in the quality of the standards.
