The strategic importance of addressing environmental, social and governance (ESG) challenges continues to increase as ESG-related investor interest grows. Companies recognize that ESG issues factor into long-term performance strategy, but determining what to disclose and how to do so can be challenging given the veritable alphabet soup of ESG frameworks, ratings agencies, organizations and other initiatives. To help you keep track of it all, we put together a list of some of the most prominent frameworks, raters and rankers, organizations and initiatives.
Note: this list is expanding and will be updated as appropriate. Last update: July 2019.
Industry and non-profit/non-governmental organizations and initiatives
- ESG data and analytics are distributed through the Bloomberg terminal alongside fundamental financial data; accordingly widely used by over 18,000 Bloomberg terminal customers (as of 2018 also available outside the terminal as a licensed product).
- CDP, formerly the Carbon Disclosure Project, runs a global disclosure system that enables companies, cities, states and regions to measure and manage their environmental impacts, specifically climate change, deforestation and water security. CDP aims to motivate investors, companies and cities to work towards a sustainable economy using its database of self-reported environmental data.
- Companies can make their CDP reporting private or public. While private reporting provides issuers the ability to test the waters, investors ultimately seek public reporting.
- CDP's network of investors and purchasers represent over $100 trillion, and it has offices and partners in 50 countries.
- It recently launched an initiative targeting over 700 companies for not reporting their climate change, water security and deforestation data.
CDSB– Climate Disclosure Standards Board
- CDSB is a framework for integrating the reporting of environmental information, natural capital and associated business impacts into company disclosure to allow investors to assess the relationship between specific environmental matters and the organization's strategy, performance and prospects.
- Developed in alignment with the recommendations of the TCFD.
- Intended to be responsive to regulatory reporting requirements for environmental reporting, namely the EU Non-Financial Reporting Directive.
- Ceres is a sustainability nonprofit organization comprised of investors, public interest groups and companies that advocates to build sustainability leadership and take on challenges like climate change, deforestation, water scarcity and human rights abuses.
CRD – Corporate Reporting Dialogue
- The Corporate Reporting Dialogue (CRD) is an initiative that supports greater coherence, consistency and comparability between corporate reporting frameworks, standards and related requirements. Specifically, it is mapping the SASB, GRI, CDP and CDSB frameworks against the TCFD recommendations to align metrics where possible to support further integration of financial and extra-financial reporting.
– Corporate Social Responsibility
- Typically corporate vernacular used to describe the company's philanthropic, volunteer and community-focused efforts. While this information is important to some stakeholders, particularly employees, investors generally are not focused on this information unless is closely and clearly tied to the company's strategy.
– Enterprise Risk Management
- Enterprise Risk Management (ERM) is a process to strategically identify, assess and manage for potential uncertainties and events that may affect a company's operations in order to provide reasonable assurance that the company will be able to achieve its objectives notwithstanding the occurrence of such uncertainties and events. The Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Enterprise Risk Management – Integrated Framework provides that ERM encompasses: aligning risk appetite and strategy; enhancing risk response decisions; reducing operational surprises and losses; identifying and managing multiple and cross-enterprise risks; seizing opportunities; and improving deployment of capital.
ESG – Environmental, social and governance
- Investors of all stripes are increasingly considering environmental, social and corporate governance criteria alongside financial, industry-related and other indicators to make investment decisions aimed at generating long-term competitive financial returns and sometimes positive societal impact.
- ESG incorporation or integration in considering capital allocation is considering ESG criteria as part of investment analysis or portfolio construction.
- ESG investor engagement (or investment stewardship) is communication between shareholders and issuers regarding ESG policies and practices, seeking enhanced ESG disclosure or improved practices to enhance long-term asset value.
FASB – Financial Accounting Standards Board
- The Financial Accounting Standards Board (FASB) is an independent, private-sector, not-for-profit organization that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations under Generally Accepted Accounting Principles (GAAP). It was established in 1973.
FTSE Russell ESG Ratings
- FSTE Russell ESG Ratings and data model provide ESG ratings on constituents of the FTSE All‐World Index, FTSE All‐Share Index and Russell 1000 Index (approx. 4,100 public companies)
GRI – Global Reporting Initiative
- GRI provides disclosure standards for companies to communicate their impact on key sustainability issues such as climate change, human rights, governance and social well-being using a modular approach of three universal standards applicable to all companies and three topic-specific standards – economic, environmental and social – that companies can choose from to report on. The GRI Sustainability Reporting Standards were developed with multi-stakeholder contributions.
- The GRI helps businesses and governments worldwide understand and communicate their impact on sustainability issues with the goal of creating social, environmental and economic benefits for everyone.
IASB – International Accounting Standards Board
- The International Accounting Standards Board (IASB) is an independent, private-sector organization that develops and approves International Financial Reporting Standards (IFRSs). The IASB operates under the oversight of the IFRS Foundation. The IASB was formed in 2001 to replace the International Accounting Standards Committee (IASC), which was formed in 1973 by accounting bodies in Australia, Canada, France, Germany, Japan, Mexico, Netherlands, United Kingdom/Ireland and the United States.
ICCR – Interfaith Center on Corporate Responsibility
- The Interfaith Center on Corporate Responsibility (ICCR) uses shareholder advocacy to press companies on environmental, social, and governance issues. It has a coalition of 300 global institutional investors, representing over $400 billion in managed assets. Leveraging their equity ownership in some of the world's largest and most powerful companies, ICCR members engage management to identify and mitigate social and environmental risks resulting from corporate operations and policies. The ICCR is in its 47th year.
IFRS – International Financial Reporting Standards
- The IFRS Foundation is a not-for-profit international organization that develops a set of global accounting standards, known as IFRS Standards.
- IFRS works to promote transparency, accountability and efficiency in financial markets by fostering trust, growth and long-term stability in the global economy.
IIGCC – Institutional Investors Group on Climate Change
- The Institutional Investors Group on Climate Change (IIGCC) is a forum that enables investors to collaborate on climate change, with a focus on public policies, investment practices and corporate behavior.
- IIGCC's mission is to mobilize capital for a low carbon future using investors' voices and collaboration with businesses, policymakers and investors.
- Members consider it a fiduciary duty to minimize long-term risks and losses and present and consider opportunities associated with climate change.
IIRC – International Integrated Reporting Council
- The International Integrated Reporting Council (IIRC) is a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs. It promotes value creation as the next step in the evolution of corporate reporting, with a goal of establishing reporting and mainstream thinking and business practices in both the public and private sectors.
IPCC – The Intergovernmental Panel on Climate Change
- The IPCC is the United Nations' body for assessing the science related to climate change.
– The Investor Stewardship Group
- The ISG is an investor-led group with more than 60 institutional investor members, including BlackRock, State Street and Vanguard, that articulates a framework of six stewardship principles intended to establish investor expectations around corporate governance practices of U.S. publicly listed companies.
ISO – International Organization for Standardization
- ISO is an independent, non-governmental international organization with a membership of 164 national standards bodies.
- Through its members, it brings together experts to share knowledge and develop voluntary, consensus-based, market relevant International Standards that support innovation and provide solutions to global challenges.
- ISS ESG is part of the ISS family, offering various ESG products including ESG ratings based on sector‐specific ESG criteria, and rankings through its QualityScore platform (ISS sells its E&S QualityScore product separate from its Governance product; company rankings for both appear in ISS's proxy voting recommendations).
- MSCI is a global provider of equity, fixed income, hedge fund stock market indexes and multi-asset portfolio analysis tools. It publishes the MSCI BRIC, MSCI World and MSCI EAFE Indexes. Formerly Morgan Stanley Capital International and MSCI Barra.
PRI (sometimes UN PRI) – Principles for Responsible Investing
- The UN PRI is a supports responsible investment worldwide, encouraging investors to use responsible investing to enhance returns and manage risks. This investor-sponsored initiative has over 2,200 signatories, including all major institutional investors, and it was created in partnership with the UNEP Finance Initiative and the UN Global Compact.
- PRI articulates six investment principles related to the incorporation of ESG issues into investment practice, and examines the investment implications of ESG factors. It supports its signatories by helping investors incorporate these considerations into investment and ownership decisions.
- While the PRI engages with global policymakers, it is not associated with any government. It is supported by, but not part of, the United Nations.
R-Factor from State Street Global Advisors
- State Street Global Advisors' (SSGA) R-Factor is a scoring methodology that leverages commonly accepted frameworks like the Sustainability Accounting Standards Board (SASB) Materiality Map, corporate governance codes and inputs from four data providers to produce ratings that focus on financial materiality. As of June 2019, over 5,000 companies have been scored.
- As part of the Dow Jones Sustainability Index family, RobecoSAM offers investors products based on E&S criteria. It works with over 3,400 public companies annually on its Corporate Sustainability Assessment to build its indices.
SASB – Sustainability Accounting Standards Board
- The Sustainability Accounting Standards Board (SASB) has developed a set of 77 industry standards, which are explained graphically through its Materiality Map. They are available for individual sector download and may be viewed through its Standards Navigator database. SASB staff and Standards Board followed a Conceptual Framework and Rules of Procedure to develop the standards, which are designed to be cost-effective for companies to implement and useful for company and investor decision making.
- In November 2018, SASB published these standards, providing a complete set of globally applicable industry-specific standards, which identify the minimal set of financially material sustainability topics and associated metrics for the typical company in an industry.
- SASB's Engagement Guide provides investors questions to consider asking companies regarding financially material issues. Its Implementation Guide, which was updated in early 2019, provides companies explanations of issues and approaches to consider when implementing SASB standards.
SDGs – Sustainable Development Goals
- The Sustainable Development Goals (SDGs), sometimes referred to as Global Goals, are a call to end poverty, protect the planet and ensure all people enjoy peace and prosperity.
- Seventeen Goals were established by the UN, building on the Millennium Development Goals while expanding to include climate change, economic inequality, innovation, sustainable consumption, peace and justice and other priotities. The goals are seen as interconnected, and are intended to inform investors' engagement with companies on ESG matters and to focus ESG research firms on certain areas.
- Some companies use the SDGs as a framework to guide ESG disclosures.
- The PRI has committed to aligning its investment principles with the SDGs.
SRI – Socially Responsible Investing
- SRI generally refers to values-based investing focused on specific social issues.
- Sustainalytics is a global provider of ESG and corporate governance research and ratings. Founded 25 years ago, it provides ESG research and client services to support hundreds of investors worldwide who incorporate ESG and corporate governance into their investment processes.
TCFD – Task Force on Climate-related Financial Disclosures
- The FSB (Financial Stability Board) Task Force on Climate-related Financial Disclosures (TCFD) will develop voluntary, consistent climate-related financial risk disclosures that companies can use to provide information to investors, lenders, insurers and other stakeholders.
- The Task Force will consider the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures across industries.
- The Task Force will help companies understand what disclosure financial markets seek in order to measure and respond to climate change risks, and encourage firms to align their disclosures with investors' needs.
- Thomson Reuters/Refinitiv is an ESG data and analytics provider, including scorecard reporting on ESG performance, covering 7,000 public companies across more than 400 metrics. (Thomson Reuters required Refinitiv in late 2018.)
UNEP FI – United Nations Environment Programme Finance Initiative
- The United Nations Environment Programme Finance Initiative (UNEP FI) is global partnership established between the United Nations Environment Program and the financial sector.
- The organization promotes sustainable finance with a special focus on climate change. Its motto is "Changing finance, financing change."
- As of June 2019, over 200 institutions have signed the UNEP FI Statement and committed to working towards the organization's goals.
UN Global Compact – United Nations Global Compact
- The UN Global Compact launched in 2000, the United Nations Global Compact as a policy platform and a practical framework for companies committed to sustainability and responsible business practices.
- It has 7,000 corporate signatories in 135 countries, make it the largest voluntary corporate sustainability initiative in the world.
US SIF – U.S. Sustainable Investment Forum
- The US SIF Foundation is a "Forum for Sustainable and Responsible Investment." It is a 501(C)(3) organization that advances its mission with education, research and programs, including training for advisors and other financial professionals on the Fundamentals of Sustainable and Impact Investment.
- Vigeo‐Eiris manages ESG indices published on the Bloomberg and Datastream platforms. It performs ESG research on 4,500 public companies and thematic research on up to 10,000 issuers to build its indices.
If you have ESG concerns, learn how to
conquer your ESG challenges or contact us today at
email@example.com or 212 440 9800.