Sustainability Reporting Frameworks, Standards, and Protocols: A Complete Guide

By: Nicole Sullivan, Director of Climate Services

This article was originally published on carbonbetter.com on May 4, 2023. Subscribe to our LI newsletter, Sustainable Progress, to get a bi-weekly digest of brand new content.

A guide to understanding the sustainability reporting ecosystem used for voluntary disclosures, as well as relevant regulations.

As businesses and their stakeholders, including but not limited to customers, investors, and employees, increasingly recognize the importance of environmental, social, and governance (ESG) performance, it’s essential to understand how various sustainability reporting mechanisms work together to enable effective voluntary disclosure of these factors. In this post, we will focus on the “E” aspect of ESG, exploring the world of sustainability reporting frameworks, standards, and corresponding protocols that organizations can use to voluntarily disclose climate impacts, risks, and other environmental factors, such as water and plastic waste. Following these reporting structures is not required when reporting voluntarily. However, they can be very helpful. Some frameworks even offer industry-specific protocols, while others can be applied to both organizations and municipalities.

We will also show the relevance between common frameworks and upcoming or proposed regulations that would affect some United States (US) businesses, including the Securities and Exchange Commission (SEC) climate disclosure rule, the federal supplier rule, and the European Union’s (EU’s) Corporate Sustainability Reporting Directive (CSRD). Join us as we navigate the complex landscape of sustainability reporting and its essential components.

Understanding the Sustainability Reporting Ecosystem

To get a handle on the reporting ecosystem, first, it’s essential to differentiate between its various components:

FRAMEWORKS

Sustainability reporting frameworks, also referred to as ESG frameworks or ESG reporting frameworks, are high-level guidelines or approaches that provide organizations with a structure to identify, assess, and report on sustainability issues relevant to their operations. These frameworks allow companies to benchmark their performance against industry peers and global best practices, and to communicate their progress to stakeholders, including investors, regulators, customers, and employees.

There are several well-known sustainability reporting frameworks, such as the CDP (formerly the Carbon Disclosure Project), the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-related Financial Disclosures (TCFD). Each framework has its unique focus, but they all share the common goal of promoting transparency, comparability, and accountability in sustainability reporting.

STANDARDS

Standards are the more detailed and specific guidelines that build upon the principles set forth by frameworks. They outline the precise requirements, metrics, and indicators organizations should use to report on specific sustainability topics. Standards enable comparability across organizations and sectors by providing a common language and set of metrics to measure and disclose sustainability performance.

Standards vary depending on the framework and the industry sector. For example, the GRI offers a set of universal standards applicable to all organizations, as well as topic-specific standards that address industry-specific issues. The SASB, on the other hand, focuses on industry-specific standards designed to capture the financially material ESG issues for companies within a particular sector.

PROTOCOLS

Protocols are the specific tools, methodologies, or instructions that help organizations to measure, monitor, and report their sustainability performance in line with the chosen framework and standards. Protocols can be separate from or built-in as part of the frameworks.

Protocols offer detailed guidance on how to collect, calculate, and disclose data consistently and accurately. In addition, they can address various aspects of sustainability reporting, such as greenhouse gas (GHG) emissions accounting, water usage, waste management, energy usage, and plastic waste generated.

Some protocols, like the GHG Protocol, can be used across different frameworks, as they provide universally accepted measurement and reporting methodologies for GHG emissions. Other protocols may be more specific to a particular framework or industry. For example, the GRI has its own set of protocols embedded within its standards.

Image credit: Prerana (Pre) Tirodkar

ADDITIONAL COMPONENTS IN THE SUSTAINABILITY REPORTING ECOSYSTEM

In addition to frameworks, standards, and protocols, the sustainability reporting ecosystem comprises several other components. Ratings evaluate and score organizations’ sustainability performance based on specific criteria, while rankings compare and list organizations’ performance relative to peers or industry benchmarks. Regulations, established by governmental or regulatory bodies, set mandatory sustainability reporting requirements. Global goals, such as the United Nations (UN) Sustainable Development Goals (SDGs), provide a set of universal targets and objectives to guide sustainability efforts. Finally, principles, like the UN Global Compact, define foundational commitments and values that shape organizations’ sustainability strategies. These components work in concert, complementing and supporting each other throughout the reporting process to create a cohesive sustainability reporting system.

Frameworks, Standards, Protocols, and Relevant Regulations

Now that we’ve covered each component individually, below is a chart that illustrates the complex interplay between frameworks, standards, protocols, and relevant regulations in the sustainability reporting ecosystem. These components work together to create a comprehensive and robust reporting landscape that enables organizations to effectively and voluntarily disclose their environmental performance.

MORE ON PROTOCOLS: THE BUILDING BLOCKS OF STANDARDS AND FRAMEWORKS

Protocols play a crucial role in providing detailed guidance on data collection, calculation methodologies, and reporting requirements within these frameworks and standards, enabling comparability and consistency across sustainability reports. The following list explains the relevance of each protocol mentioned in the chart above and how they support the respective reporting framework or standard.

• TCFD Recommendations: These recommendations help organizations align with the TCFD framework, providing a consistent approach for disclosing climate-related financial risks and opportunities.
• GHG Protocol: This protocol supports various reporting frameworks and standards by providing guidelines for measuring and managing GHG emissions, enabling organizations to track their climate impact.
• CDP Questionnaires: These questionnaires help organizations respond to CDP’s annual disclosure requests, providing a structured format for reporting carbon, water, and forest-related information.
• CDP-Water Protocol: This protocol provides guidance on reporting water-related risks, opportunities, and impacts, enabling organizations to align with the CDP’s water disclosure requirements.
• CDP-Forest Protocol: This protocol offers guidance on disclosing forest-related risks, opportunities, and impacts, helping organizations comply with CDP’s forest disclosure requirements.
• International <IR> Framework: This framework guides organizations in developing integrated reports that demonstrate their value-creation process, considering financial, environmental, social, and governance aspects.
• GRI Standards: These standards help organizations report on a wide range of ESG issues in a consistent and comparable manner, following the comprehensive approach of the Global Reporting Initiative.
• SASB Standards: These industry-specific standards enable businesses to disclose material ESG information in a consistent manner, aligning with the Sustainability Accounting Standards Board’s approach.

IMPORTANCE OF UNDERSTANDING THE SUSTAINABILITY REPORTING ECOSYSTEM FOR REGULATORY COMPLIANCE

Considering the dynamic regulatory environment, which encompasses the proposed SEC climate disclosure rule, the proposed federal supplier rule, and the EU CSRD, it’s crucial for impacted US companies to know how the sustainability reporting ecosystem works. Gaining this understanding enables organizations to effectively navigate the complexity of these regulations, ensuring compliance and mitigating potential risks. In addition, by proactively incorporating the appropriate frameworks, adhering to relevant standards, and applying consistent protocols, companies can simultaneously meet regulatory requirements and demonstrate their commitment to responsible business practices. In doing so, this enhances their credibility with stakeholders, investors, and regulators, ultimately contributing to improved financial performance, risk management, and long-term sustainability. Note, when reporting voluntarily, the use of standards and frameworks is not required but can be beneficial.

Order of Integration

Integrating frameworks, standards, and protocols into sustainability reporting is not strictly sequential but rather an iterative and interconnected process. However, to better understand their interplay, one can think of the process in the following order:

1. Framework selection: Organizations first choose a suitable sustainability reporting framework that aligns with their strategic goals, stakeholder expectations, and industry context.
2. Standard identification: Within the chosen framework, organizations identify the relevant standards, both universal and industry-specific, to capture and report material sustainability issues.
3. Protocol application: Finally, organizations apply the appropriate protocols to measure, monitor, and report their sustainability performance in accordance with the selected framework and standards.

By cohesively integrating these elements, organizations can enhance the credibility, transparency, and impact of their sustainability reporting, ultimately driving positive change toward a more sustainable future.

Conclusion

Understanding the intricacies of frameworks, standards, and protocols is essential for organizations aiming to create a solid sustainability strategy. By becoming familiar with the various components involved in the sustainability reporting process, organizations can develop comprehensive sustainability reports that cater to diverse stakeholders, effectively demonstrating their commitment to sustainability. As the reporting landscape continues to evolve, ensuring your organization remains compliant with relevant and emerging regulations and meets stakeholder expectations is crucial for success.

If your organization is seeking guidance in evaluating its sustainability reporting needs and navigating the complex reporting landscape, do not hesitate to contact us. Our team of experts can help. Reach out today to get started on your journey toward a more sustainable and responsible business practice.

Nicole Sullivan is the Director of Climate Services at CarbonBetter. When she’s not working on sustainability reports and helping clients to decarbonize, she’s busy reading about the environment or is outdoors exploring it. Connect with her on?LinkedIn?and say hi!

ABOUT US

We're a privately held firm focused on sustainability & decarbonization services, clean energy & carbon offset project consulting, and energy logistics services for Fortune 1000 companies, utilities, and other organizations that seek to make a positive impact. We're a creative and diverse team tackling the complex climate challenges that are changing our world by helping organizations transition to a net-zero future—accelerating the societal shifts that will save our planet.

We're proud to be the largest minority-owned business in Austin and the 7th largest privately-owned business headquartered in Austin.

Learn more at carbonbetter.com/about/.

EXPLORE OUR SERVICES

• Sustainability Reporting & Strategy
• Carbon Offset Sourcing
• Project Development Consulting
• Energy Logistics

VIEW SOME OF OUR WORK

• BeatBox Sustainability Report
• Fierce Whiskers Distillery Case Study

LEARN MORE ABOUT REPORTING

• Sustainability Reporting Overview

“We’re realists. We know companies can’t just decarbonize overnight. But we can all take steps to do better—and make a collective difference.”

Tri Vo – President, CarbonBetter