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Date: 2024-03-29 Page is: DBtxt001.php txt00010977 |
Metrics | ||
Burgess COMMENTARY | ||
The Battle of Giants: GRI vs SASB vs IR Blog, Datamaran Discovery GRI, SASB, Sustainability Reporting eRevalue Part 1 of our Analysis of EESG Reporting Frameworks (GRI vs SASB vs IR) Navigating the unexplored waters of EESG frameworks and indicators is not an easy task, especially if you are not confident in your map. With all the “maps” (i.e. frameworks and guidelines) available, choosing the right one is a crucial decision for the “captain” (i.e. the manager). Given the fast-changing regulatory environment (more on this here) and the increasing diversification of audiences (investors, the public, employees, and NGOs) the risk of falling short on transparency and compliance can be extremely high. This type of risk is complex and comes from a variety of sources such as industry peers, supply-chains, and influential stakeholder groups. Minimizing this risk is key to ensuring that the investment of resources into EESG reporting leads to a positive return. Therefore, before gathering huge amounts of data on CO2 emissions, workforce diversity, and board composition etc., it is essential to determine what framework best addresses your reporting needs and goals. Collecting information on each of the different reporting frameworks is time consuming. There are global, national, and local regulations to take into account, peers and competitors to benchmark, stakeholders to engage, and materiality assessments to carry out. With Datamaran™, its possible to streamline and jumpstart this process to go beyond the most obvious comparative analysis of the different reporting frameworks. Let’s look at an example. We compared the three dominant EESG reporting frameworks: the Global Reporting Initiative (GRI), the International Integrated Reporting Council IR Framework, and the Sustainability Accounting Standards Board guidelines (SASB). Each of these frameworks adopts a different definition of materiality, or the principle determining which issues are considered relevant in influencing decision-makers. The GRI G4 indicates that “the report should cover Aspects that 1. reflect the organization’s significant economic, environmental, and social impacts; or 2. substantively influence the assessments and decisions of stakeholders”. The SASB Implementation Guide does not define materiality, but instead refers to the definition set out by the US Supreme Court: “a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available”. Finally, the IIRC states that “an integrated report should disclose information about matters that substantively affect the organization’s ability to create value over the short, medium and long term”.
Each emphasizes different elements of the broad ESG universe. While GRI G4 builds its materiality around a multi-stakeholder approach, SASB focuses on investor-centric material ESG information.
Approaching the process of framework selection with a “one-best-solution” mindset is a short sighted tactic.
A strategic approach requires the understanding of each framework’s idiosyncrasies. Datamaran™ can help.
Our database includes more than 40,000 reports from over 6,100 organizations. Where other data providers offer only report metadata, we analyze the content using Natural Language Processing techniques and compare it to disclosure requirements coming from both direct and indirect sources (e.g. supply-chain), as well as regional and global regulations, sector/industry peers, stakeholders and digital and social media sources
We looked for references to each of the three reporting frameworks in Annual Financial and Sustainability reports for the period from 2012 to 2015:
REFERENCES_to_Reporting_Frameworks_in_AnnualFin_Sus_Reports_eRevalue_01032016
As already reported by KPMG, GRI is the the dominant EESG reporting guideline. However, our analysis demonstrates that the other frameworks are increasingly closing the gap, as evidenced by the growing trend in references to
Zooming in 2015, we can identify those regions and sectors that are leading the rise of SASB and
References_by_Region_2015_eRevalue_01032016
As expected, SASB is more dominant in the Americas, while
REFERENCES_by_Sectors_2015_eRevalue_01032016
When looking at the sector distribution, both the Financial Services and Health Care and Pharmaceuticals sectors put more emphasis on SASB, while
EESG reporting frameworks guide first-time reporters in understanding which environmental, social, and governance issues they should address. In addition, they help early-reporters structure their reporting activity through their contribution to the the development of systematic processes and controls.
Datamaran takes this process a step further.
Its data-driven approach and user-friendly visualizations provide insights into each reporting framework and serve to inform the decision of which to adopt. As a result, it helps companies and their decision makers effectively minimize regulatory and reputational risk and supports them in implementing guidelines in the field.
Stay tuned for Part 2! Next week we will complete our analysis by zooming in on the specific content addressed in financial and sustainability reports.
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ERevalue
Introducing Datamaran™ - your emerging risk radar. We are eRevalue, a women-led technology company with offices in London and New York City. We offer Datamaran™, a collaborative analytics platform that helps business executives, financial institutions and their advisors stay on top of emerging regulatory, reputational, and competitive risks related to ESG issues.
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