Sustainability iXBRL
XBRL: THE FUTURE OF ESG REPORTING
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Technology like XBRL is quite useful in presenting financial and non-financial information in more structured format. It helps is data collection and analysis in a more efficient manner. Also helps in transparency and comparability across basket of companies enabling investors for efficient informed decision making.
As it is becoming essential for companies to communicate sustainability [ESG] data on a regular basis, therefore, by using standardized language for communicating ESG data in a more structured form using XBRL would make the reporting system more efficient and credible.
Sustainability [ESG] Reporting Frameworks
ESG reporting frameworks are tools used by organizations to measure and report on their Environmental, Social, and Governance (ESG) performance. These frameworks provide a common set of standards, guidelines, and metrics to ensure consistency and comparability in ESG reporting.
Global Reporting Initiative (GRI)
The Global Reporting Initiative (GRI) is an international organization that promotes sustainability reporting as a means for organizations to understand and communicate their environmental, social, and governance (ESG) impacts in a very structured way that helps transparency with the stakeholders and shareholders.
Overall, the GRI aims to promote sustainability reporting to encourage more responsible and sustainable business practices and to provide stakeholders with the information they need to make informed decisions about the organizations they interact with.
The GRI Standards are a modular system comprising three series of Standards:
- The GRI Universal Standards,
- The GRI Sector Standards, and
- The GRI Topic Standards.
Here you can find the a short introduction to the GRI Standards.
Sustainability Accounting Standards Board (SASB)
SASB was founded in 2011 to provide a standardized set of sustainability accounting standards that could be used by companies to report on their environmental, social, and governance (ESG) performance in a way that is comparable across industries.
SASB is based on an industry-specific sustainability disclosure that enables organization to disclose about risk and opportunities that affects Enterprise Value.
SASB Standards help identify ESG issues impacting financial performance and Enterprise value of 11 sectors categorized into 77 Industries.
You can download the SASB for all the 11 sectors across all 77 industries here: Download
Announcement: On August 01, 2023, Value Reporting Foundation, parent foundation of SASB, has been consolidated with IFRS foundation.
Task Force on Climate-related Financial Disclosures (TCFD)
TCFD provides recommendations for reporting climate-related financial information. Its framework is designed to help companies disclose the risks and opportunities associated with climate change.
It’s a voluntary group established by the Financial Stability Board (FSB) in 2015 to develop recommendations for disclosing climate-related financial risks with a goal is to improve the quality and consistency of climate-related financial disclosures by companies thereby helping investors, lenders, and other stakeholders to better understand and manage climate-related risks and opportunities.
The TCFD’s recommendations are organized around four pillars:
- Governance: Disclosing the organization’s governance around climate-related risks and opportunities
- Strategy: Disclosing the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning
- Risk Management: Disclosing how the organization identifies, assesses, and manages climate-related risks
- Metrics and Targets: Disclosing the metrics and targets used to assess and manage relevant climate-related risks and opportunities
The TCFD’s recommendations are intended disclose the risks and opportunities related to climate change in a consistent, comparable, and transparent manner, and to facilitate informed decision-making by investors, lenders, and other stakeholders.
CDP
CDP, formerly known as Carbon Disclosure Project, is a non-profit organization established in 2000 based in the United Kingdom that operates a global disclosure system for companies, cities, states, and regions to manage their environmental impacts.
CDP was established to encourage businesses and governments to disclose their carbon emissions, water usage, and other environmental data to reduce their environmental impacts.
CDP also provides a platform for companies to set and report on their environmental targets, and it has developed a global standard for measuring and reporting on carbon emissions and other environmental metrics.
The organization’s data and analysis are widely used by investors and companies to make informed decisions making and to track progress toward global sustainability goals.
CDP is a global platform that provides companies with a standardized questionnaire to report on their carbon emissions, climate risks, and opportunities.
CDP currently offers three questionnaires:
1. Climate Change,
2. Water Security and
3. Forests
And produces three types of reports on these above-mentioned questionnaires on an annual basis with a data portal opening during April and Submission due in July every year.
European Sustainability Reporting Standards (ESRS)
Corporate Sustainability Reporting Directive (CSRD) is a proposed regulation by the European Union (EU) aimed at improving sustainability reporting by companies operating in the European Union and under this proposal, EFRAG, previously known as the European Financial Reporting Advisory Group, was appointed technical adviser to the European Commission developing draft ESRS.
EFRAG has developed first set of 12 drafts of draft ESRS on November 22, 2022
The first set of 12 draft ESRS is composed of:
Cross Cutting: 2
Topical standards – Environment 5
Topical standards – Social 4
Topical standards – Social 1
SustainoTech is well-positioned to help you with ESRS reporting in iXBRL.
XBRL: The future of ESG reporting
As sustainability reporting becomes more important for companies to communicate their environmental, social, and governance (ESG) performance to stakeholders, the use of XBRL for sustainability reporting is likely to increase.
This will enable stakeholders to easily access and analyse sustainability data, which will help drive more informed decision-making.
Technology like XBRL is quite useful in presenting financial and non-financial information in a more structured format. It helps in data collection and analysis more efficiently.
As it is becoming essential for companies to communicate sustainability [ESG] data regularly, therefore, by using standardized language for communicating ESG data in a more structured form using XBRL would make the reporting system more efficient and credible.
Sustainability iXBRL tagging requirements are mandated in guidance issued by the reporting framework. There is iXBRL taxonomy for each framework which serves as essential ingredients for tagging. Such as for CSRD you can get the entire framework at EFRAG-issued European Sustainability Reporting Standards [ESRS]