The other commonly used ESG standard is the Global Reporting Initiative (GRI). GRI breaks down the ESG hierarchy by universal standards, sector standards, and topic standards.
Three types of standards fall under GRI’s Universal top-level category: foundation, general, and material topics.
- Foundational standards specify any environmental requirements your organization would want to comply with.
- General standards contain the disclosures your organization would use to provide information on your environmental reporting practices (e.g., think governance and policies).
- Material Topic standards include environmental-specific elements that could have a material impact on your business.
The middle-tier of standards in the GRI hierarchy are Sector Standards. Sector standards are often the best place to start when determining specific environmental-related Material Topics for your organization. Run through the GRI list of Sector Standards to identify which apply to you that you’ll need to track, measure, and report on.
The lowest tier in the GRI hierarchy is made up of Topic Standards, which provide a more detailed level of disclosures necessary, including how your organization is managing your environmental practices and their individual impact.
Here are a few examples of GRI topic standards specific to the environmental component of ESG. These three topics represent common starting points for corporations embarking on environmental impact initiatives: energy usage, water usage, and emissions.
Let’s take a minute to unpack greenhouse gas emissions and what Scope 1, Scope 2, and Scope 3 mean under the environmental umbrella of ESG. Each of these Scopes categorizes the source of your emissions.
Scope 1 includes direct emissions from sources that your company owns and operates.
Example: Trucks deliver your products from your manufacturing plants or distribution centers. Emissions from those trucks, plants, and warehouses are included in your Scope 1 emissions count.
Scope 2 includes indirect emissions from your energy sources.
Example: Electricity, coal, steam, heating, cooling purchased for use by your company. Emissions from those origination sources are included in your Scope 2 emissions count.
Scope 3 includes indirect emissions from any non-energy sources.
Example: Business travel is a common example in Scope 3. Emissions from flights, taxis, and hotel stays are included in your Scope 3 emissions count.
SASB vs. TCFD vs. GRI for Your Environmental Practices
GRI is similar to SASB in that both break down standards by sector and industry, while simultaneously providing general applications that are similar across all industries. Choosing the preferred standard to devise the social strategy in your ESG program is like choosing whether you’ll follow: agile or ITIL IT development processes.
Go with the standard that best aligns with how your business operates and makes decisions.
Once you establish whether your organization will follow a specific ESG standard or framework, your next step is to outline the specific social topics and disclosures your organization will focus on. With this shortlist, you’ll want to work through a detailed action plan to execute against the strategy for your ESG program.
This planning process entails documenting a detailed social approach to governance, strategy, risk management, metrics and targets, and integration across your business.
Build an Environmental Roadmap for ESG
Check out the step-by-step guide to focus your environmental strategy in an ESG program